Preface
This is the committee's fourth report relating to the
building and construction industry since 2004. In 2004 the committee undertook
a wide-ranging inquiry into the construction industry in the light of recommendations
of the Cole royal commission. In considering whether there was a need for separate,
industry-specific legislation for the building and construction sector, the 2004
inquiry also considered broader issues relating to the nature of the industry;
its unique operational characteristics and culture. Later inquiries, including
this one, have focussed on examining specific legislation, and the committee
has not had the opportunity to revisit the broader issues facing this industry in
any comprehensive way. The committee believes that these broader issues remain relevant
today, as highlighted in the report to the government by Mr Wilcox[1],
and require a brief mention here.
While this report examines the provisions of the Building
and Construction Industry Improvement
Amendment (Transition to Fair Work) Bill 2009, the committee majority reminds
the Senate that many of the issues which characterise the building industry cannot
be addressed by legislation alone.[2]
The Australian Building and Construction Commission (ABCC), established under
the Building and Construction Industry Improvement Act (BCII) has taken a
narrow view of its role and has not sought to remedy all the unacceptable
practices which occur in the industry. This has resulted in a perception that
the ABCC is interested only in protecting employers against union 'aggression'
rather than safeguarding the interests of all stakeholders in the industry.
This is a tough industry with tough players, working in a
physically demanding and inherently risky work environment. Pressures are linked
to cost structures, profit margins and sensitivity to economic cycles. The building
and construction industry is underscored by commercial imperatives which drive
tensions in industry relationships. These tensions are more likely to spill
over into the industrial relations arena in this industry than in other
industries. The industry is highly competitive with contracts largely
determined by price. In the 2004 inquiry, the committee observed how commercial
pressures resulted in reduced compliance with workplace entitlements and
occupational health and safety (OH&S) regulations, which creates workforce
tensions. Business practice, determined by fluctuating rhythms of construction
activity and the temporary nature of construction sites has led to the use of
extensive subcontracting rather than direct employment of labour by principal
contractors. Securing payments is complicated by this hierarchical employment system.
As a result this industry has seen the use of sham corporate structures to
avoid legal obligations and evasion or underpayment of taxation. The attitudes
of the workforce are influenced by these characteristics.
It was unfortunate that the ABCC was established for the purpose
of curbing the militancy of building unions. In the view of the government of
the day, this was believed to be the main, if not the sole-source of the
building industry's problems. Few of the industry characteristics listed above
appear to have had a bearing on the initial or continuing rationale for
separate legislation. The committee majority makes the obvious point that 'fixing'
the problems in this industry cannot be reduced to a simple formula of 'fixing'
the conduct of industrial relations by legislation.
Although it concentrated on union behaviour, the Cole royal
commission unearthed a wealth of evidence regarding unacceptable practices by employers,
including the use of phoenix companies, tax avoidance, evading payment of
workers entitlements, and disregard for OH&S rules. The committee majority is
concerned that the focus of ABCC investigations continues to be on employee
organisations rather than on broader problems bearing on workplace conduct. It
notes the more recent observations of Professor David Peetz that employer
compliance is not without its problems:
...There is no reason to believe the building and construction
industry would have no problems of employer compliance and indeed an exercise
by the Sydney Office of the Workplace Ombudsman found 31 per cent
non-compliance in the NSW construction industry, even though inspections were
restricted to head offices and no building worksites, where breaches could be
expected, were visited (Workplace Ombudsman 2009c). Yet most actions taken by
the ABCC against employers are for cooperation with unions that are seen to be
in breach of the law, rather than for unfair treatment of employees.[3]
To this end the committee majority welcomes the expanded
role of the Office of the Fair Work Building Industry Inspectorate to ensure
compliance with safety net contractual entitlements.
The building and construction industry is enormously
important to the economic, social and environmental fabric and its many
achievements can be celebrated. The committee majority accepts there is still
work to do to improve practices and culture in the sector to ensure the
industry fosters cooperative and harmonious workplaces. In view of the
prevailing focus of ABCC activity this cultural change has been difficult to
achieve.
As noted in previous committee reports, genuine and broad
reform can only succeed through collaboration with states/territories and
through consultation with all stakeholders. To take an example, OH&S has
been identified as one of the critical issues for the industry. It remains a
source of workplace tension and dispute.
The Minister for Employment and Workplace Relations has
emphasised the need for a new focus on cultural change in the workplace, to
build partnerships between management and workers and their unions to benefit
all.[4]
This desire for greater collaborative and cooperative relationships in the
building and construction industry to address issues like OH&S, skills
development and productivity was stressed in evidence to the committee.[5]
The building and construction industry is treated
differently to other industry sectors on the basis that it is more prone than
other industries to industrial disputes. The committee majority notes, however,
Australian Bureau of Statistics data which shows the building and construction
industry conforming to the industry-wide reduction in industrial disputes. The
amount of this reduction directly attributable to the BCII Act and ABCC is a
matter of conjecture.
Regarding the alleged lawlessness and criminality in the
sector, importantly, it is not criminal activity that is being addressed by the
coercive powers held by the ABCC which are to be retained under this
legislation. This point is recognised by employer groups[6]
as well as unions.[7]
The ABC Commissioner has no power regarding the general criminal law as it
might apply in the industry. The ABCC is primarily responsible for
investigating civil breaches of federal industrial law.[8]
There are criminal laws and police to deal with criminal activities. The strong
coercive powers are usually reserved for serious crime, not arguments on
building sites and potentially minor breaches of industrial instruments. The
committee majority understands that the coercive powers impinge on civil
liberties and that their use should be limited to circumstances where there is
an overwhelming public interest. With the exception of the coercive powers,
construction workers should soon join other workers in being regulated by the
Fair Work Act (FW Act) on most matters. In this regard, the committee majority
points out that more than half of the court cases in which the ABCC
successfully obtained penalties were brought under the WR Act (now FW Act) alone.
The committee majority welcomes the introduction of
additional safeguards in the legislation. This was recommended in the
committee's last report in 2008. It notes with disappointment that the early
introduction of these safeguards by the government was prevented by the
Coalition in June 2009. While supporting the increased safeguards it maintains
its in-principle objection to separate legislation for one sector of the
workforce when it deprives employees of the rights they enjoy in other
occupations. Whatever particular issues remain in the building and construction
industry, they should be dealt with under the same law that applies to any
other industry. The committee majority believes there needs to be a strong and
effective enforcement and investigation regime that applies across all
industries. The coercive powers should not have a continuing role in the
enforcement of workplace laws. The ultimate goal must be the regulation of the building
and construction industry under the same laws as the rest of the workforce.
This bill is the next step in this process. The committee majority recommends
that the bill be passed.
Senator Gavin Marshall
Chair
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