Jane Hume (Victoria, Liberal Party) Share this | Hansard source

I rise today to speak on the Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013. Our construction industry builds the offices, the apartments, the roads, the shopping centres, the hospitals, the universities, the schools, the airports and the other important infrastructure—vital infrastructure—that all Australians use and depend on daily. The construction industry is the third-largest industry in Australia, representing some eight per cent of our gross domestic product. Furthermore, the construction industry employs approximately 1.1 million Australians in one capacity or another. Indeed, there are more than 300,000 small businesses that fall within the parameters of the construction industry in Australia. Let us just recap those facts for a moment: eight per cent of gross domestic product, 1.1 million Australians employed and over 300,000 small businesses in operation. By any means, this is a substantial industry, and so important in the greater make-up of the Australian economy.

There is not a person in this place, no matter whether they choose to admit it or to feign ignorance, who is not aware of the toxic culture of the Construction, Forestry, Mining and Energy Union, or the CFMEU. We have seen this culture of intimidation, economic blackmail, violence and thuggery on TV screens, in print media and, for the most part, uncovered as part of the royal commission into the trade union movement. Commissioner Heydon—one of the finest legal minds in Australian history, I might add—described the deplorable union behaviour uncovered by this royal commission as 'only the tip of the iceberg'. The behaviour of unions, such as the CFMEU, is not isolated to their own operations. Rather, the effects of behaviour such as this flow on through the Australian economy, with devastating results.

As of October 2016 some 113 CFMEU officials are before the courts charged with more than 1,100 alleged contraventions of various Australian laws—an absolutely astounding figure. If we were to work that out as an average it would be 9.7 alleged contraventions per individual. The CFMEU must think that they are above the law. Do they? Is this what they think? They seem to believe that the law applies to all Australians but them. But it must be noted that these matters are before the courts and as they currently stand they are alleged. Nevertheless, it is worth noting that in recent years courts of various jurisdictions have imposed more than $8 million in fines as punishment for the CFMEU's callous disregard for Australian laws. So brazen is their attitude that one Federal Court Justice remarked that the CFMEU's record of noncompliance with the law is 'notorious' and their record 'ought to be an embarrassment to the trade union movement'. This seems to be an embarrassment that those opposite do not wish to acknowledge, but they should, because the rest of Australia certainly does.

While some may trivialise the unruly behaviour of some unions, it is incredibly dangerous to do so. The rate of industrial action in the construction sector is nine times higher at present than the average across all other industries in Australia—a truly staggering statistic. To further illustrate this point, it should be noted that two of every three days lost to an industrial dispute in this country are lost from within the construction industry. Because of this and the continuing behaviour of rogue unions, the taxpayer dollar is wasted. The taxpayer must pay more. It seems that those opposite are content with that. The building of vital infrastructure—of schools and hospitals—costs 30 per cent more owing directly to that industrial action on building sites.

The ABCC is the proven solution to ameliorate this situation. The proven solution in putting a stop to lawlessness and thuggery in the building industry is the ABCC. Let us look at some facts about the ABCC. Before the ABCC was initially introduced, the rate of industrial disputes in the construction industry was five times the average across all other industries. During the ABCC's operations, disputes fell to just two times the average. But, on average, since the ABCC's abolition, disputes have gone back up to five times the average across all other industries. Since the ABCC was abolished by Bill Shorten in 2012, the rate of disputes in the construction sector has increased by 40 per cent, whereas the rate of industrial disputes across all other industries has decreased by 33 per cent on average. When the ABCC was in force, productivity in the construction sector grew by 20 per cent, yet it now remains relatively stagnant.

This bill will restore the ABCC as the industry-specific regulator for the construction industry. It will restore penalties to their former level. It will retain the current compulsory evidence-gathering powers but remove the sunset clause, and these powers are held by other regulators, such as the ACCC, ASIC, the ATO, Centrelink and Medicare. This bill will introduce new measures to deal with unlawful picketing and the disruption of transport and supply to building sites, including those located offshore. It will remove the inability for the ABCC to enforce the law where private settlements occur. Otherwise, it would be like police having no power to prosecute a driver for running a red light and causing a crash if the driver reached a private settlement with the other driver. This bill will enable a strong building code to be made for government projects. This will help improve standards and create a fairer playing field for businesses in the industry.

Despite the misinformation spread by those opposite, the ABCC legislation does not amend any workplace safety law. It will in no way prevent safety issues from being raised or addressed by employers, by unions or by health and safety regulators. Senator Rhiannon's comments were incomprehensible. All the stats show that, under the ABCC, the number of deaths and accidents actually went down, that productivity increased, that the number of days lost to strikes also went down, and that the vast majority of workers reported being much happier in their construction workplaces. But, since Labor abolished it, lawlessness has gone up again and days lost from strikes have increased. This is taxpayer money for infrastructure projects that is being wasted.

I would like now to turn to one case study examined at length quite recently by the Menzies Research Centre in their report entitled Constructing a better future: restoring order and competition in the building industry. The example relates to the Wonthaggi desalination plant in my own home state of Victoria. The Menzies Research Centre reports that construction of the Wonthaggi desalination plant at Dalyston on the Bass Coast of Victoria was commissioned by John Brumby's Labor state government in July 2009 and completed in December 2012, a full year behind schedule. Plagued by cost blowouts, delays, waste and excessively high labour costs, Wonthaggi exemplified the very worst of public construction in Australia. When construction began in late 2009, it was expected to cost $3.1 billion, an estimate that was itself considerably above the cost of similar projects in Australia. The Kwinana desalination plant south of Perth, for instance, completed three years earlier, holds approximately 30 to 50 per cent of the capacity of the Wonthaggi desalination plant, but it was completed at a cost of $387 million, only 12.5 per cent of the cost of the Wonthaggi plant. The final price tag of the Victorian plant hit a staggering $5.7 billion.

An analysis by Independent Contractors Australia found that, had the Victorian plant been completed with broadly the same cost-effectiveness as the Perth plant, the project should have totalled no more than $2 billion. Labour costs were locked in at an extraordinary level under a greenfields bargaining agreement struck in 2009 between the head contractor Thiess Degremont, the AMWU, the AWU, the CEPU and the CFMEU. This agreement allowed for 26 rostered days off, 12 public holidays, a picnic day, and fixed long weekends that coincide with the RDOs. It included not only superannuation and long service leave, a 17½ per cent holiday loading and annual leave, but also termination pay of an extra couple of weeks, a redundancy allowance of $5.44 per hour, clothing allowance, spectacle allowance, and six-monthly pay increases totalling approximately $200 per week. An extraordinary element was a tax-free living-away-from-home allowance of $700 per week, or $36,400 annually. Wonthaggi is barely 75 minutes drive from the south-eastern suburbs of Melbourne. This was struck at a time when the going rate for living-away-from-home allowances in genuinely remote areas such as the Pilbara was $400 per week. Wages at the plant were reliably estimated to be 40 per cent—40 per cent!—higher than those found at desalination plants interstate, providing trade workers with $150,000 annual salaries before factoring in the generous conditions and allowances.

For instance, a carpenter under the agreement earned more than $200,000 in wages and benefits—roughly twice the income of a school principal. Worse still, under the terms of the agreement the only direction in which wages could move would be higher. The greenfields agreement covering the plant's construction contained a clause stating that Thiess could only engage contractors who applied wages and conditions no less favourable than the wages and conditions provided for in the agreement for similar or equivalent work. Now, the effect of this clause is to remove competition between subcontractors entirely from the tendering process.

The desalination agreement locked in considerably higher increases in remuneration than those under standard CFMEU industry EBAs. Wages increased in six-monthly increments of 2½ per cent over three years, a total of 15 per cent over three years. Under the standard EBA wages increased by a lesser amount, while allowances were linked to CPI.

A lack of transparency in the tendering process added to concerns. The winning bid from the AquaSure consortium, which included Degremont Australia, Macquarie Capital and Thiess, was in fact higher—higher!—than the losing bid from John Holland. Industrial relations commentator Robert Gottliebsen wrote that the Leighton subsidiary John Holland, which had not done the deal from hell with the unions, actually tendered a lower price for the desalination plant than Leighton's other construction subsidiary Theiss. But the Victorian government took the higher tender. It took the higher tender to look after its union mates who had secured this truly amazing deal from the Theiss-Leighton subsidiary. Leighton also gave some iron-clad price guarantees.

There is an enormous cultural difference between John Holland and Theiss, which gives the union what they want because they can add it on to the price, management style. Clearly, Thiess was awarded the project, at least in part, on the basis that it would assuage union demands and avoid disruptive industrial action. In turn, Thiess signed on to a clause that would ensure the terms of its 'peace at any price' deal were reflected in all contractors connected to the plant, negating any chance of competition. The cruel irony for Thiess and for the Victorian taxpayers is that despite such efforts, the project was fraught with strikes and other delays that ended up costing Thiess over $1 billion.

This is only one of many possible examples, but it is just as pertinent as the rest. To those opposite today I say that while Labor did not support its two million union members last night in voting against the registered organisations bill, there is still a chance to do so here. There is still a chance for you to do so today. These are your constituents; these are the people you represent. It is your responsibility to do right by them. Vote for this legislation. Vote for this legislation so that we can return the rule of law to our construction sector. Vote for this legislation to make our construction sites safer, to make our construction sites fairer and to make our construction sites free of coercion and free of intimidation and, so importantly, to improve competition in the construction industry—not just in Victoria but all over Australia.

Allow Australia to build the vital infrastructure it needs in a fair and cost-effective manner. This is the only way; it is the proven way to ensure that the Australian economy has the chance to flourish, to thrive and to prosper.