James Paterson (Victoria, Liberal Party) Share this | Hansard source

I am very pleased to rise to continue to the debate on the Building and Construction Industry (Improving Productivity) Bill 2013. It is pleasing again for the second week in a row on a Monday morning to begin on a positive note dealing with such a substantive and important piece of legislation. I hope this week proves as successful for the ABCC bill as last week proved for the registered organisations bill. I again commend Senator Cash for her leadership in this area and tireless efforts to secure the government's key election commitments in this area.

I will note up-front that I have listened carefully to the contribution of Senator Lines and particularly her comments about safety. I congratulate her for taking this issue as seriously as she does. I will just flag that later on in my remarks I will address some of the criticisms of the government that she made and respond to some of those issues. But I thought it might be more helpful to begin this morning by just talking about exactly what this bill seeks to do, what it is seeking to address and why the government sees this is such an important priority.

As I suspect all senators will know, this bill seeks to restore the Australian Building and Construction Commission which previously existed between 2005 and 2012. When the previous Labor government abolished the Australian Building and Construction Commission in 2012 it replaced it with a much weaker building regulator—the Fair Work Building and Construction body known as FWBC. In a couple of key and important areas the FWBC and the laws that Labor put in place are weaker. Firstly, the maximum penalties for breaching the law were cut by two-thirds. That has obviously had a very significant effect on the behaviour of in particular the CFMEU. Secondly, FWBC has no power to enforce the law when affected parties—for example, a building company and a union—have entered into a settlement. So if the union is able to coerce and intimidate a building company into agreeing to a settlement on whatever terms, the FWBC has no power to intervene, even if it is in contravention of the law. Thirdly, the compulsory powers, which the ABCC had, were retained but they are subject to a sunset clause that will expire on 30 June 2017. No doubt, many in the CFMEU are circling that date in their calendars and looking forward to that day, if this Senate does not act upon Senator Cash's bill. Fourthly, there is no effective building code to regulate employer conduct, another important matter that must be regulated.

What this ABCC bill seeks to do is, firstly, to restore the penalties to their former level. They were originally recommended in 2003 by the Cole royal commission, and so this bill is seeking to return to those recommendations. These penalties will be substantially lower than the equivalent penalties in other equivalent legislation—for example, in the Corporations Act and in the Competition and Consumer Act. Secondly, it seeks to remove the inability for the law to be enforced where private settlements occur. As I have mentioned before, if a union is able to coerce a building company into agreeing to a private settlement, the FWBC is not able to enforce the law. That is an extraordinary and unusual circumstance. If any related civil dispute between an employer and a union is settled, even for a nominal sum, FWBC has no power to bring proceedings or to continue any proceedings to enforce the law. This is the equivalent of the police having no power to prosecute a driver for running a red light and causing a crash if the driver reaches a private settlement with the other driver. We would never tolerable this in other areas of law.

Thirdly, this bill seeks to retain the compulsory evidence-gathering powers that Labor retained but which were due to sunset in 2017. That is a very important measure. Fourthly, the bill will introduce an effective building code to be made as a legislative instrument under the act. This will impose a range of requirements on employers in the building industry. It will not apply to unions or employees. These requirements must be met by an employer that wishes to tender for Commonwealth-funded building work. These include compliance with all relevant laws—it does not seem like a shocking or unreasonable requirement to me—such as workplace, taxation, safety, immigration, et cetera. Any employer who breaches any of these legal requirements—for example, by underpaying employees, which is an important issue raised by Senator Lines, or by breaching safety requirements, which is a concern to this government and to those opposite, or by employing staff who do not have valid work visas, which is a problem that all of us agree it needs to be addressed—risk being declared ineligible to work on projects covered by the Commonwealth. I think that is an entirely appropriate measure, given that taxpayers' money is involved. Importantly, the code will also protect smaller subcontractors from unfair practices by head contractors. That is a worthy and sensible initiative.

I want to commend to the Senate an article that was published in the Australian Financial Review last week. It was written by Gerard Phillips, who is a partner in the labour and employment workplace safety group at K&L Gates, which is a global law firm. He has gone through and analysed, in a reasonable and dispassionate way, the key measures of the bill. I wanted to share with the Senate his conclusion about some of the aspects of the bill. I will not read the entirety of the article but some key aspects of it. It appeared on 22 November in the Financial Review:

The bill proposes expanding the definition of building work to cover transport and supply to building sites. This is a necessary and desirable measure because as history has shown the Construction, Forestry, Manufacturing and Energy Union (CFMEU) has often pursued suppliers and transport companies to put commercial pressure on the builder. By choking off its supply line and pressuring innocent third parties, the CFMEU's tactic is to cause a collapse in the builder's resistance in enterprise agreement negotiations.

He goes on to say:

How any member of parliament could think that a provision dealing with this deliberate behaviour is a bad thing defies belief.

I agree. Analysing another aspect of the bill, the increased penalties, he refers to a judgement in which Justice Christopher Jessup stated:

…that the CFMEU's "record of non-compliance with legislation of this kind has now become notorious. That record ought to be an embarrassment to the trade union movement ... quite obviously over the years the CFMEU has shown a strong disinclination to modify its business model in order to comply with the law."

As Mr Phillips says:

These are very strong words for a judge and in the clearest terms possible he is making out the case for higher penalties. Quite simply the current regime of penalties, set by the former Labor government, is no deterrent at all to the CFMEU. Breaking the laws of this land has simply been priced by the CFMEU as the cost of doing business. Given that the penalties are obviously no deterrent they need to be increased to a level where observance of the law becomes the more desirable alternative.

That is an entirely reasonable point, and I commend that analysis by Mr Phillips in the Financial Review to the Senate.

What this bill seeks to address is the problem in the building and construction industry that has clearly been identified by two royal commissions, by extensive public commentary and by media reporting. As we all know, there are now more than 100 CFMEU officials before the courts. That is an extraordinary number. If any organisation in our society had a hundred of its members before the courts, we would regard that organisation as rogue, totally out of control and in need of action to address it. Clearly, there is something systemically wrong in this industry. The courts have imposed more than $8 million of fines for the CFMEU's lawbreaking—and that is under the revised lower maximum fines introduced by the previous government. Sadly, it is clear and it becomes clearer every day that this does not deter the CFMEU. If the penalties are not enough to deter lawbreaking, then surely the penalties need to be increased. Master Builders Australia has estimated that infrastructure such as schools, hospitals and roads cost taxpayers up to 30 per cent more because of industrial action and delays at building sites. I will come back to that point later on.

Large building contractors are currently free to lock out smaller contractors in the industry by discriminating against those who do not have a particular type of EBA favoured by the large contractor and/or by the unions. As we know, there is from time to time in this industry a cosy relationship between large unions and large construction companies that is to the detriment of small- and medium-sized firms in this industry. Big unions and big employers do collude and they do lock out smaller players from building sites.

The ABCC was abolished by Mr Shorten in 2012, and the rate of disputes in the construction sector has increased by 40 per cent. In all other industries, the rate of industrial disputes has declined by 33 per cent. So the building and construction industry has become spectacularly less harmonious and a less efficient industry as a result of the change in laws.

One really clear piece of evidence that there is a cultural problem in the industry is that the participation of women in the industry has declined in the last two decades, against the trend in most other industries. How can we attract more women to this industry if we cannot change the culture? This is an issue that I know many senators have genuine and sincere concerns about, and I would encourage them to apply those genuine and sincere concerns in other policy areas, in other spaces of the economy, to the construction industry.

As I foreshadowed, I will address some of Senator Lines' comments, Senator Lines made a number of comments about safety. It was certainly sobering to listen to her and to hear about the cases of workplace deaths that have recently occurred. I can only concur that they are incredibly troubling. I know that they weigh heavily on the minds of all senators—not just on that side of the chamber but on this side too. She is absolutely right to say that we should be pursuing a goal of zero deaths in the construction industry—in fact, in all industries. No worker in any workplace should be injured; no worker on any worksite should be killed. I certainly support the sentiments of Senator Lines' comments.

But this bill, the bill to re-establish the ABCC, does not make any changes to workplace safety law. Nothing in this bill changes workplace safety law in any way. It does not prevent legitimate safety issues being raised or addressed by either employees or unions, or, particularly, by health and safety regulators, who have the most important responsibility to ensure that our workplaces in Australia are safe.

Senator Lines mentioned that one of the encouraging things in recent times has been the decline of construction industry deaths. She is right to say that a decline is only a start, and that we hope to get to zero—and I concur. Nonetheless, I am pleased that there has been a decline. The number of deaths per 100,000 workers in 2003 was 5.8; that had dropped to three per 100,000 workers by 2014, the most recent figures available. That is pleasing and I hope that continues, and I see no reason why and I have heard no evidence that this bill will adversely impact that trend in any way.

What it seems to come down to for those opposite—and I am happy to be corrected if I am wrong—is that anything which reins in the CFMEU at all, anything which seeks to ensure that the CFMEU is compliant with the law, somehow means that workplaces will be less safe. That is tantamount to arguing that the CFMEU cannot do its job without breaking the law and that it is okay for the CFMEU to break the law because it has a higher end in mind which justifies the means. That is a really strange and unusual logic.

Unfortunately, we know the CFMEU has a track record of misusing safety concerns as a cloak for its other activities. There was a particular case that I think illustrates this very powerfully. Of course, the CFMEU has an important role in ensuring safety, but, any time it uses the thin veil of 'safety' to achieve its own objectives, it undermines its important role in upholding safety. It is understandable that people have become cynical about the CFMEU's statements about safety when it engages in conduct like that.

I quote from a media release from the FWBC on 9 July 2014. It has two important features, quotes from an important court case, by Judge Burnett; and the conduct of the CFMEU in a particular dispute:

Federal Circuit Court Judge Burnett has said the actions of CFMEU officials Kane Pearson, Joseph Myles and Shane Treadaway on a Brisbane construction site represented a 'gross failure of corporate governance on the part of the CFMEU and its affiliates'.

As we have seen in other cases, this is an extraordinarily damning indictment of the CFMEU by a judge.

In February this year, Judge Burnett penalised the CFMEU and the three men a total $38,500 for hindering, obstructing and acting in an improper manner on a Brisbane construction site on 11 February, 2010.

The media release goes on to quote some of the phrases and sentences that Mr Pearson and Mr Myles engaged in on the site. I am not going to even attempt to read them out, because I will have to stand here and bleep myself continuously, such is the nature of the language. But I think it is language which we are all familiar with because we have heard it in so many hearings and courts over the years.

One of the key things that were interesting about this was that Mr Myles, Mr Treadaway and Mr Pearson said that they needed to access this site, using their right-of-entry powers, for safety reasons. But Mr Treadaway brought with him an EFTPOS machine and was seen walking around the worksite with it. I acknowledge I have never worked on a construction site and I am no expert in construction safety. But I am not aware of any purpose that an EFTPOS machine could be used for to assist safety. I am aware of other purposes for EFTPOS machines. It could be used for taking payments, for example. It could be used to take the payment of union dues, for example. It could be used to sign up on the spot any workers on that site who are not union members and give them a speedy way of doing so. But I cannot see how that relates to safety in any way. That is one of many pieces of evidence that the CFMEU has abused these laws.

I turn now to the important matter of productivity, the economic impact of this bill and the importance of this industry. As I have spoken about before—and other senators have too—the rate of industrial action in the construction sector is far higher than in other industries. In fact, the latest ABS data, from the June quarter, shows that it is nine times higher than the average across all industries. This obviously has an impact on productivity. Currently, of all the days lost in the economy to industrial disputes, two out of three are in the construction industry. That is despite the fact that the construction industry employs only a small proportion of Australians, not the vast majority.

Infrastructure, as I have said before, like schools and hospitals and roads, will cost taxpayers up to 30 per cent more because of the extraordinary amount of working days lost due to industrial action at building sites. This is what the ABCC seeks to address. The construction industry is our third largest industry. It contributes eight per cent of GDP. It employs nearly 1.1 million Australians, and there are more than 300,000 small businesses in the building industry. There was an interesting article published in The Australianlast week, by Ewin Hannan, which detailed the massive total cost of this disruption and disputation by the CFMEU and the impact it has on our economy. A total of $100 billion worth of projects have, in some way, been delayed or disrupted by CFMEU activity. Some have already been before the courts, where the CFMEU has been found guilty of workplace law breaches, and some will be coming before the courts in the coming months.

The Prime Minister was interviewed by Neil Mitchell about this very topic on Melbourne radio on Friday. Of particular concern to me, as a Victorian senator, he highlighted how serious this impact has been on my home state. He said:

… let me give you some good Victorian examples. There are 270,000 Victorians working in the construction industry. There are 22 Victorian CFMEU representatives before the courts for breaching of industrial law. In Victoria over the last decade the CFMEU has been fined $4.3 million – to the highest level in any state. And they have been found to breach the law on building sites in Victoria on including a project for 58 schools, road and rail projects, Mitcham and Rooks Road rail separation, Southern Link upgrade, the Florey Neuro Science Institute at Heidelberg, the Simpson Army Barracks, Melbourne Institute of Technology.

I mean the CFMEU's lawlessness in Victoria is so well known. Now, if we can get the rule of law reimposed, restored in the building sector, that will increase productivity, it'll increase the ability of people to work in the industry because they won't have to get past the union, being able to dictate which subcontractor, which tiling contractor for example can get a start and of course it will, by reducing that industrial lawlessness, you'll reduce the cost of these union jobs.

That is a very important point by the Prime Minister and, in my remaining minute, I want to highlight a case in my home state of Victoria which has been adversely impacted by the CFMEU—something which I hope, with the restoration of the ABCC, will not be allowed to happen again.

One of the cases which the Prime Minister referred to is the Mitcham Road and Rooks Road rail separation and station upgrade project. A Federal Court judge has condemned the CFMEU for a 'pattern of contravention' of workplace laws. In reviewing a schedule of the CFMEU's previous contraventions, Justice Jessup found it painted 'a depressing picture' which 'bespeaks an organisational culture in which contraventions of the law have become normalised'. Justice Jessup's comments came as he penalised the Victorian CFMEU $48,750 and its official Joseph Myles $6,375 for unlawful conduct at the $140 million Mitcham Road and Rooks Road rail separation and station upgrade project. This is just one of the many examples of the way in which taxpayers and citizens are having good services, good infrastructure, delayed or denied to them because of the militant behaviour of the CFMEU, and it is yet one more example of why the restoration of the ABCC is necessary.