Hundreds of workers at one of Australia's largest power plants will have their pay drastically slashed by up to 30 per cent, after energy giant AGL won a bid to abolish a long-standing agreement.
The Fair Work Commission on Thursday agreed to tear up the existing pay and conditions for all employees working at the massive Loy Yang power plant in Victoria's Latrobe Valley. The plant supplies about 30 per cent of Victoria's power and is an important part of the national energy system.
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Victoria warned of energy price hike
Electricity bills are expected to jump to an average of $99 per year due to the impending closure of the Hazelwood power station.
More than 570 workers there now face deep cuts to their take-home pay and superannuation, as they will now revert to less favourable minimum rates of the power industry, known as the award.
Workers who spoke to Fairfax Media said they were "flabbergasted" at the decision, which would be a huge blow to the plant's ageing workforce.
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"Yes we are on quite reasonable salaries, but it's not extravagant compared to other plant operators around Australia," one Loy Yang worker said.
"The award is for minimum basic electrician wages - we are not basic electricians, we are operating a major power station."
Under the agreement, which the Fair Work Commission has now agreed to terminate, workers at Loy Yang were being paid between $70,000 and $180,000 a year on average.
In a statement, AGL applauded the decision and said the company was hopeful of striking a new deal.
"AGL is encouraged by the FWC's decision to terminate the old agreement. The decision provides AGL with an opportunity to modernise the EBA and remain competitive amid significant challenges facing the energy industry, including the transition to a low carbon economy," said AGL Loy Yang General Manager, Steve Rieniets.
"AGL remains hopeful we can reach a new agreement."
The commission's decision is the latest development in a long and bitter 15-month conflict between AGL and its unionised workers over the terms of a new workplace deal.In multiple ballots, staff have knocked back management's pay rise offers of 20 per cent over four years.
Union officials say their members are unwilling to give into a number of AGL's "unreasonable" demands, including cuts to minimum staffing levels.
We are not basic electricians, we are operating a major power station
Worker
AGL argued in front of the commission that the station has the highest ratio of workers per shift compared to its other power stations as well as "the most restrictive operational practices".
On top of that AGL said the plant was facing pressure from decreasing wholesale energy prices, a shift away from coal power, a hike in its state royalties for coal from $18 million per year to $54 million and wages having spiked well above inflation despite the deteriorating market.
It also complained that the agreement that was terminated also prohibited compulsory redundancies.
It told the commission it wanted to drastically reduce its overtime bill from $20 million to $10 million claiming 10 workers pocketed more than $100,000 a year in overtime alone.
The ruling will see the agreement terminated at the end of January, but in making the decision Deputy President Richard Clancy pointed out that AGL had promised to keep paying workers under the same deal for three more months to discount claims of hardship from the union.
"I am satisfied the dispute is intractable as things currently stand. I am persuaded that a change in the status quo through the termination of the agreement will better support good faith bargaining for a new agreement that delivers productivity benefits," he said.
Loy Yang A is the largest power plant in Victoria and industrial strife at the site has escalated in recent months.
On Christmas Day, members of the Electrical Trades Union took part in a work stoppage and instituted bans on certain tasks.
Members of the Construction, Forestry, Mining and Energy Union had previously threatened to walk off the job for 24 hours, but called off the strike after AGL threatened to lock out the workforce from the plant and mine.
In the lead up to the Christmas Day action, AGL complained the the unions did not understand the future of the plant was at stake, saying vital flexibility reforms were needed to achieve savings if it was to survive.
The warnings about the plant's future came just weeks after it was revealed that the nearby 1600-megawatt Hazelwood coal-fired plant in the Latrobe Valley will shut down in March next year, leaving hundreds of workers unemployed.