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Wednesday, 26 March 2003
Page: 13499


Mr ABBOTT (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9:01 AM) —by leave—The Royal Commission into the Building and Construction Industry was established in August 2001 to examine and report on the extent of coercion, collusion and intimidation in the commercial construction industry. This followed claims by the national secretary of the Construction Division of the Construction, Forestry, Mining and Energy Union that organised crime elements were infiltrating his union, a series of violent invasions on Perth building sites, allegations of corruption by a sacked New South Wales CFMEU official and an Employment Advocate report that the problems of the industry were beyond his office's power and capacity to handle. In addition, as indicated by Australian Bureau of Statistics figures, the industry's strike record was bad and getting worse. Construction comprises nearly six per cent of GDP but accounts for about a quarter of days lost through strikes.

This has been a model royal commission: swift, thorough, efficient and, above all, fair. It conducted public hearings from October 2001 till October 2002. There were 171 public sitting days, including 58 examining the state of the industry in Victoria, 34 in New South Wales, 29 in Western Australia, 28 in Queensland, seven in Tasmania and two days each in South Australia and the Northern Territory. Some 16,000 pages of transcript were taken from 765 witnesses. Some 1,900 exhibits and 162,000 documents were tendered. Of the 7.2 million pages of documentation received, 1.6 million were placed on the commission web site. Interested parties made 29 general submissions to the commission and 140 formal responses to the 18 discussion papers which the commission issued last year. Over the life of the commission, nearly 1,500 summonses and 1,700 notices to produce were issued. In addition, the royal commission conducted 22 days of private hearings where 48 witnesses were examined.

Commissioner Cole has produced a final report of 23 volumes. It is the definitive study of the industry and its workplace culture. Today I am tabling volumes 2 and 12 to 22 of the commission's report, which provide numerous case studies and extensive analysis of the industry's operations in every state and territory. I regret to say that Commissioner Cole's report reveals an industry which all too often operates as a kind of conspiracy by big unions and big business against small business and consumers. Typically, fixed price contracts are signed between head contractors and their clients. Head contractors then engage a series of subcontractors to perform the myriad special tasks integral to a construction project. Head contractors usually face specific monetary penalties for failure to meet construction schedules. This makes them especially vulnerable to work stoppages and inclined to lay off `industrial risk' to subcontractors. While the industry is characterised by dozens of large contractors and thousands of subcontractors—all of them operating under standard competition principles—workers belong to two or three key unions, whose workplace activities are generally not covered by the anticollusion provisions of the Trade Practices Act and which have a tendency to `hunt as a pack'. This means that on large building sites the CFMEU, which superseded the old Building Workers Industrial Union and the Builders Labourers Federation, is a quasi-monopoly supplier of labour.

The CFMEU, often in alliance with the Communications, Electrical and Plumbing Union and the Australian Manufacturing Workers Union, can only maintain this dominant position by enforcing a `no ticket, no start' rule. As the commission's report makes abundantly clear, maintaining a closed shop routinely involves unlawful coercion and intimidation backed by threats of violence. Breaking agreements, ignoring previous undertakings and flouting industrial commission and court orders are all part of maintaining the `union rules' culture of the industry. Officials of the CFMEU, particularly in Victoria and Western Australia, act as if the law does not apply to them.

The most notorious incident of industrial lawlessness occurred at the National Gallery of Victoria, a project which was supposed to finish in 2001 but which is still not completed and is currently about $13 million over budget. A subcontractor working on the site was in dispute with the CFMEU because some of its employees had joined the rival Australian Workers Union. When the Victorian government initially refused to strip the company of its contract, a mob rampaged through the site on 10 August 2000 causing at least $150,000 worth of damage. CFMEU officials boasted that they had organised this invasion. Even so, no-one was ever charged and the company in question duly lost its contract.

What follow are some further emblematic examples of the conduct which infests the industry, drawn from dozens contained in the commission's report. In the late 1990s, Woolworths commissioned two almost identical buildings in Melbourne and Sydney. The Sydney warehouse was completed on time and $5 million over budget. The Melbourne warehouse was seven months late and $15 million over budget because of industrial practices including routine breaches of certified agreements, chronic failure to observe safety dispute settlement procedures, the use of three different workers from three different unions to operate machinery usually operated by two workers, demands to employ union nominated activists and illegal picketing. Despite obtaining a Supreme Court injunction against a picket line, the head contractor, Hansen Yuncken, had to make a $50,000 payment to a Victorian Trades Hall trust account before the picket was eventually withdrawn.

In 1998 in Victoria, a union activist tried to force his employer to hire as a painter a particular associate with a colourful past but with no relevant qualifications or experience. After a few days, the subcontractor company refused to continue the associate's employment. The activist then directed workers to leave the site and subsequently told the manager: `I'll kill you and your family. No-one crosses me. This is the last job site you work on. You are finished.' When the head contractor, Hansen Yuncken, tried to remove the activist, the CFMEU brought proceedings on his behalf because he was supposedly the site occupational health and safety representative. Despite the failure of these proceedings, the activist, as well as his brother, continued to visit the site, threatening and harassing workers and managers. After seven weeks of this, the head contractor successfully sought restraining orders against the brothers, who ignored them, and they were arrested and briefly gaoled. After further CFMEU intervention, Hansen Yuncken requested that the charges of criminal trespass be dropped. Eventually, Hansen Yuncken paid $15,000 to the brothers as `compensation', which company lawyers lamely justified as `likely to achieve a greater cost saving to the company overall' because, they said, it might prevent the recipients from further `harass(ing) and interfere(ing) with operations'.

The Saizeriya project at Melton is another illustration of the pitfalls of `chequebook industrial relations' in the Victorian building industry. The initial dispute arose because the AMWU objected to National Union of Workers coverage of the plant once operational. Construction commenced in May 2001 and was scheduled to finish by December of that year. Commissioner Cole found that AMWU, CFMEU or CEPU bans were imposed on 20 June; 12 and 18 September; 9, 12, 17 and 18 October, 2001; and 4 June, 2002. The plant is still not fully operational and costs have blown out from $40 million to at least $52 million. Commissioner Cole found that a senior CFMEU official threatened one of the companies to have proceedings under the Trade Practices Act withdrawn. He also found that the Victorian government has ended up paying wages on site to make up for losses caused by protracted stoppages and orchestrated various `fixes' which usually ended up making bad situations worse.

In November 2001, as part of a long-running dispute over a subcontractor's unwillingness to sign the union endorsed enterprise bargaining agreement, painters left the Burswood site in Perth after a furious argument between their manager and union officials threatening violence. The next day union officials again visited the site and tried to disconnect the tools of tradesmen who continued work. Later that day, the CFMEU's state secretary led an invasion of 150 people, none of whom were site workers, in support of a payment of $25,000, allegedly a `completion bonus'.

`Casual tickets', or payment for ghost workers, are a feature of the Perth building industry. The commission found that recent casual ticket payments amounted to some $397,000—paid by companies including Broad Constructions, Multiplex, John Holland, Q-Con, Key West, Walters, and Cooper and Oxley. These payments, derived from guesstimates of non-union workers on site, were often invoiced as `training' even though no training had taken place. Companies told the commission that payments were justifiable `commercial decisions' to `purchase peace'. In fact, these quasibribes show the insidiousness of a corrupt industrial culture where decent people, on both sides of the workplace fence, find themselves participating in practices they would reject as wrong in any other context.

In the mid-1990s, a NSW concrete pump operator was told by the local CFMEU organiser that he had to join the union. The organiser attended a meeting at the premises of De Martin and Gasparini, Sydney's largest concrete placer, at which the company told the pump operator that he would never be engaged again or work on any other Olympic site unless he agreed to the union enterprise bargaining agreement. In 1998, after a visit from the organiser in question, the operator was not allowed back on an Olympic site, despite having $8,000 worth of work to complete. Last year, the same organiser stopped the same operator's concrete pour, citing safety reasons. The then head contractor purported to find a number of safety issues with the pump but admitted that the real problem was the union organiser.

It ought to be clear from these examples, of which there are dozens more in the volumes of the commission's report released today, that this is a largely lawless industry operating on the principle of might is right and subject to commercial and sometimes physical intimidation and blackmail. Union organisers and associates try to track people who do not play by their rules in the confident expectation of driving `troublemakers' out of the industry. This sort of behaviour is a travesty of unionism.

This near anarchy in the commercial construction industry ultimately impacts on everyone. An Econtech report published last week shows that commercial construction tasks typically cost 10 per cent more than comparable tasks in domestic construction. Labour productivity in commercial construction is some 13 per cent lower than in home building, mainly because of overmanning, demarcations and frequent work stoppages. Most importantly, this research showed that housing industry standard labour productivity in commercial construction would produce a one per cent boost in GDP, a one per cent cut in inflation and $2.3 billion worth of benefits to consumers every year. Workers in the commercial construction industry often earn $100,000 a year, with overtime and allowances, but such a fair day's pay requires a fair day's work; otherwise it turns into a rip-off ultimately borne by consumers, taxpayers and other workers.

From the evidence gathered during the hearings and investigations, the royal commission has made findings of about 392 separate instances of unlawful conduct by individuals and organisations. These include unlawful industrial action, failure to follow dispute resolution procedures, demand for unlawful payments, abuse of right of entry provisions, fabrication of safety issues to advance industrial demands and widespread breach of freedom of association laws.

In Western Australia, Commissioner Cole made 230 findings of unlawful conduct against two unions, 28 representatives of three unions, three companies and one representative of a company. In Victoria, Commissioner Cole made 58 findings of unlawful conduct against one union, 18 officials and stewards representing three unions, six companies, two representatives and three employees of five companies and one individual. In Queensland, he made 55 findings of unlawful conduct against five unions and eight representatives of three unions. In New South Wales, he made 25 findings of unlawful conduct against one union, 14 representatives of two unions and two companies. In Tasmania, he made 13 findings of unlawful conduct against one union and three representatives of two unions, four companies and two representatives of two companies. In the Australian Capital Territory, he made one finding of unlawful conduct against a union organiser.

Commissioner Cole found that South Australia and the Northern Territory generally experience less industrial disruption than the other states and territories. He found that freedom of association is generally respected. Even so, he made eight findings of unlawful conduct in South Australia against two unions, three representatives of one union and one company, and two findings of unlawful conduct in the Northern Territory against two companies.

These 392 instances of unlawful conduct are contained in the volumes released today. It is necessary that these matters be published so that the problems of the industry can be more widely understood and improved. In addition, Commissioner Cole has produced a confidential volume of matters to be referred for prosecution. This volume, which the government will not publish—on Commissioner Cole's recommendation—identifies 26 incidents involving possible criminal offences. Commissioner Cole has found that 23 union officials and eight employer or employer organisation officers might have breached criminal laws. Of these individuals, 12 are from Western Australia, eight are from Victoria, seven are from New South Wales and four are from Queensland. He also identified 66 incidents of unlawful but not criminal conduct to be referred for prosecution. The Attorney-General or the Minister for Justice will refer these matters to the appropriate state and federal authorities. Launching prosecutions and securing appropriate convictions is necessary if the rule of law is finally to be established in this industry.

Commissioner Cole's desire to avoid trial by media and the associated presumption of guilt where possible criminal prosecutions are concerned is typical of the scrupulous fairness with which he has conducted his inquiry. Tomorrow, I will table the remaining volumes of analysis and the recommendations for reform. This national royal commission is our last best hope for a clean industry and everyone who values civil society should take its report seriously. I present copies of volume 2, Conduct of the Commission, and volumes 12 to 22, State findings and administration, together with a copy of my ministerial statement, and I move:

That the House take note of the papers.

Question agreed to.

Mr ABBOTT (Warringah—Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9.18 a.m.)—by leave—I move:

That so much of the standing and sessional orders be suspended as would prevent the honourable member for Barton speaking for a period not exceeding 16 minutes.

Question agreed to.