entry scheme which
the Democrats negotiated in our view provides a sensible balance of union,
employer and employee rights.
1.45
Professor
McCallum raised concerns about watering down
the system that the Democrats negotiated:
What I would
say about right of entry is that, under our system, it is for the arbitration
inspectors and the registered trade unions to have the capacity to police
awards and certified agreements. I do not think that that ought to be destroyed
or watered down. Obviously improper use of right of entry is another thing.[479]
1.46
While we believe the current system is balanced
we acknowledge that there is evidence of abuse of the right of entry system.
The CFMEU argued that approximately two thirds of the 392 breeches identified
by the Cole Royal Commission with industrial matters and that a significant
number of these were related to right of entry:
Of the two-thirds that
are industrial matters, I can point you to the fact that a significant number
involve the union failing to adhere precisely to the right of entry provisions.
One of the common reasons for finding breachesa whole litany of them against
usis that we failed to tell the employer that we had come on site or that we
did not come on site during the prescribed lunchbreak.[480]
1.47
However we agree with the Committee majority
report that the provisions in the BCII Bill place too much weight on the rights
of employers and give too little protection to employees.
1.48
The Democrats believe there are a number of
solutions that could be implemented that would not water down the rights of
unions.
Recommendation 1 Right of Entry
-
Applicants for right of entry permits to be
required to demonstrate a knowledge of the rights and obligations associated
with the permit;
-
The Registry be requested to develop, in
consultation with union and employer bodies, a code of practice governing the
right of entry;
-
Implement a two tiered approach where on serious
industrial issues or where there is dispute about the right of entry, an independent
third party, such as an inspector, is called to arbitrate the matter.
-
Increase penalties to right of entry provisions
under the WR Act 1996, to act as a deterrent.
Freedom of Association
1.49
Chapter
7 amends the freedom of association legislative regime in the building and
construction industry by:
1.50
providing
a number of general prohibitions that apply to all building industry
participants to deal with what the Royal Commission found to be the most common
forms of inappropriate conduct;
making
improvements to various existing freedom of association provisions,
particularly in relation
to enhanced protection for independent contractors and their employees; and
providing
greater penalties for contravention of the freedom of association provisions.
1.51
The Democrats stated policy is to protect
freedom of association and the right to join a particular union or employer
organisation. There were some concerns raised to the Committee that the
amendments would tip the balance of the current provisions. Professor
McCallum stated that:
Some of the provisions
on freedom of association look extraordinarily detailed to me, when my view is
that part 10A of the Workplace Relations Act works very well indeed.[481]
1.52
In negotiating changes to Freedom of association
provisions to the Workplace Relations Act 1996 I said that:
The Democrats support freedom of association and the
removal of compulsory unionism, but an orderly conduct of trade union affairs
remains an essential element of a workable industrial relations system in Australia. In the committee stage we will be seeking a fairer
balance for the rights of trade unions.[482]
1.53
The Democrats would have difficulties supporting
amendments that impacted negatively on the rights of trade unions. However we
would consider supporting a small increase to penalties for breeches of freedom
of association provisions.
Industrial Action and Secret Ballots
1.54
Chapter 6 of the BCII Bill makes certain forms of industrial
action in the building and construction industry unlawful and provides
'improved access' to sanctions against unlawful industrial action in the form
of injunctions, pecuniary penalties and compensation for loss. In addition, it
sets down additional requirements for accessing 'protected' industrial action
including a mandatory cooling-off period.
1.55
There have been several Bills before the senate dealing
with many of these provisions including the More Jobs Better Pay Bill, Workplace
Relations Amendment (Genuine Bargaining) Act 2002, and the Workplace Relations Amendment (Better Bargaining Bill) 2004.
In particular the Secret ballot
provisions proposed in the BCII Bill, have been before the Senate and rejected
by the Democrats several times and one such Bill Workplace Relations Amendment (Secret
Ballots for protected Action) Bill 2002 - has been negatived by the Senate and
is currently on the Double Dissolution list.
1.56
As I have said in numerous minorities and second
reading g speeches before the senate, it is difficult for the Government to
advocate a much greater tightening up of the area of industrial disputes, when Australia
has the lowest level of industrial disputation in eighty years.
1.57
With respect to secret ballots, evidence was again received at this inquiry
that Secret Ballot provisions such as those proposed in the BCII won't work,
for example Professor McCallum said:
Secret ballots have been
in the act in one way or another since 1928.the Fraser government extended certain secret ballots
in elections in 1976. My research then, and there has been nothing much since
to go against iteven the British studiesshowed that secret ballots are equivocal.
Sometimes the workers vote in favour of strike action when their leaders do not want
them to; sometimes the workers vote against industrial action when the leaders
want them to support it; sometimes, when the workers vote in favour of
industrial action and the leaders of the trade union want a settlement, it is
very hard to get a settlement because of the vote[483]... There
is an awful lot of literature on the notions of secret ballots and strikes that
have been tried in Canada and have failed[484].We should
be focusing upon allowing trade unions and other representatives to determine
whether or not to take industrial action, and to ensure that these bodies are
democratic and responsive to the law. [485]
1.58
The Democrats' policy recognises the legitimate
role of unions in protecting the interests of workers who wish to be
represented by them and in moving to improve the internal democracy and
accountability of unions. We believe that the Industrial Relations Commission
should have sufficient powers to end industrial action and to resolve
underlying issues by arbitration. We have always supported the democratic
protections afforded by secret balloting processes but there is no empirical or
credible evidence that industry specific or industry-wide set of somewhat
complex rules such as those that are being proposed is justified.
1.59
Instead we again recommend amendments we have
moved in past that require trade
unions to have within their rules secret ballot provisions which the members
can activate when the members think it appropriate. Professor Ron McCallum in his evidence to the committee supported the proposed amendment.
I think that is an
interesting idea and I would have no problem with the Workplace Relations Act
being amended to provide that union rules must contain that.[486]
1.60
CFMEU Secretary John Sutton was asked whether he objected to the
principle of the Democrat proposal, his response was no, I do not [487]
1.61
With
respect to cooling of periods, applications to terminate bargaining periods
under section 170MW are comparatively infrequent, with 45 such applications in
2002-03, as against about 7 500 applications to certify collective agreements
and over 15 000 applications to initiate bargaining periods.
1.62
The
Government argue that the intention of the cooling-off period is to remove, for
a period of time, the pressure of protected industrial action from the
negotiations for a certified agreement.
1.63
While
the Democrats fully support giving the Commission more discretion it is
important to remember that this area was only recently amended via the
Workplace Relations Amendment (Genuine Bargaining) Act 2002, which provided:
-
Guidance
to the Commission on when parties are genuinely negotiating,
-
Parties
to apply for suspension or termination of bargaining periods without having to identify
the specific bargaining periods being involved, and
-
The
Commission express powers to prevent, or attach conditions to, the initiation
of new bargaining periods where a bargaining period has previously been
withdrawn or suspended.
1.64
Surely we have to give these provisions a chance
to settle in before we make further changes in this area.
1.65
Recent evidence would suggest that the current
provisions to suspend or terminate bargaining are effective, with the AIRC just recently suspending for six weeks the unions'
bargaining periods with three of the companies at the centre of Victoria's protracted electricity dispute.
1.66
I would probably be more appropriate at this
stage for the Government to reconsider labors amendments 4
and 5 of the Workplace Relations Amendment (Genuine Bargaining) Bill 2002,
which sort to define and articulate 'bargaining in good faith'.
1.67
The Committee heard evidence that the proposed
agreement making framework adds so many complexities, that it would make union
bargaining inefficient and unattractive. The CEPU stated that:
It is our view that this will make the capacity for
union agreements to be registered in the industry basically impossible. As I
indicated earlier, we are talking about 90 per cent of the employers that we
deal with having fewer than 20 employees. They do not have the capacity to go
through these processes and sit down and negotiate where they would like to go.
So that is it, in essence. I know this has been a very brief explanation, but I
refer you to section 7 of our submission, and you can go through that at your
leisure. You will see that there are distinct differences.[488]
1.68
The Democrats believe that these provisions are
unnecessarily complex and would only serve to hinder the agreement making
process and reduce the power of the unions to negotiate the best deal for their
members.
1.69
One area where improvements could be made are in
the area of dispute settlement procedures. The CFMEU argued that approximately
two thirds of the 392 breeches identified by the Cole Royal Commission with
industrial matters and that a significant number of these were related to
non-compliance of dispute settling procedures.
Non-compliance
with the strict terms of the dispute settling procedure is another component.
Often that was as petty as the union missing one stage in the dispute settling
procedure or where the official got involved earlier than he should have or
where the shop steward held a meeting when should not have. Non-compliance with
dispute settling procedure was a heavy component of the industrial matters.[489]
1.70
The
Queensland MBA called on more enforceable dispute mechanisms with the ability
of an umpire to intervene:
The fourth issue is to re-establish a complete commitment to the
Dispute Settling procedures of awards and agreements which are designed to ensure
that due process is strictly followed before industrial action commences. A strike first mentality must be challenged
and eradicated from the union armory at least and until a due process is
followed. The entire industrial relations
system must provide fair access for unions to have matters raised and resolved
without strike action and employers must be able to access the umpire who can
intervene and have the jobs go back to work thus enabling the matters in
dispute to be resolved on their merits.[490]
Recommendation 2 Secret Ballots
-
require trade unions to have within their
rules secret ballot provisions which the members can activate when the members
think it appropriate
Recommendation 3
-
Amend the
WRA to require all agreements to provide effective dispute resolution
mechanisms, which allow the AIRC to arbitrate disputes.
Agreements/Bargaining
1.71
Provisions to ban pattern bargaining has been
before the Senate and has been rejected by the Democrats. We do not believe
that enterprise bargaining is necessarily at odds with industry-wide or
sector-wide negotiations (I use the word sector here because industry wide
negotiations that apply across Australia
seldom occur). Sector-wide collective agreements and enterprise collective
agreements are not mutually exclusive, and nor are multi-employer site or
sector agreements necessarily at odds with efficient and effective industrial
outcomes. In some cases, both employers
and employees see benefits in having an industry or sectoral standard in mind
as they approach bargaining at an enterprise level. Indeed, the federal
government itself bargains in a whole-of-government manner in the context of
their Policy Parameters that shape bargaining in the public sector and give
it a comparable character across different government agencies. A Senate
committee received evidence of multi-employer agreements in retailing, media,
education and electrical contracting which suited both unions and employers,
particularly smaller employers.
1.72
At the
senate inquiry into the BCII Bills, Professor Ron McCallum argued in his evidence that:
the enterprise
bargaining system works decidedly well when you are dealing with a factory
producing widgets. You want that factory to be able to bargain with its work
force to make sure that it can produce widgets more cheaply than its
competitors can and that it will not have unnecessary labour costs. That
factory is a stable workplace and it makes eminent sense. The building and
construction industry is totally different. Projects vary in size and regions
vary, and one is not so concerned with the labour costs of each individual
subcontractor. One is more concerned about stability, and that is why most of the
world has allowed there to be greater flexibility in bargaining in the building
industry. [491]
1.73
Dr Buchanan argued that:
This leads to our final
question: is pattern bargaining part of the problem or part of the solution? As
an IR researcher reading the report of the Cole royal commission, I would fail it. It shows
the ascendancy of ideology over any grasp of the empirical reality in this
area. You see traces of that elsewhere. In other parts of the recommendations
there is recognition of the benefits of coordination. That comes through in
parts of the training section and in the notions of codes of practice later on.
But when they deal with IR issues this ideological obsession is apparent. They
show a fetish about the enterprise.[492]
1.74
The
Queensland Master Builders Association (MBA) argued that pattern bargaining
actually provided benefits to the industry:
One of the pivotal platforms of the proposed Building and Construction Industry Improvement Bill
2003 is the removal of pattern bargaining within the BCI. While Master
Builders acknowledges the arguments in
favour of the proposal, the industrial realities paint a different picture from
that provided by the Federal Government.
Wage justice has long been defined as circumstances where as workers
doing identical work in close proximity to one another receiving identical
remuneration wherever practicable. A
system that encourages individual employers to pay differing wages to workers
performing similar tasks on the same site, is a recipe for industrial anarchy
and cannot be supported. The industry
has continued to negotiate pattern agreements within certain parameters as a
deliberate strategy to minimise industrial disputation. The entire EBA framework is designed to
prevent workers receiving disparate industrial entitlements while working
together on site.[493]
1.75
The Committee also heard from several
subcontractors who argued that pattern bargaining provided benefits to the
industry. For example, Engineering (Aust) Pty Ltd stated that:
Pattern Agreements
provide industry with a common set of standards of employment thereby ensuring
that as an employer in a very competitive industry the means of setting one of
the main components of our fixed costs is the same across the industry. This
ensures that we are competitive with other companies operating in the same
industry.
1.76
Project
or site agreements were considered by many in the Industry as an alternative
method to cater for the specific needs of the Building and Construction Industry.
1.77
The
merits of project agreements were
considered and analysed by Cole in
Chapter 14 of Volume 5 of the Cole Royal Commission final report. Commissioner Cole found that while project agreements are
attractive to major builders and unions, they have a tendency to interfere
with, contradict and pre-empt the process of bargaining at the enterprise
level.
1.78
It was
accepted by Commissioner
Cole that head contractors need to maintain
control over building sites in order to coordinate and plan work. However, in
the Royal Commissioners view such coordinating role should not impinge upon
or impugn the employment arrangements between a subcontractor and its
employees.
1.79
However
AIG argued that:
The use of project
agreements on major projects is a legitimate risk-management practice adopted
by stakeholders in the building and construction industry and such practice can
be clearly differentiated from damaging industry-wide pattern bargaining
approaches and damaging industry agreements such as the Victorian Building Industry Agreement.
Major projects can be
viewed as enterprises that bring together parties with the relevant skills and
expertise in pursuit of a common goal.
1.80
In
their submissions to the Royal Commission, Ai Group argued strongly that the Workplace Relations Act should enable genuine project agreements to
be certified for major construction projects given the size, nature, location
and complexity of such projects and the complex chain of contractual
relationships involved. They argue that in their experience, owners, head
contractors and subcontractors all support the establishment of project
agreements on major projects. And that subcontractors generally indicate that
project agreements provide the best environment for them but seek that project
agreements be established in advance of tendering and only apply to the
subcontractors employees while they are engaged on the project.
1.81
AIG also
argued that the Workplace
Relations Act could be
amended to enable genuine project agreements to be reached and certified for
major projects by, either:
-
Restore
the mechanism which existed under the previous Industrial Relations Act 1988 whereby employer associations were able to enter into project agreements
which would then bind member companies while working on the relevant project;
or
-
Rely on
the Corporations Power under the Australian Constitution to underpin a new
legislative provision for project agreements to enable project agreements to be
certified and become binding, as a common rule, on all Constitutional
Corporations which work on the project.
1.82
Professor McCallum also saw merit in project certified project agreements and/or site
awards:
In my considered
judgement, this industry is ill-suited to having single business enterprise
bargaining as the only available form of bargaining throughout the industry.
For example, clause 68 makes project agreements unenforceable, yet there are
many instances where project agreements and sectoral agreements have the
capacity to bring stability to the building and construction industry. This is
also a sector of the economy where, in appropriate circumstances, arbitrated
awards by the Australian Industrial Relations Commission could bring about
stability as adjuncts to collective bargaining on a sectoral or project basis.[494]
1.83
The
Labour Council of NSW told the committee that project agreements were such a
success on the construction of the Olympic, that the unions supported to
implement project agreements on other sites:
..we have tried to
foster all those elements that established that environment in the Olympic
Games on other major building projects right around New South Wales. You will see, in the submission that we
have made, that we currently have under the auspices of the Labor Council some
$5 billion worth of construction works that go under project agreements. We are
very fearful that any moves to introduce the types of laws that are
contemplated in the bill will undo all the good work and cooperation that we
have been able to achieve in New South Wales.[495]
1.84
A
number of witnesses argued that project agreements would reduce many of the
problems experienced in the building and construction industry such as
non-compliance and could improve efficiencies.
1.85
For
example, Professor McCallum was asked whether he thought project
agreements would improve efficiency, he said:
Project agreements are
the majority method of undertaking construction projects in most market economy
countries. I am not an economist. I think they are an efficient way of
operating. Certainly, no-one has been able to show me that a more efficient
method would be single business enterprise bargaining with every subcontractor.
I would see the economies of scale there as not being able to prove to me that
that is more efficient. In most of the market economy countries, project
agreements have been found to be the most efficient method.[496]
1.86
The Labor Council of NSW had the view that
project agreements reduced non-compliance:
.in terms of the
project awards that we have, where we do have overarching project awards that
provide a whole set of additional procedures, that has limited the number of
non-compliance issues that come up with respect to workers entitlements,
because the unions and employers have a system where they can regularly check
that employers and subcontractors are paying into the superannuation fund and
their redundancy schemes and that they are complying. [497]
The way to run
bargaining is to put in ground rules and to have discretionary powers exercised
by agencies like the proposed Building
and Construction Commission or by the Australian Industrial Relations
Commission. Legislation that tells people how to bargain, and to only bargain
in one way, is not conducive to industrial progress.[498]
1.87
The NSW Labour Council stated that:
most of the problems
correctly complained of in the Cole royal commission findingssuch as forced
donations which are contrived, telling people who turn up on sites that they
have got to get under particular agreements or be a member of a particular
organisation, or particular coercive practices are outside of and extra to the
project agreement? They are not a consequence of the project agreement; they
are a consequence of what happens on the site.[499]
1.88
Concerns have been raised about the impact
pattern bargaining in the Construction industry can have on subcontractors,
especially those subcontractors that operate in both the construction sector
and the cottage/housing sector. For example the Electrical and Communications
Association (ECA) argued that:
Of more significance is the trap that many small contractors
find themselves falling into whereby they may only work on major sites three
or four times a year, but due to pressure from the union and principle
contractor have signed a pattern EBA.
This then (often unbeknown to the contractor) locks in their
wages and conditions for the next three years at the very high end of the
market, rendering them uncompetitive for 80 or 90% of their traditional
market. ECA has seen many companies go
under in this situation because they do not have the resources and expertise to
shift their market focus to only EBA work, and cannot win any work with their
usual clients.[500]
1.89
In their submission ECA argued for a revamping
of the award whereby the base rate remains constant while allowances move up
and down depending on where the employee is working. ECA believe that this type
of system would:
provide contractors with the flexibility to move in and out of
market sectors without the baggage of uncompetitive rates locked in for three
years. It would provide employers with
the ability to manage the business more effectively, and allow them greater
ability to maintain employees during quiet times by being competitive enough to
win work in non traditional markets, where using todays system they would be
unable to win, and would need to reduce their staffing numbers.[501]
1.90
The system described by ECA is akin to project
agreements. The Labour Council of NSW argued that project agreements would
benefit subcontractors:
..the decision I
referred to before, which was handed out, is a decision by the commission about
how project awards actually operate for subcontractorsthe very point that John has made. The clause that the commission
was looking at was the clause that said that where the principal contractor
enters into these arrangements, they make it a condition of tender that, when
all the subcontractors are actually tendering for the job, they have to take
into consideration the conditions under the project award. That actually does
mean that, whether you are a subcontractor that has AWAs, whether you are a
subcontractor that has a union EBA, or whether you are a subcontractor that has
nothing, there is actually a set of minimum standards that apply on the
project. It enables all subcontractors to get onto the project as long as they
apply the minimum standards. So it is not designed to force subcontractors to
have a union agreement to get on the job.[502]
1.91
However, Dr
Buchanan argued that there may be a need to
protect subcontractors or to give them a voice on the establishment of project
agreements:
I do have a lot of
sympathy for subbies here, and that is why I think the whole question of
representation for subcontractors is so critical and that they need to be part
of these arrangements. Simply leaving it to the head contractors and the unions
to sort out does not necessarily take into account the subcontractors
interests.. I am not an expert on project agreements, but you could
potentially have a provision where maybe the MBA has a voice into some of the
leading ones that come along.[503]
1.92
Commissioner Cole did not recommend that certified project
agreements be outlawed completely but expressed support for some forms of
project agreement. However, AIG argue that neither s.170LC or s.170LL provide a
suitable mechanism for the certification of project agreements for major
projects.
1.93
S.170LC
agreements are of little use in the construction context because all of the
organisations to be bound by the agreement need to be identified at the time
when the agreement is certified. All such organisations need to sign the
agreement and their employees need to vote in favour of the agreement. It is
impossible to identify all employers that will work on a major project at the
commencement of the project. The other mechanism - S.170LL provides even less
utility because such agreements can only apply to single businesses.
1.94
Based on evidence before the Senate inquiry, the
Democrats believe that certified project agreements similar to that proposed by
AIG, but with some adjustments to ensure subcontractors have a voice, would be
appropriate to resolve some of the issues in the building and construction
industry, including the pressure on subbies to sign EBAs, non-compliance and
efficiencies.
Recommendation 4 Agreement making
-
Reject
provisions to ban pattern bargaining in the Building and construction industry and instead
amend the Workplace Relations Act to enable genuine project
agreements to be reached and certified for major projects.
Occupational Health and Safety
1.95
We will not deal with Occupational health and
Safety at length in our minority report, not because we don't think it is
important, on the contrary, we believe occupation health and safety is a
critical issue facing the industry, but because we believe that chapter 6 of
the Committee majority covered the issues very well.
1.96
I would say that this is an area where I think a
national uniform approach to occupational health and safety is important. There
are several options:
-
work through WR ministers council for reforms
along the lines of those that led to ASIC toward national uniformity;
-
or the Commonwealth could takeover OHS laws
given its constitutional power to do so or override bits of state laws it
doesnt approve of.
Productivity and efficiency
1.97
Australias
Building and Construction Industry makes an
important contribution to the Australian economy. It contributes 5.5% to GDP
per annum. The value of total construction turnover increased by 8.8% in
2001/2002 and is set to further strengthen over the next couple of years. Productivity in Australian construction is
higher or equal to that in the US,
Japan and Western
Europe, while labour costs are frequently lower.
1.98
The
CFMEU argued the Building and Construction Industry in Australia was highly productive, citing a number of
publications to support their claims:
For some time
now the Australian construction industry has been among the worlds best. Every
analysis, whether it be by Access Economics or the Productivity Commission, has
found the industry to be highly productive by comparison with other OECD
countries. Before the royal commission was announced, the federal governments
Minister for Education, Training and Youth Affairs said that the industry was
one of the most efficient and cost effective industries in Australia. Even one of the royal commissions own
discussion papers found that the industry is well placed by international
comparisons. In 23 international studies, our industry ranked second or better
16 times. On productivity, we ranked second in five of the seven reports on the
topic.[504]
1.99
The
Econtech study, commissioned by the Department of Employment and Workplace
Relations (DEWR), argued that the Australian economy could gain significantly
if workplace practice in the construction sector could match the standards in
the domestic housing building sector the Consumer Price Index would be 1 per
cent lower, there would be an annual gain in economic welfare of $2.3 billion
and real GDP would be 1.1 per cent higher.
1.100
The
Econtech further asserted that productivity gains could be made if restrictive
work practices were reformed. The Government have utilised this report to argue
that implementation of the BCII Bills would result in economic gain of $2.3
billion. When questioned at the Senate inquiry, the Director of Econtech agreed
that he could not say that the BCII Bills would lead to productivity gains.
1.101
The
reports methodology was seriously bought into question as outlined in the
Majority report, further weakening the Governments ability to link restrictive
work practices to the substantial productivity gains being touted.
1.102
What
the committee did hear is that far from restrictive work practices being the
main contributor to productive inefficiencies that other things that
significantly impacted on productive such as tax avoidance, disguised contracting,
lack of training and skill development, and OH&S.
1.103
When
the Committee visited the Bechtel worksite in Darwin, the senior staff told the Committee that
they believed that there comprehensive OH&S procedures contributed to
higher productivity.
1.104
Dr Buchanan
argued that productivity could be improved through a focus on training and tax
avoidance. Specifically Senator Tierny
asked Dr Buchanan
In terms of efficiency and in terms
of getting industrial sites working properly, surely this is something that must
be addressed. Dr Buchanan answered with the following:
Absolutely. If
you actually did something serious about skills, if the industry collectively
said, Were going to offer people a future, looking after training, and said,
Were going to do something serious about safety, and really followed through
on that big-time, if they were going to do something about clearing up all the
tax avoidance and actually deal with the real problems of corruption in the
industry, you would have a very different climate prevailing. If you addressed
the climate where skills are slowly rusting away, being burnt out, if you
encouraged a climate where safety was elevatedsafety in Australia is pretty
good but it could be betterand if you did something about wiping out the
corruption around tax, you would have a very different climate prevailing.[505]
1.105
Buchanan and Allan
reported that the contracting system in the UK
resulted in a deterioration in key features of the industry, including falls in
productivity/building quality.[506]
1.106
The Democrats believe that there was no
substantial evidence to support the Governments argument that implementing the
BCII Bills would lead to significant productivity gains. And believe that that
other areas such as improving OH&S, addressing disguised contractors,
addressing phoenix companies, improving training and skill development, more
effective enforcement of current law and implementing a unitary Industrial
relations system would instead lead to more significant productivity gains.
Is there a need
for industry specific legislation?
1.107
Governments wherever possible, and legislators
like us, have always preferred laws that are common to all. Philosophically, we are nervous of carving
out an industry from the provisions of general law.
1.108
There have
been (and still are) instances where industries have had specific legislation,
which may, to some extent, govern industrial issues.
1.109
For example,
the Coal mining industry until 1994 was regulated by the Coal Industry Tribunal
(now absorbed into the AIRC) and Stevedoring/Waterfront and Seagoing industries
either have, or have had specific legislation drawn up to apply to them.
1.110
Also, in the past, the forerunner Conciliation and Arbitration Act had
separate provisions dealing with:
Maritime Industries
The Snowy Mountains Area
Waterside Workers, and
A separate part of the Act for the Flight Crew
Officers Industrial Tribunal
1.111
So there is
certainly precedent for legislation dealing with industries. However in
recent years the trend has been towards providing general laws and general
tribunals, a principle the Democrats have agreed with.
1.112
The Democrats support a system which means all
Australians, employers and employees alike, would have the same industrial
relations rights and obligations, regardless of where they lived. Supporting industry specific legislation would
fly in the face of the Democrats Workplace Relations policy.
1.113
The construction industry is comprised of mostly
small firms with fewer than 20 employees. They contribute most of the
industrys output and account for 99% of the total number of enterprises. The BCI has some unique features,
including:
It is
not exposed to global competition;
Project
based work headed by lead contractor, contracting many subcontractors;
Short
term, project based nature of working arrangements resulting in low levels of
permanent employment and high job mobility;
Changes
in the organisation of labour and the growth in the number of dependent
sub-contractors, self-employment, contract, part-time and casual labour;
Wage
disparity amongst workers performing similar work on the same site;
Long
working hours, including regular overtime; and
Significant
workplace health and safety risks and high rates of work-related injuries and
deaths.
1.114
As noted in the Bills Digest[507] Professor
Andrew Stewart from the School of Law at Flinders University argues that the Federal Government needed
to demonstrate why the industry's problems were 'so unique' that Parliament
should reverse the trend away from specialised institutions. He said the
building and construction industry was:
not the only
industry in which employers and employees sometimes failed to comply with legal
obligations it was 'a long way short of being an essential service like
police, firefighting, health and power building workers were not the only
employees with significant industrial muscle If these amendments are worth
introducing, why aren't they worth introducing more generally?
1.115
One of the questions that should be considered
is is the problem Australia
wide? The figures outlined in the Cole
Report suggest that the problems are
greatest in a couple of states. The states with the largest BCI are New
South Wales (35% of national total), Victoria
(23 percent) and Queensland (22
percent). The Cole
Report found 392 separate instances of
unlawful conduct: 230 in WA, 58 in Victoria,
55 in Queensland, 25 in NSW, 13
in Tasmania. The NT seems largely free of problems.
1.116
The BCI is broken into three main sectors:
cottage sector, large commercial sector; and civil construction sector. According to the OEA complaints are not
frequently received from the cottage sector. Virtually all allegations of
misbehaviour received come from the large commercial sector or (to a lesser
extent) the civil construction sector.
1.117
It is also reported that complaints or evidence
of unlawful conduct in relation to the industry are generally in urban (city
centre) areas and not regional/rural areas.
1.118
The proposed BCIA focuses only on conduct regarding unions and employees, and will
not address inappropriate conduct undertaken by employers, as identified in the
Cole Report.
1.119
While the BCI is unique in its structure and
characteristics from many other industries, there is not necessarily any more
compelling evidence that as a result of its unique characteristics the provisions
previously rejected by the Democrats for all industries should nevertheless all
apply to this one industry.
1.120
One would also have to be cynical and question
whether the implementation of the proposed (previously Senate-rejected)
provisions would not be used by the Coalition government as precedents to argue
for their implementation in other industries and eventually all industries.
Recommendation 5
BCII Bills
Oppose
the Building and Construction Industry Improvement Bills
Compliance, Enforcement and Regulation
Is the creation of new law the solution to what is
essentially a problem of law enforcement?
1.121
Primarily, the Royal Commission identified
weaknesses in the current mechanisms of enforcing laws of general application,
including criminal law, industrial relations law and civil law. If this is the case, how will creating new
laws solve a problem that has been identified as failure of the market
regulators?
1.122
CFMEU Secretary John
Sutton
I have a view
that current laws should be better enforced, whether we are talking about tax
law or corporate misdeeds or workers compensation breaches or superannuation
breaches or OH&S breaches or the underpayment of workers and all of these
thingsthe whole gamut of matters I have in mind. Lots of laws are already on
the statute book. I probably lean to the view that better enforcement or more
effective enforcement is the answer. Then that of course opens up another
debate as to how you achieve more effective enforcement. It is a very big and
difficult industry, it is a changing industry, and it is about how you achieve
that better enforcement.[508]
The debate
obviously lies somewhere between better enforcement of existing laws and the
possibility of some additional legislative sanctions to get better compliance.[509]
1.123
The logical first step would be to implement
mechanisms to improve law enforcement, review and evaluate the effectiveness of
these mechanisms, and if problems still exist, then look at implementing new
law.
1.124
Various sources of evidence suggest that there
is in fact considerable unlawfulness by employees, unions and employers - in
the BCI. The degree to which this
unlawfulness is flagrant and widespread is still being debated.
1.125
In 2001, an OEA report found that despite the relatively
small size of the BCI, the majority of complaints during 1996-2001 (56%)
related to the BCI. The National Building
Industry Task Force report that there is a lot of unlawful conduct and
collusion between unions and employers occurring in the BCI. The Royal Commission found 392 cases of
unlawful and inappropriate conduct.
1.126
The ATO reported that the industry hides up to
(an amazing!) 40% of its income (reportedly $1 billion in unpaid tax, every
year in NSW alone). Phoenix
companies are widespread. The ATO is
presently investigating 550 cases and has already collected more than $200
million in taxes and penalties.
1.127
One commentator argues that while Cole
does not specifically accuse the institutions of failure his key recommendation
leaves no other conclusion. The only
institutions with a tick from Cole are the ATO
and the Immigration department.
Apparently both these authorities robustly enforce their
responsibilities in the BCI. (Given the
40% hidden income figure, you would have to question the effectiveness of the
ATO however!)
1.128
Ultimately the failure that Cole
details is not that of market failure, but rather failure of the market
regulators.
There are so
many areas of public policy where the authorities, federal and state, are
reluctant or blind or will not enforce compliance with laws. I listened to some
of the evidence this morning and I have to say that the vast majority of
disputes that my union is involved inand there are not that many, contrary to
some of the propositions thrown aboutare compliance disputes, where we have
gone onto a site and found that the superannuation has not been paid for nine
months and the workers death and disability cover has lapsed because there is
an insurance component with the super. So, yes, in a situation where workers
entitlements have not been paid, generally they stop work until the moneys are
paid.[510]
1.129
The problem is that the current mechanism are
failing for example:
AIRC The
WR Act 1996, has essentially limited the powers of the AIRC to prevent and settle
disputes via conciliation and arbitration and to enforce the rights of parties
to a dispute. An unintentional
consequence is that the emphasis is now on the courts to resolve disputes,
which is often not timely and is costly.
Some commentators have argued that it is the reliance on courts that is
fuelling the collusion that occurs in the industry, because it is more
commercially expedient to make a deal.
OEA
The Office of the Employment Advocate (OEA) has a philosophy of voluntary
compliance, unfortunately from a law enforcement perspective there should be
zero tolerance. The OEA have stated that
much of the conduct reported to them is outside the jurisdiction of the OEA and
therefore they are unable to assist complainants. In addition they find that it is often not
possible to effectively refer the complainants to other appropriate law
enforcement agencies, as their matters will simply not be actioned with any
priority, or at all. Concerns have also
been raised that the OEA has too many functions and limited resources, which
limits its effectiveness.
Police
- The Police are reluctant to come down heavily on union representatives;
especially given many police are also members of a union. The Police also lack knowledge and training
in industrial relations law, which is often complicated because there is both a
State and Federal system operating.
Taskforce
- While the ITF has made headway into addressing problems within the industry,
it may only be scratching the surface.
The biggest problem the ITF faces is that it does not have enough
powers, such as access to information as a law enforcement body, which limits
their ability to pursue complaints in a timely and effective manner. It has also experienced difficulty in
establishing relationship with other agencies due to the ITFs lack of
permanency.
1.130
The Government and the Building
Industry Taskforce argue that one of the key factors impinging on current
industrial relations mechanisms to regulate is that inspectors under the WR Act
1996 do not have the same powers as those under the Trades Practices Act (TPA),
such as the ability to:
access information as a law enforcement body;
confirm residency particulars for service of
notices;
review call charge records to confirm alleged
threatening phone calls;
review taxation information of companies in
pursuing employee entitlements;
review financial records to investigate alleged
inappropriate payments;
investigate the range of matters dealt with
during the hearings of the Royal Commission;
compel persons to provide evidence or provide
documents;
search;
appropriately protect parties; and
intervene in AIRC or court matters
1.131
It is for these reasons that Cole
and the Government recommend the creation and implementation of the ABCC with
powers to monitor conduct in the industry and prosecute unlawful industrial
action, similar to the ACCC.
1.132
There were many submissions that argued that a
regulator could effectively address non-compliance issues. For example, the CFMEU felt that a regulator could be effective
in dealing with non-compliance of employee entitlements:
So often
industrial disputes do have a linkage through to a lack of compliance. I am
telling you that in this industry the bulk of disputes are non-compliance
disputes. If you had a strong commission which could say: Hang on. Hold your
horses. Get everyone back to work for a week or two. Im sending people out
there to fix all this up. Lets report back in a weeks time to see if all
these moneys are paid, you would head off a lot of disputes. We do not want
workers to have to walk out and lose money just trying to be paid their
entitlement. If there were another decent enforcement mechanism then we would
love it and our members would love it.[511]
1.133
The Democrats are generally in favour of
improving law enforcement, however we do not believe that an industry specific
regulatory body is the best use of resources. While many submissions and
witnesses supported the creation of the proposed Australia Building
Construction Commissioner, when asked if they would support an industry wide
regulator with a focus on the building and construction industry, the majority
were supportive.
National Workplace Relations Regulator
1.134
Complaint statistics from the OEA show that from
1997-2001, 44% of complaints regarding freedom of association, coercion in
certified agreement making, right of entry for union organisers, and strike
pay, were from industries other than the BCI.
1.135
The OEA have stated that much of the conduct
reported to them is outside the jurisdiction of the OEA and therefore they are
unable to assist complainants.
1.136
Evidence would suggest that improvements to
current industrial relations mechanisms would benefit all industries. John Robertson from the Labor Council of NSW said that:
Some of the instances of non-compliance that
exist in this industry, in terms of employment related matters, would probably
be in existence in a whole range of other industries as well. It begs the
question: do you set up something specifically for this industry or more broadly?[512]
1.137
There are detractors to a workplace relations
regulator who would argue that there are bodies that already exists that can
deal with these issues, but as Dr Buchannan pointed out the other bodies are not verse
in labour market function:
I think the ACCC and ASIC are not equipped
to understand how labour markets function, and they would be very blunt
instruments for achieving your ends. They might get a very healthy compliance
with the commercial law but actually miss the main story.[513]
1.138
The Democrats believe that there has been enough
evidence before the Senate and Indeed the Workplace Relations, Employment,
Education and Training Committee, via Bills such as Workplace Relations Amendment (Codifying Contempt offences) Bill 2003,
Workplace Relations Amendment (Compliance
with Court and Tribunal Orders) Bill 2003, Workplace Relations Amendment
(Secret Ballots for Protect Action) Bill 2003, to support the need for an independent National
Workplace Relations Regulator.
1.139
In both the Workplace Relations Amendment (Codifying
Contempt offences) Bill 2003, and Workplace Relations Amendment (Compliance
with Court and Tribunal Orders) Bill 2003, I argued for the creation of a
national Workplace Relations Regulator as a more effective means of dealing
with non-compliance and issues on contempt as opposed to implementing new
draconian laws.
1.140
As many witnesses pointed out a regulator would
have to be independent and regulate both employers and
employees. For example, Professor McCallum observed that the
proposed ABCC was not symmetrical and appeared to focus just on
enforcement of the unions:
I was the principal executive officer of the
Fraser
governments industrial relations bureau, so I have some experience in these
types of agencies. That body [proposed ABCC] seems to me to focus very much on
employee and trade union conduct. I think if you wanted to improve that body
and make it more symmetrical, you would give it the power to enforce wages and
other employee entitlements against recalcitrant employers. I know that would mean
transferring some staff from the Office of the Employment Advocate and the
industrial inspectorate, but it would at least give that body a symmetrical
approach. In industrial relations there needs to be a balance, and legislation
which is not balanced either does not pass through the parliamentary process or
does not operate very well at all.[514]
1.141
Also Dr Buchanan argued that the regulator would have to have
a broad agenda:
I have no problems with regulations and
regulators at all. The key questions are: what are they regulating and what are
the principles guiding their interventions? For me, that is what has to be
thought about more broadly because, as it is defined here, it is not a very
broad agenda of issues.[515] . It should look at all aspects of the problem,
not simply focus on the IR aspects narrowly defined.[516]
1.142
Labor Council Secretary John Robertson also notes that the regulator must be
adequately funded:
You can put all the laws you like into
place, but if there is no commitment to properly fund the operations of these
entities then frankly they are not going to succeed. It would be fair to say
that they have been wound back to such an extent that they are all but
ineffective.[517]
1.143
What the regulator would look like need careful
consideration and consultation. Importantly the regulator would have to be
independent, act as an even-handed enforcer on both the employer and union
sides, and have the ability to investigate and work side by side with other
bodies such as ASIC, ATO and the ACCC.
1.144
One model could see the regulator paired with
the AIRCs tribunal, as happens with the ACCCs tribunal and regulator. The CFMEU argued that a regulator would need
to be independent and seen to have credibility. The CFMEU argued that being a
part of the AIRC would achieve this:
We certainly support much stronger
regulation than presently exists, whereby laws are enforced. I do not mean new
prescriptions. There are enough prescriptions. I believe that the laws are
there already and that what we need are better enforcement mechanisms. I am
aware of the debate that is running in this area as to whether it ought to be a
body that is specific to one industry or whether it ought to be a body that
covers all industries and has a link with the AIRC. I very much support that
approach. There ought to be a strong regulatory body linked to the AIRC.[518]
There ought to be a strong regulatory body
linked to the AIRC[519] . A model that is attached to the AIRC
where the people who have been appointed to that quasi-judicial body or
whatever it is are independent of the government of the day, where they cannot
be pulled this way or that by what the minister of the day might think, whether
it be Liberal, Labor or another, and where they do their job without fear or
favour because they are part of that independent structure.[520]
1.145
There are historical difficulties that have to
be worked through. For example, until
1957 or thereabouts the Arbitration Commission was the Commonwealth Court of
Conciliation and Arbitration. That was
until the High Court in the Boilermakers case found its functions of law-maker
(awards) conflicted with its role enforcing those laws. The difference between
the ACCC and the AIRC is that the AIRC has judicial authority and the ACCC does
not.
1.146
However the industrial relations landscape has
changed since this time. Such a model
would also need to introduce safeguards and overcome concerns regarding civil
liberties.
1.147
What is attractive is a one stop shop on
Industrial Relations matters, with powers to enforce current IR law (in all
industries), provide advice on law, provide options, assist in arbitration,
collaborate and refer matters to other agencies (ACCC, ATO, ASIC, and Police),
and provide education on workplace relations law.
1.148
Mr Christodoulou
from the Labour Council of NSW argued the need for a one-stop-shop for
employment related matters:
There is non-compliance with respect to
WorkCover premiums, where employers underestimate the number of workers they
need to insure. There is non-compliance with respect to payroll tax, and that
is a big issue. There is sometimes also non-compliance with respect to
Australian taxation generally. What we are coming to is that if there were to
be a ramping up of compliance, it ought be not only with respect to things such
as breaching an award or non-payment of superannuation but also the whole gamut
of issues for which employers have obligations. If an employer is cheating on
payroll tax, it does give him a competitive advantage over employers who do
not. What we are after is a level playing field at the end of the day. We do
not want to have one employer being able to win contracts on the basis of
illegal activity, whether it is the non-payment of taxation, breaching awards
or setting up sham subcontracting arrangements. I think compliance is not just
limited to whether you breach awards or industrial agreements; it has to cover
all employment related laws and, at the moment, we do not have a one-stop shop
for that type of thing. [521]
1.149
The ideas are in embryonic stage and would need
to be researched further.
Recommendation 6 -
Regulator
Oppose the creation of the Australian Building Industry Commissioner
Establish an independent National Workplace
relations Regulator
Appointments
on merit
1.150
The Democrats believe for a National Workplace
Relations Regulator to be truly independent and to be seen to have
creditability it is important that the appointment of the board and the chair
should be based on merit.
1.151
The Democrats are long been concerned to ensure
that wherever appointments are made to the governing organ of public
authorities, whether they be institutions set up by legislation, 'independent'
statutory authorities or quasi-government agencies, that the process by which
these appointments are made is, and is seen to be, transparent, accountable, open
and honest.
1.152
At present, there is a widespread public
perception that Government appointments result in patronage to handsomely
remunerated positions. This perception can damage the reputation of these
bodies, as in the public eye they are then seen as being controlled by persons
who lack the appropriate independence and who may not be as meritorious as they
might be. Labor and the Coalition Government have rejected Democrats'
amendments to ensure that appointments are made on merit 22 times so
far!
1.153
One of the main failings of the present
'system', is that there is no empirical evidence to determine whether the
public perception of jobs for the boys is correct, as these appointments are
not open to sufficient public scrutiny and analysis;
It is still the case that appointments to statutory authorities are left
largely to the discretion of the Minister with the relevant portfolio
responsibility. There is no umbrella legislation that sets out a standard
procedure regulating the procedures for the making of appointments;
1.154
Perhaps most importantly, there is no external
scrutiny of the procedure and merits of appointments by an independent body.
1.155
This issue was extensively investigated by a
Committee appointed by the United Kingdom Parliament, which in 1995 set out the
following principles to guide and inform the making of such appointments:
-
A Minister should not be involved in an
appointment where he or she has a financial or personal interest;
-
Ministers must act within the law, including the
safeguards against discrimination on grounds of gender or race;
-
All public appointments should be governed by
the overriding principle of appointment on merit;
-
Except in limited circumstances political
affiliation should not be a criterion for appointment;
-
Selection on merit should take account of the
need to appoint boards which include a balance of skills and backgrounds;
-
The basis on which members are appointed and how
they are expected to fulfil their roles should be explicit;
-
The range of skills and backgrounds which are
sought should be clearly specified.
1.156
The UK Government fully accepted the Committee's
recommendations. The office of Commissioner for Public Appointments was
subsequently created (with a similar level of independence from the Government
as the Auditor General) to provide an effective avenue of external scrutiny.
What needs to be done in Australia?
The Democrats' Charter of Political Honesty Bill should be enacted. The Bill
is currently before a Senate Committee and proposes mechanisms to promote appointments
on merit, along with a range of other accountability reforms.
1.157
Despite the efforts of the Democrats in the
Senate, Labor and the Coalition have ensured that we in Australia
lack not only the external scrutiny mechanism in the form of a Commissioner for
Ethics, but more fundamentally we do not have even basic procedural safeguards.
Such an independent body should be established as soon as is possible.
1.158
The first task of this body would be to develop
a code of practice for public appointments that is intended not to act as a
mere "guideline" to the Government in making appointments, but to
regulate by law the way in which a Minister exercises the power of appointment.
1.159
Further, every piece of legislation relating to
the constitution of public authorities should contain standard clauses setting
out how appointments to the authority are to be made and affirming the
jurisdiction of the external review body to examine those appointments. General
principles for appointment would include merit, independent scrutiny of
appointments, probity and openness and transparency.
1.160
When considering appointments, Ministers must
also be obliged to give fair consideration to the impact of the particular
appointee on the overall complexion of the Authority. This provision is aimed
at ensuring "capture" of the Authority by any particular interest
group cannot occur. It is essential that Boards are genuinely representative of
the inevitably divergent views of those groups affected by their actions.
1.161
The public must have trust and confidence that
the Government will not allow improper or irrelevant considerations or
political interests to influence public appointments. The structures that we
recommend be instituted to regulate these appointments would make it very
difficult for any Government to make an appointment that was not based squarely
on merit.
1.162
Appointment on merit provisions would be a must
to include in any legislation to establish a National Workplace Relations
Regulator, if the regulator is going to have any credibility and sense of
independence.
Recommendation 7 Appointments on Merit
-
Merit
based appointment provisions be included in any legislation created to
establish a National Workplace Relations Regulator.
Penalties
1.163
The Cole
Royal Commission recommended significant increases in penalty provisions for
the Building and Construction Industry to act
as deterrent and ensure greater compliance of Workplace Relations law.
1.164
As noted in the Bills Digest:
Compared to
the Workplace Relations Act, the Bill
introduces significantly greater financial penalties for non-compliance (for
employers and workers), provides for imprisonment for failure to provide
information to the ABCC or for obstructing the ABCC or a Federal Safety
Officer, and allows for de-registration for failure to comply with court
orders. As well as introducing a wider range of civil and criminal offences in
the building and construction industry, it also lowers the hurdles for
establishing that such offences have been committed.
1.165
There is some support from the federal Court for
increasing offence penalties. In imposing the maximum fine of $500 under
section 301(e) of the Workplace Relations Act against a union organiser for
improperly influencing and coercing a site manager, a magistrate criticised the
inadequacy of the penalties provided, arguing that it did not reflect the
severity for this type of offence.
1.166
The Democrats believe that increasing penalties
under the Workplace Relations Acts would act as a deterrent to non-compliance.
However we think that the Governments move under the BCII Bills to increase
penalties ten fold is ridiculous and could as the Bills digest notes have the
opposite effect and could instead lead to wides spread industrial disruption
and public demonstrations. We have already rejected the government's attempts
to include provisions to deregister union officials for failing to comply with
court orders.
1.167
The opportunity for the Government to increase
Part XI-offences penalties under the Workplace Relations Act, was available
when the Democrats support 3 fold penalty increases proposed in schedule 2 of
the Workplace Relations Amendment (Codifying Contempt offences) Bill 2003.
However the Government in the end did not accept the Democrats amendments. The
Democrats also moved additional amendments to increase penalties at section
178. As I said in my second reading speech to that Bill,
we would prefer to see an increase in penalties at section 178 rather than
support the government's proposal to criminalise contravening an order of the
commission.
Recommendation 8
Increase penalty provisions 3 fold in the
Workplace Relations Act to act as a deterrent to facilitate greater compliance.
AIRC
1.168
As noted above, the WR Act 1996 has essentially
limited the powers of the AIRC to prevent and settle disputes via conciliation
and arbitration and to enforce the rights of parties to a dispute. An unintentional consequence is that the
emphasis is now on the courts to resolve disputes, which is often not timely
and is costly. Some commentators have
argued that it is the reliance on courts that is fuelling the collusion that
occurs in the industry, because it is more commercially expedient to make a
deal.
1.169
The Labor Council of NSW argued that greater
power needs to be given to the AIRC to intervene in agreement making:
The only
reform we think is absolutely necessary is to give the Australian Industrial
Relations Commission the same powers that exist under the New South Wales act. Here in New South Wales the act provides for broad-ranging powers
with respect to the making of awards. It allows the commission to intervene in
disputes. We think that is one of the missing factors in the Australian
Industrial Relations Commission. Beyond that, we think if those powers were in
the federal act that would make for a better industrial relations system and
one where there would be more certainty around disputes et cetera.[522]
1.170
Professor
McCallum also advocated for greater
involvement of AIRC in agreement making:
A more
flexible approach to bargaining, particularly with project agreements and
sectoral agreements and, where appropriate, use of the Australian Industrial
Relations Commission, is likely to give you better results.[523]
1.171
The Democrats have also expressed concerned in a
number of Workplace Relations Bills before the Senate of later, about the
ability of the AIRC to intervene in disputes.
1.172
While we support greater enforcement and
compliance, we also believe that there needs to be appropriate and effective
mechanisms for conciliation and arbitration as the preferred method to resolve
disputes.
Recommendation 9
-
Provide
the AIRC with powers to make 'good faith' bargaining orders;
-
Increase
the capacity for the AIRC to resolve disputes on its own motion and increased
resources to ensure timely resolution of disputes;
-
Remove
limits on the subject matters on which the Australian Industrial Relations
Commission can make determinations.
Whistleblower
1.173
Lawlessness, corruption and thuggery identified
by the Cole Royal Commission surely cannot be properly addressed without
whistleblower protection mechanisms in place.
Impropriety will only be uncovered if the people in a position to reveal
it are genuinely protected, and compensated where appropriate.
1.174
Over the last decade the Australian Democrats
have campaigned for strong whistleblower protection laws in both the private
and public sectors.
1.175
There were a number of submissions and witnesses
that identified a need for
whistleblower protection. For example, the CFMEU stated that:
We have a number of
decisions at the Industrial Relations Commission which demonstrate that workers
who have raised concerns over occupational health and safety or have taken a
legitimate but active role within their trade union have faced dismissal. That
has been borne out and demonstrated.What I wanted to say was that, if that is
indicative of what happens in areas where we have coverage of workers, we have
little doubt although we do not have first-hand knowledgethat there are
probably executives and management people in building companies who are aware
of matters which may be in the public interest to expose. From the experience
we have of the way that building workers are treated for raising concerns over
safety or legitimate union issuesand we have had demonstrated cases where
those people have been dismissed and discriminated against it is likely that in
other areas of the building sector and, indeed, in private industry generally,
that sort of thing goes on. The unions view, I think, is that whistleblowers
in that circumstance who are performing a legitimate public duty ought to be
entitled to some protection under the law.[524]
1.176
ECA in their submission also argued for
whistleblower protection:
ECA believes that effective whistleblowing provisions are
essential for the proposed legislation to succeed. Presently the industry is caught in a
systemic cycle of almost a tit for tat style of reprisal against anyone who
rocks the boat and speaks to authorities with regard to any wrong doing in the
industry. If a contractor does make a stand against a union, they are likely to
find themselves blacklisted by the union when tendering for work. That is, the union will apply pressure to the
principle contractor/developer to ensure that the contractor in question does
not win work. Should they be lucky
enough to win a project, then they will find that the project will be disrupted
routinely with frivolous safety issues.
In the eyes of most contractors in the building and construction
industry industrial harmony is worth more than doing the right thing and
standing up to coercion and intimidation. As ECA has mentioned earlier in this
submission, the industry requires a shift in its culture and its thinking for
the recommendations of the Cole Royal Commission to be successfully
implemented. This can only occur if all stakeholders
are comfortable with the levels of safety that are provided to them should they
decide to come forward with information pertaining to lawlessness or
criminality. These safeguards will be
even more important if the legislation remains in tact to the point where
supplying information to the Building and
Construction Industry Commissioner is compulsory in certain circumstances.[525]
1.177
An effective whistleblower protection scheme
serves the public interest by exposing and eliminating fraud, impropriety and
waste. This is especially topical in the
private sector, given the giant corporate collapses of WorldCom, Enron and HIH,
and in the public sector with alleged government involvement in the sexing up
of intelligence reports to encourage war in Iraq.
1.178
If you are fighting criminality or corruption in
the workplace you need to encourage disclosure in the public interest. Public sector disclosure laws are quite
effective in the States and Territories, but are effectively absent in the
Federal arena. And private sector
disclosure laws are effectively non-existent.
Witness protection schemes are a poor substitute for disclosure laws.
1.179
There have been useful private sector
initiatives aimed at self-regulation.
The commercial world has come to realise that encouraging whistleblowing
reduces impropriety and increases productivity.
1.180
In the last few years, major audit and
accounting groups such as Deloitte Touche Tohmatsu, Ernst & Young, Pricewaterhouse
Coopers and KPMG have established procedures
that allow employees to blow the whistle anonymously to auditors on corporate
fraud, corruption or theft.
1.181
The Australian Stock Exchanges Corporate
Governance Council recommends that listed companies provide mechanisms for
employees to alert management and the board to misconduct without fear of
retribution.
1.182
Whistleblowers show great courage in exposing
the corrupt and the improper. It is a
sad fact that the law still offers them little real protection. Victimisation, exclusion, harassment and
derision are all too common experiences for whistleblowers.
1.183
Law is needed to establish and enhance the legal
rights of whistleblowers, and authorities receiving information must be
discreet and wherever possible, maintain the whistleblowers anonymity.
1.184
Whistleblowers perform a valuable and essential
public service. Without them, much
corruption and impropriety would go undetected.
Whether its unions, churches, corporations or governments, people need
to feel able to come forward when they encounter wrongdoing.
1.185
We have introduced whistleblower protection
legislation for debate in the Federal Parliament, for example I have introduced
a private members Bill Public
Interest Disclosures (Protection of Whistleblower) Bill.
Despite strong and generally
unanimous Senate pressure, certainly since 1994, successive federal governments
have shown a reluctance to embrace this principle and to establish
comprehensive protection for whistleblowers.
1.186
Persistence has resulted in a small break
through with the Government including whistleblower provisions (and accepted
amendments to the provision) in the CLERP (Audit Reform and Corporate
Disclosure) Bill 2003. The amendment
will only apply to corporate organisations. This will assist in improper
corrupt or unlawful conduct being uncovered if people in a position to reveal
it are genuinely protected and compensated.
1.187
Our view is that these protections should be
extended to other participants in the BCI registered organisations and
unincorporated associations, if we are want to encourage people to come forward
and reveal non-compliance with the law.
Recommendation 10
-
Insert
Whistleblower provisions in the Workplace relations Act 1996
Other Key issues Impacting on Building and Construction Industry
Training and skill development
1.188
As
noted in Chapter 7 of the Majority report, the Committee heard a lot of
evidence that training and skill development was a critical issue for the
building and construction industry. And that adequate skill level was
critical to the efficiency and productivity of the industry. The Democrats
support the points raised in chapter 7 of the Committee majority report and
believe that training and skill development in the industry should be a key
priority of the Government as a way to improve productivity and efficiency and
ensure that skills are not further eroded.
Work arrangements
1.189
According to Buchanan and Allan
(2000), the construction industry has long been recognised as having
distinctive employment relationships and that in the English speaking world the
industry is often characterised by high levels of contractor and subcontractor
employment[526].
Although in France
for example the proportion of workers with less than standard employee status
is approximately 10 per cent, compared to approximately 45 per cent in the UK
and 35 percent in Australia[527].
1.190
Buchanan and Allan
go on to argue that:
The comparatively high level of sub-contracting and especially
informal (ie black economy) activities in the Australian and UK industries have
meant high levels of tax avoidance, if not complete evasion, have been a
feature of this sector.[528]
1.191
Buchanan and Allan
estimate that the in the mid 1990's the average construction worker payed
around $6,000 a year less than equivalent PAYE workers. They estimated that
losses in tax revenue could be up to $2.2 billion annually.
1.192
Buchanan and Allan
reported that the contracting system resulted in a deterioration in key
features of the industry, including falls in productivity/building quality;
safety standards on sites; and commitment to skill formation.
1.193
Buchanan and Allan
report that similar dynamics as to what we are seeing in Australia
got so advanced that the Conservative UK Government was forced to take remedial
action. Interestingly the campaign began by looking at a series of cases
concerning dismissals, redundancy and safety rights for contractors. According
to the authors:
the UK
government found that nearly all cases conducted established that the workers
were in fact employees, despite the fact the Inland Revenue treated them
differently.[529]
1.194
In 1996 the UK Government announced to the
construction industry that all contractors would be obliged to review the
employment status of their workforce, eventually setting deadline for the
review the penalty for not making the deadline was liability of paying back
taxes from that date on. Buchannan and Allan
report that the Inland Revenue claims 200,000 workers subsequently went back to
PAYE tax status.
1.195
In his submission to the Cole Royal Commission, Professor
Stewart argued that they way to deal with
the increase in disguised employment is by a redefinition of the term
employment. Professor Stewart
argues that:
There are many genuine contractors who quite clearly run
business of their own and provide services to a range of different clients.
They are not the concern. Rather, the concern lies with the "dependent
contractors" who make up at least a quarter of all "self
employed" contractors (and probably much higher in the building and
construction industry) and who as a matter of practical reality are often
distinguishable from employees.it is important to adhere to the principle that
it should no be lawful to contract out of protective regulation. If a contract
to pay an employee less than applicable award conditions or to deny them leave
entitlements is illegal and unenforceable, why should it be lawful to do the
same thing through the device of a delegation clause or an interposed entity
even if the worker freely consents?[530]
1.196
Professor
Stewart argues that:
The alienation of personal services income legislation has reduced
the tax incentives for some workers to agree to be hired as an independent
contractor rather than as an employee, or to operate through an interposed
entity such as a personal company, partnership or family trust. However these
provisions to not deems such a worker to be an employee, nor in any way affect
the incentive for business to persuade workers to contract in this way.[531]
1.197
Professor
Stewart also cites the advances that
legislation is some jurisdictions (News South Wales, Queensland
and lesser extent Commonwealth)
that permit workers who are categorised by law as contractors to complain about
the fairness their work arrangements. However, Stewart
argues that they are piecemeal and that a more effective response is to tackle
the problem at the source - the common law definition of employment itself. Stewart
stated that:
What is needed is to adopt a standard or model definition of
employment that can be included in any legislation where it is considered
necessary to apply obligations or extend entitlements to or in respect of those
who work for someone else in a subordinate and dependent capacity, but not
those who are genuinely in business in their own account.[532]
1.198
The Democrats adapted Stewarts
proposed definition of employee
1.199
One would assume that the government would
support such an amendment as the federal system has always supported access to
genuine employees so it should have no objection to provisions that ensure
genuine employees are captured by the unfair dismissal system. To further make
my point, you cannot at one level deem an employee for tax purposes and then
for workplace relations purposes exclude them.
1.200
However, it appears that despite the Government
placing a lot of emphasis on productivity of the building and construction
industry and the need to address what the econtech report referred to as
'restrictive work practices', yet have failed to look at the potential impact
that non-genuine contracting may be having on the productivity of the industry.
Recommendation 11 Definition of employee
-
The
Government consider legislating a definition of employee into the Workplace
Relations Act 1996.
1.201
The CFMEU made several recommendations to deal
with Labour hire, that are also worth consideration:
In relation to
subcontracting and labour hire, we suggest
that
section 127A of the Workplace Relations Act be amended to ensure that bona fide
contractors have recourse to effective remedy in situations where contracts are
unfair; that the act be amended to include labour hire agencies within the
definition of employer in section 4;
that a
comprehensive national licensing regime be introduced for the labour hire
aspect of this industry; and
that
OH&S laws be amended to guarantee both the client/employer and labour hire
company are responsible for OH&S of labour hire workers.[533]
Employee Entitlements
1.202
The Committee received evidence that
underpayment or loss of employee entitlements was rife in the Building
and Construction Industry as was indirectly and directly responsible union
anxiety and 'action' against employers. According to the CFMEU:
The building industry suffers from chronic under/non-payment of
workers entitlements. A great deal of
the unions time and resources is devoted to recovering these monies. The following are gross figures for the sum
of entitlements recovered on behalf of workers by our corresponding State
Branches in recent times.