ABCC: a better plan for union governance?

cash_michaela_image-20161121-4515-2juc76_250The Senate has passed the so-called ‘registered organisations commission bill’, with only Jacqui Lambi joining the Greens and Labor to vote against it (see also Michelle Grattan). Now the game moves to proposed legislation to restore the Australian Building Construction Commission, which I’ll examine below.

Essentially the government succeeded with the registered organisations commission bill by doing deals with The Nick Xenephon Team (NXT) and Derryn Hinch on whistle-blower provisions. Hinch reckons the whistle-blower provisions are the best in the world, and the Government has agreed to extend them to the corporate and government sectors by 2018.

Labor has argued that the governance of unions should be undertaken by ASIC. Their plan was to provide ASIC with extra funding. Their worry is that a small entity dedicated to unions could become rabidly anti-union, by pressure or appointing a ‘suitable’ head. Some support is given to this notion by the performance of the Fair Work Building Inspectorate (FWBI), according to David Peetz.

David Peetz is Professor of Employment Relations at the Centre for Work, Organisation and Wellbeing in the Griffith Business School, Griffith University. As such he is a scholar of work place relation. I think he may have supervised my son Mark’s honours thesis, which was on the history of the then mining union. I claim no knowledge on industrial relations, but would give Peetz significant credibility. Back in March Peetz told the ABC that:

    it’s much more about changing the balance between unions and employers than it is about dealing with productivity of industrial action or corruption.

Peetz has an instructive piece on John Menadue’s blog, written last week. He details the likely voting patterns in the Senate, where much will depend on NXT and probably Hinch, who seems to be becoming an NXT fellow traveler. Peetz thinks the Senate is a better bet for the Government than a joint sitting.

Hinch is keen on a broad anti-corruption body. Peetz says that the ABCC bill does nothing about corruption, only about imposing restrictions on union access to construction workplaces.

Xenophon wants stronger occupational health and safety legislation, higher standards on imported building products, and better protections for payments to subcontractors in the industry. He also has concerns about aspects of the Building Industry Code attached to the ABCC bill which Xenophon thinks would give too much power to one body, one that would be ‘investigator and assessor of compliance and…responsible for…sanctions’. Peetz:

    As the likely head of a renewed ABCC is the current head of the Fair Work Building Inspectorate (known as the FWBC), or a protégé thereof, such concern is well justified. The FWBC these days acts as a determined antagonist of the unions, criticised by the Federal Court for ‘abuse of process’ and by the Commonwealth Ombudsman for its behaviour in compulsory examinations of workers. Subsequently, it emerged that FWBC last year withdrew funding provided to the Ombudsman to monitor FWBC’s use of coercive powers.

Peetz says that productivity gains are being spruiked by the government and industry, but this relies on an old ABCC-commissioned report which has been discredited. Peetz says much of the sting in the legislation is in the Building Code and quotes industrial reporter Paul Karp approvingly:

    ‘Compared to the ABCC’s long war of attrition, the building code’s effect is viral and immediate’. It actively punishes employers who do not adopt the government’s industrial agenda. Much (but not all) of what the revived ABCC would do can already be done by the current body, the FWBC.


    The new Building Code, however, would give the head of the ABCC much greater power to punish employers who did not abide by ABCC policy than is presently available, or would be available through the ABCC legislation on its own.

Peetz says that the Building Code will be a ‘legislative instrument’ that can be disallowed by the Senate. Ironically, the bill may pass and then have it’s sharpest teeth pulled subsequently by the Senate.

I’ll accept as given that there is union intimidation and thuggery in the building industry. Such was found by the Heydon royal commission, and I haven’t heard anyone in Labor deny it. Yet the proposed coercive powers have brought the unions and the Law Council together in opposition. Liam McLoughlin says every voter should read a comment made by George Williams about the ABCC in 2010:

    “By any standard, the ABCC is a remarkable body. Described as a ”tough cop on the beat”, it has powers that greatly exceed those given to any police officer in the nation.

    The ABCC can force people to answer questions in secret and to reveal documents that relate to any of its investigations. This negates a person’s right to silence. It also removes their privilege against self-incrimination, a protection that has been described by the High Court as a ”cardinal principle of our system of justice” and a ”bulwark of liberty”.

    Disobeying the ABCC is punishable by six months in jail…

    There are no limits on the type of information that can be sought by the ABCC. A person can be compelled to hand over personal phone and email records, reveal memberships of a union or political party, and report on private meetings.

    This can be applied to anyone. Workers can be brought in, not because they are suspected of wrongdoing, but to report on the activities of their co-workers. Family members, including young children, can be told to reveal information about a parent in the building industry…

    The problem is not just one of extraordinary power, but also that the expected safeguards have been stripped away. Unlike other bodies that question people, the ABCC does not need a warrant from a judicial officer or other independent person. The normal grounds of reviewing its decisions have also been excluded, meaning federal law cannot be used to argue that the ABCC has breached the rules of natural justice or made a decision in bad faith.

    What is most surprising is this unchecked authority is not directed at serious crime. The ABCC’s mandate is instead to investigate industrial matters in the construction industry. This means it can use its coercive powers to inquire into minor breaches of industrial awards, including the proper taking of sick leave and rest breaks.

    Despite its limited role, the ABCC has been given powers that would not be contemplated for the police by a state government bent on winning a law and order auction. This should be a concern to everyone, not just people working in the building industry. A dangerous precedent has been set that could well be applied elsewhere…

    The ABCC has no place in a modern, fair system of industrial relations, let alone in a nation that prides itself on political and individual freedoms.”

Gerard Phillips a partner in the Labour, Employment and Workplace Safety Group at K&L Gates, a global law firm explains why the coercive powers matter in the AFR (probably paywalled):

    In his recently concluded Royal Commission, Justice Dyson Heydon revealed that widespread misconduct, thuggery, bullying and threats of violence were commonplace events in the construction industry. Clearly when unlawful activity takes place at building and construction sites, those who witness it understand – too well – the cost of cooperating with the authorities. This and a combination of the code of silence normally seen in criminal gangs makes the investigation and prosecution of these matters even more difficult.

He says the human cost is immense:

    Young engineers and construction workers entering this industry are quickly brutalised and have to make up their mind about going along with this culture, defying it or leaving the industry altogether. This is a miserable picture for 21st-century Australia and the community deserves better from its politicians. These are the people whom the ABCC bill will protect: the future workers in the construction industry.

He says that:

    the person subject to the exercise of the power in the ABCC bill is given the benefit of a derivative use indemnity. Namely, none of the evidence so supplied can then be used against that person.

That would be small comfort to someone who has been forced to dob on their dad.

Whatever the problems are, I’m inclined to think that such a deprivation of rights is not the answer. Here’s a speech by Scott Ludlam for The Greens vs ABCC. Here’s Labor’s Plan for Better Union Governance.

Our representatives in Canberra will be earning their money wrapping their minds around all this. Let’s hope the outcome leads to a more civil society.

For now I left here other links I’d gathered in the run-up to the election. Some may be pay-walled.

19 thoughts on “ABCC: a better plan for union governance?”

  1. Just to hand is a pretty stunning report by Jim Stanford, an economist with the Australia Institute’s Centre for Future Work, called Beyond Belief: Contruction Labour and Housing Costs. He told The World Today that there is no relationship between wages paid and building costs, that labour productivity in the industry had improved since the ABCC had been done away with, that union cover had fallen by about half, but unionised sites performed better than the others.

    On the figures, he says, there is no evidence that union thuggery is having an effect on industry performance, and if you were looking for thuggery you might look at bosses in non-unionised sites.

    He says the pity is that Turnbull and his mates do not seem to understand why house prices are high, but are essentially playing ideological games.

    There is an interpretation available that the do understand and are telling porkies.

    If you want a different view, Google Alan Moran and Catallaxy.

  2. I’ve had a browse through the Stanton report, and it seems quite thorough. The summary starts:

    In an effort to mobilise public support for their plan to create an Australian Building and Construction Commission, Prime Minister Turnbull and other Coalition leaders have blamed union activity in the construction industry for the escalating cost of housing in Australia. The Prime Minister expressed sympathy for “young Australian couples that can’t afford to buy a house because their costs are being pushed up by union thuggery.”1

    His Minister for Immigration, Peter Dutton, made a similar case: “When young Australians go to an open house this weekend, to a unit that they may not be able to afford or that they have been saving up for, they know that that unit is more expensive because they have seen building costs increase as a result of the involvement of the unions and bikies.”2 An implication of their argument is that housing will become more affordable, if legislators support the government’s effort to restrict union activity (including union negotiations over apprenticeships and training, and health and safety measures) in the construction industry.

    He examines the sub-hypotheses underlying these claims and finds them all false.

  3. Firstly;

    Peetz has an instructive piece on John Menadue’s blog, written last week.

    I’m unable to get the links on this blog article that proposes to back Peetz position, an anyone ? Help please.

    Secondly, in my main area of the Construction Industry ( new commercial ) I estimate less than 10% is material cost, the rest is compliance and wages. Recently profit margins have been on a wages +5% basis. So a $50k wage job, on best case scenario, is 2.5K.
    Confusing housing and Commercial sale price is misleading give Schools, Hospitals or a ” Government owned ” property don’t have a market sale price.
    The Unions and large crony building companies focus on Govt projects, not residential.
    Think about the cost blowout of Parliament House, Desal plants or hospitals.
    The eventual construction price the taxpayer pays for Govt projects doubles when unions are involved.

    Anyway wage to house price is a unicorn argument, Jim Stanford is trying to miss-direct the debate.

  4. Here is the long running AIG Index data.
    The last 2 graphs on the right show ” wages and employment levels ” and ” input costs and selling price ”
    Remembering above the 50 line is expansion, below contracting.

    Wages and input costs are growing, but selling price and employment are shrinking. Who’s getting the squeezed ?

  5. Jumpy I tested the link and it works for me. I suggest you Google ‘John Menadue – Pearls and Irritations’ to get to the blog, or ‘DAVID PEETZ. An industrial relations furphy’ may take you directly to the post.

  6. The eventual construction price the taxpayer pays for Govt projects doubles when unions are involved.

    Got some data to back that up?
    Being in the industry you should be well placed to name Govt construction projects where unions are not involved compared to the same (or similar) Govt construction projects where unions are involved. Should be right up your alley.
    I would also be interested to know if this union caused cost blowout also occurs with private construction projects (and if not, why not).
    I’m no expert, but I get the impression that Government construction projects (which are usually tendered out to private companies) always end up costing twice as much as originally estimated, but I think it has little if anything anything to do with union involvement.
    For example, the new Children’s Hospital in Perth will arrive late and well over budget because of purchasing decisions (should have made sure there was no asbestos), poor contract negotiations (we’re paying a company how much to operate an empty car park?) and various other failures of management (in this case the Health Dept).

  7. I’m no expert,

    Not even a novice,
    Find out how asbestos and dilapidation report are done on WA State projects, Who from Government signed off the contract and what ” liquidated damages ” clause is.

    While this has your interest, consider how industrial actions by unions can blackmail using liquidated damages.

  8. Jumpy, the links in the story are clearly stuffed. The ones I tried just took me back to the top.

  9. Jumpy: You should know as well as I do that many contractors make money by bidding low to get the contract and then make their profit from variations. Easier to do with clients like governments who skimp on preparation of tender documents because they want the project to start before the next election, and, if they lose the election will be able to blame their successors of incompetence because of cost over-runs. Or am I being far too cynical?

  10. Well thank you for engaging so fully Jumpy.
    Your lucid explanation of the facts behind your blanket statement that union involvement doubles the cost of government projects is so crystal clear that I can now call myself an expert on the subject.

  11. John, I heard a RN investigative project once that found, from memory, that cost and time over-runs in public projects were pretty much entirely due to a lack of time and effort being put into design and specification.

    And, yes, the political cycle was at the bottom of it.

  12. Jumpy, when I was a Leighton’s shareholder I was surprised that they were undertaking large projects on margins less than those applying at Woolies. In the low single figures region.

    It’s one of the reasons I got out while in front.

  13. Brian: Keep in mind that the share market’s view of construction companies is often based on the size and quality of the order book rather than profit margin. Also keep in mind that it doesn’t take a lot of capital to run a project, particularly if the project manager can manage to pay suppliers after the contractor gets progress payments.
    The other problem is that CEO’s don’t have much job security with the pressure being on them to increase the share price and meet challenging objectives. It puts pressure on to grow the order book and gamble the companies future on projects that will be profitable if they work or lead to the end of the company if they fail.

  14. The home insulation programme and the so-called BER were rolled out quickly, as befits stimulus measures.

    The $900 in your pocket as a deposit on an imported plasma TV, was quicker.

    It seems all of the above may have helped Aust weather a nasty, global storm. Though exports to China no doubt assisted. We will never know. The influences are “multifactorial”, to put it mildly.

    But while we’re on it, let me raise an objection to the title:
    Building the Education Revolution.
    That name was grandiose and inaccurate. A school hall is, or should be, standard equipment. Multiple uses for the school, and in many places also a community asset. A new computer lab should be standard issue. Fixing or replacing old school buildings should have been going on for years. Have a bit of respect for children, teachers and parents!

    That’s not a “revolution”.
    We should expect well-equipped schools.
    School parents’ committees and teachers had been pointing out leaking gutters, poor insulation, tumble-down ……. for decades. (At least here in Victoria, were the other States far better??)

    New school buildings do not a revolution make. Why not call it “improvement”, “amelioration”, or “long overdue maintenance”? That’d be fair enough.

  15. Ambigulous, I think the fabric of Queensland government schools was in pretty good shape, and many improved the atmosphere of the school surrounds by sensible landscaping and planting some shrubs.

    School halls were never part of the government supply, however, and the provision of a multipurpose gym/all-weather assembly place was most welcome in many places. I believe in smaller places they also became community facilities.

    It kept the construction industry going, which is one of our core industries.

    Every time we vote now, ironically it seems to be in a school hall, where LNP voters grumble about Labor waste.

    There were also a lot of school libraries built, but Peter Garrett, who could have made a difference, did not take up the cudgels on behalf of teacher-librarians.

    There is a dumb idea around that because kids can use a tablet they can get everything on the net and don’t need research skills.

    The BER went way beyond buildings. The main good thing to be said is that education funding of schools would never have been sustained at the same level, but for Julia Gillard being PM. Gonski good, but on just about everything else to do with schools she was badly advised and stuffed up.

    But that’s another story.

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