COALITION SENATORS DISSENTING REPORT

Introduction

1.1        Coalition Senators completely reject the government's claim that the Building and Construction Industry Improvement Bill (Transition to Fair Work Bill) 2011 delivers 'a tough cop on the beat in the construction sector'.[1] Coalition Senators – as expressed when this Bill was first presented to the Parliament in 2009 – were fearful that this Bill would turn the Australian Building and Construction Commission into a toothless tiger. Along with Labor's last minute amendments, it is now clear that this Bill will ensure that it will now be a toothless mouse suffocating in red tape.

1.2        Coalition Senators draw attention to the Coalition Senators Dissenting Report to the Senate Education, Employment and Workplace Relations Committee's 2009 inquiry into the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009. This report should be read in conjunction with that Dissenting Report.

Evidence

1.3        Coalition Senators find it deeply concerning that the majority did not see fit to allow the former Australian Building and Construction Commissioner, John Lloyd, who made a submission in his role as a Director at the Institute of Public Affairs, to appear at the public hearing.

1.4        Coalition Senators note that the Government Senators quote comments of Mr Wilcox and Professor David Peetz and the Combined Construction Unions on the credibility of reports conducted by KPMG, Econtech and Independent Economics outlining the benefits of the ABCC to the Australian economy.

1.5        These unworthy comments should be viewed in the context that the current Labor Government actually commissioned KPMG and Econtech to conduct the report, Measuring the Impact of the Productivity Agenda.[2] Labor cannot have it both ways.

1.6        Professor Peetz from Griffith University has previously been exposed as having strong links with the union movement including doing research sponsored by the ACTU. He has been reported as being a singer in a trade union choir, and he writes poetry for the Workers Online web site, which calls him its ‘resident bard’. Here he writes tasteless and infantile material such as You’ve got to slug a worker or two, You’re fired and Downsized. Worse than that, in the aftermath of September 2001 and the World Trade Centre terrorist attacks he wrote a poem titled The Terrorist, which was published on 17 September and which included a verse about a terrorist telling the President of the United States:

Yes, evil will be overcome by good, but sir, you see,

I know you are the evil one, and good is on my side!

You are the force of Satan—and that is why I died.

The Cole Royal Commission and the Wilcox Report

1.7        Coalition Senators are concerned by misguided views of Government Senators in relation to the Cole Royal Commission. One Labor Senator accused the Cole Royal Commission of being a 'biased political operation'.[3]

1.8        An eminent Australian, the Honourable TRH Cole RFD QC was appointed by the then Government to conduct the Royal Commission. The Terms of Reference were wide in scope and Coalition Senators are of the firm view that the Terms did not unfairly target unions, employers or employees:

(a) the nature, extent and effect of any unlawful or otherwise inappropriate industrial or workplace practice or conduct, including, but not limited to:

(i)any practice or conduct relating to the Workplace Relations Act 1996, occupational health and safety laws, or other laws relating to workplace relations; and

(ii)fraud, corruption, collusion or anti-competitive behaviour, coercion, violence, or inappropriate payments, receipts or benefits; and

(iii)dictating, limiting or interfering with decisions whether or not to employ or engage persons, or relating to the terms on which they be employed or engaged;

(b)the nature, extent and effect of any unlawful or otherwise inappropriate practice or conduct relating to:

(i)failure to disclose or properly account for financial transactions undertaken by employee or employer organisations or their representatives or associates; or

(ii)inappropriate management, use or operation of industry funds for training, long service leave, redundancy or superannuation;

(c)taking into account your findings in relation to the matters referred to in the preceding paragraphs and other relevant matters, any measures, including legislative and administrative changes, to improve practices or conduct in the building and construction industry or to deter unlawful or inappropriate practices or conduct in relation to that industry.

1.9        Coalition Senators point to the difference between the 23 volumes of the Final Report of the Cole Royal Commission, and Mr Wilcox's 130-page report. This is a simple but telling example of the flawed justification behind Labor's attempts to abolish the Australian Building and Construction Commission and exposes accusations by Labor Senators as ideological, not substantive.

1.10      Labor uses a report written by the Hon. Murray Wilcox QC, who has been reported as calling the Howard Government as an 'elected dictatorship'[4], to abolish the Australian Building and Construction Commission. Coalition Senators trust the thoughtful and voluminous evidence of the Royal Commission over a 130 page report written by a Labor mate.

1.11      Despite the bias and political leaning, even Mr Wilcox was struck by the evidence of ongoing violence and intimidation in the industry. His report made it clear that there is still work to be done:

The ABCC's work is not yet done. Although I accept there has been a big improvement in building industry behaviour during recent years, some problems remain. It would be unfortunate if the inclusion of the ABCC in the OFWO led to a reversal of the progress that has been made.[5]

The national interest

1.12      The benefits brought to the industry and the economy by the BCII Act and the ABCC are well accepted. The 2012 Independent Economics report[6] explained that higher construction productivity leads to lower construction prices, which flow through to savings in production costs across the economy. The report highlighted the following benefits of earlier reforms for the national economy:

• that the Consumer Price Index is 1.2 per cent lower than it otherwise would be;
• GDP is 1.5 per cent higher than it otherwise would be;
• the price of housing fell by 2.2 per cent; and
• consumers are better off by $5.9 billion on an annual basis in 2011-12 terms.[7] 

1.13      Employer groups have expressed concern that the proposed changes may drive up construction costs and threaten billions of dollars of government-funded infrastructure projects. The Australian Mines and Metals Association (AMMA) warned that the expected changes to behaviour in the industry after the ABCC ceases to operate will affect investment in major projects. The AMMA submission explained:

Key decision makers within member companies, as part of the due diligence process, will consider what the likely industrial relations environment will be for their project and in the absence of strong laws and an adequate enforcement body, it is likely that the concern about the industrial environment will increase and impact on investment decisions.[8]

1.14      Coalition Senators agree with the Australian Industry Group that:

Unless a strong, well-resourced regulator and strong legislation is maintained, the risks associated with industrial lawlessness will again be priced into construction contracts, at great cost to project owners, including governments, and the Australian community.[9]

1.15      And:

Whilst behaviour has changed significantly since the ABCC was introduced, there are many indications that the industrial environment is deteriorating in the industry. Watering down protections for the industry and the community, at this time, would send entirely the wrong message to those who engage in unlawful or inappropriate behaviour.[10]

1.16      It is important to note that the Committee received submissions from both the West Australian and Victorian Governments. The Victorian Government strongly asserted that the abolition of the ABCC would have a profoundly negative impact on the community:

The Victorian Government considers that the changes proposed in the Commonwealth Bill will risk an escalation of industrial unrest and loss of the progress that has been made in improving the culture and productivity of the building and construction industry. The costs of this would ultimately be borne by the community as a whole.[11]

1.17      The West Australian Government's submission also expressed serious concerns:

Based on the demonstrated gains, facilitated by the existing regulatory and enforcement arrangements, the Western Australian Government has significant concerns that the Bill in its current form will wind back the clock and return the industry to the restrictive work practices of the past.

As was the Western Australian experience in 2001, with the former Gallop Government's abolition of the State's Building Industry Taskforce, any winding back of effective regulatory and enforcement arrangements is an open invitation to the industry's union leaders to embark on a costly disruptive campaign of fear and intimidation.[12]

Switch-off powers

1.18      The provisions in the Bill allowing for coercive powers to be ‘switched off’ do not appear in the recommendations of Justice Wilcox. The Committee was told that no industry stakeholder had made any recommendation about such a provision. Given the enormous implications of simply 'switching off' a key mechanism to deal with industrial lawlessness, Coalition senators view with alarm the inclusion of such provisions without any apparent call for them from stakeholders.

1.19      The Department's evidence was that the powers came from a request from the office of the then Minister, the Hon. Julia Gillard MP's office:

Senator ABETZ: You heard the unions on the switch-off powers. Where did that come from? The unions did not want it and the employers did not want it, yet it is in the Bill. Whose idea was it?

Mr Willing: This issue was covered quite extensively in the last hearings. The department at that point advised that it was an issue which was raised with the department by government—by the minister's office at the time. Among the technicalities is that the minister's office raised the proposal in broad terms with the department. Between the minister's office and the department, the clause as it stands was developed and implemented. Our understanding is that the minister had consultations with various people. The department was involved with some of those and there were some that we were not involved with. The department, to my understanding, was not involved in any consultations where this was raised with the minister.

Senator ABETZ: So the department did not hear anybody requesting this in their—

Mr Willing: Not in the consultations that we were involved in.[13]

1.20      Committee members are still not aware, from evidence presented, of anyone who asked for these provisions. It is deeply concerning that this part of the Bill – at the very least – appears to be politically charged and not borne out of any evidence whatsoever.

The last minute amendment

1.21      The Government circulated amendments to the Bill, after having done a backroom deal with the Australian Greens.[14]

1.22      Coalition Senators are appalled that this last minute amendment will give the green light to institutionalised corruption that goes much further than just workplace relations. It sets a corrosive precedent to the application of the rule of law in our society. It has been condemned by Victoria, NSW and Western Australia.

1.23      No regulator from the Police in any state to the Australian Securities and Investment Commission or the Fair Work Ombudsman should be stopped from taking proceedings to protect the national interest or society’s interest just because the parties have come to a commercial settlement. Labor’s Green-inspired amendment allows pay off money to flourish.

1.24      If Joe burns down Jack’s house, he should be able to be charged with arson irrespective of Joe paying Jack full compensation, plus 'a bit'.

1.25      Similarly, if an employer deliberately underpays wages, paying off the employee (and maybe a union) should not be the end of the matter. Justice demands that the offenders be able to be held to account.

1.26      Or if Josephine deliberately runs a red light and causes an accident, the payment of compensation to the victim should not be the end of the matter. Police should be able to charge Josephine with the appropriate offence/s.

1.27      This is what the law has always done– up until now.

1.28      Regrettably, we now have Greens-inspired Labor legislation which will throw this well established and entrenched legal rule out the window when it comes to corruption, graft and lawlessness in the construction sector.

1.29      CFMEU union boss, Dave Noonan, lamely seeks to justify this legislative outrage as saving taxpayers’ dollars. After all, ‘if the matter ‘settles’, why should taxes be used to prosecute’ is the argument.  This is a thinly-veiled attempt to legitimise the hankering in some quarters for the lawlessness of days past. A prime example of how this amendment would operate is from the union Mr Noonan heads. The CFMEU was involved in illegality at the West Gate Bridge. They finally settled with the contractor, John Holland Constructions. Despite settlement, the ABCC prosecuted the matter and obtained a court sanctioned record $1.325 million fine for 52 separate breaches by consent.

1.30      If this amendment proceeds, the CFMEU will be able to continue its lawlessness without fear of sanction.  Even more sobering, it will have legislative encouragement, plus the blessing of the Green/Labor government, to do so.

1.31      In this scenario big unions and big business will undoubtedly survive, lawless conduct will thrive. Coalition Senators' greatest concern is about the individual worker and sub-contractor – those whom were shown to be victimized by the Cole Royal Commission that lifted the lid on the institutionalized corruption in the construction sector.

1.32      This amendment flies directly in the face of comments from the then Minister for Workplace Relations, the Hon. Julia Gillard MP. Worse still, it directly defies what she told the Australian people prior to the 2007 election. Coalition Senators note that this is a very similar case to the infamous 'no carbon tax' promise.

1.33      Ms Gillard in 2007, prior to the 2007 election said:

We want to make sure that no one is engaged in improper conduct in the building industry, whether employer, union or employee.[15]

1.34      In Ms Gillard's second reading speech, she made her view known:

Anyone who breaks a law will feel the full force of the law.

...I am also disappointed; disappointed that there are still pockets of the industry where people think they are above the law, where people engage in intimidation and violence.[16] 

1.35      Just in case there was any doubt, she made it very clear when summing up the debate that breaches of law should feel the full force of the law:

there should be absolutely vigorous, hard-edged compliance and no tolerance at all for unlawfulness.

...Each and every breach of the law is wrong and each and every breach of the law should be acted upon.[17] 

1.36      This is yet another example where Ms Gillard has said one thing and done the exact opposite.

1.37      This travesty is the first piece of workplace relations legislation under new Workplace Relations Minister Bill Shorten. He is clearly not acting in the national interest.

Conclusion

1.38      When considering who will benefit from the abolition of the Australian Building and Construction Commission, it is glaringly obvious to Coalition senators that it is the Australian Labor Party and the Australian Greens who stand to gain, while the national interest gets put to a side. A basic look at Australian Electoral Commission electoral returns, shows the millions of dollars in donations that the union bosses give to the Australian Labor Party and the Australian Greens. Coalition Senators have observed for some years, that Labor and the Greens have been in a race to the bottom to secure election funding from the union bosses. There are genuine concerns that this Bill is simply an effort to appease the union bosses and guarantee electoral funding.

1.39      Any changes to the structure or powers of the ABCC must be based on evidence that the stakeholders in the construction industry accept the rule of common law, criminal law and workplace relations law. The Coalition believes that the development of special laws for 'bikie gangs' as an addition to criminal law provides a parallel example for the establishment and continued existence of the ABCC.

Recommendation

Coalition senators recommend that this Bill should be opposed at every step. Should it succeed, the Australian Building and Construction Commission should be urgently restored as soon as possible.

 

Senator Chris Back Deputy Chair	Senator Bridget McKenzie
Senator Sue Boyce	Senator Mary Jo Fisher

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