Mr ABBOTT (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9:01 AM) —by leave—I thank the member for Barton for granting me leave to make this statement. During 12 months of hearings, the Royal Commission into the Building and Construction Industry gave the wider community a glimpse into the dark side of this potentially great Australian industry. Revealing these insiders' secrets to the general public is an important step towards reform because it should help to reset the industry's ethical compass. Threats of violence, contempt for commission and court rulings, mob rampages, habitual failure to honour agreements and routine harassment of people exercising their legal rights are not acceptable in modern Australia and cannot be excused, even in a good cause.

The way the industry operates is almost impossible to justify but quite easy to explain. It is the result of a mismatch of power between companies whose commercial practices make them vulnerable to any stoppage and unions with an effective monopoly over the supply of labour. Unlike the car, textile, meat and coal industries, which once had similar problems, the building industry does not face foreign competition and can almost indefinitely pass costs on to consumers. In a market economy, there is nothing wrong with people trying to obtain the highest possible pay for their work. The problem is breaking the workplace equivalent of the fair trading laws. Workplace laws which work well enough in most industries are almost completely ineffective here because it is invariably in one side's best interest to make more demands and in the other side's best interest to give in and load the extra cost on to the next job.

The problems detailed in the volumes tabled yesterday have been evident from at least the late 1960s. For the best part of two generations, Australia's workplace relations institutions and legal structures generally have struggled to cope with the industrial reality of this industry. Volume 1 and volumes 3 to 11 of the royal commission's report, which I table today, contain Commissioner Cole's analysis of the industry's overall workplace culture and his recommendations for reform. At the core of his critique is an understanding of how the building industry has become a province of law without order. Where this industry is concerned, his essential conclusion is that the industrial commissions lack power, the courts lack speed, the police lack interest and the Employment Advocate lacks authority to tackle the semianarchy under which it operates.

The federal and state industrial commissions are much vaunted as the `umpires' in workplace relations disputes. In the case of the Australian Industrial Relations Commission, the umpire has no power to enforce the rules and by the time the Federal Court is involved the play has invariably moved on. Although the state industrial commissions usually possess judicial power, they are no more effective, because industrial tribunals generally see their role as dispute conciliation rather than law enforcement. As Commissioner Cole makes clear in attachment 7 to volume 3 of the report, the commissions are for the most part congenitally shy of making judgments, rulings and orders, even in the face of repeated deliberate defiance. Faced with a militant minority determined to ignore unfavourable rulings, too many commissioners have a tendency to play for time or explore ingenious technicalities in the hope that problems will disappear without exposing the charade industrial commission processes can easily become.

A state industrial commission judgment, quoted in the report, is symptomatic of this toothless tiger quality. A hearing commissioner declared:

It was followed by:

And why wouldn't the union be open to conciliation, given that the company was being manoeuvred to pay at least part of an illegitimate claim? On any serious analysis, these are weasel words to justify complicity in union intransigence. Subject to this semisanctioned smash-and-grab raid, the company eventually agreed to a site allowance, which added up to $100,000 to the project's cost.

Enforcing Industrial Relations Commission orders means applying to the Federal Court for an injunction. Invariably, this involves a rehearing because of the differences in procedure between courts and commissions. Frequently, evidence accepted by the commission is not accepted by the court. The result is lengthy delays and great expense to applicants. After that, injunctions have to be enforced, which involves further hearings, at which unions invariably claim that persons and organisations other than those enjoined are responsible for unlawful conduct. Even the most militant unions try to avoid contempt orders, which come with heavy fines and the possibility of gaol. But, long before this point has been reached, building employers invariably compromise on the least damaging deal they can get.

Similarly, obtaining damages for unlawful strikes means applying to the Industrial Relations Commission for a certificate, followed by a court application. Although the courts do award damages, matters rarely proceed this far. Once effective sanctions are imminent, strikes invariably settle. Almost always, one of the conditions is an end to legal action, so the perpetrators of unlawful strikes escape scot-free. As Commissioner Cole noted, completion delay cost penalties of up to $250,000 a day are a compelling incentive to surrender.

The Patricia Baleen gasworks dispute in Gippsland, Victoria is a recent paradigmatic case of how this industry has too much legal process and not nearly enough law enforcement. Construction workers at the site were already bound by a Federal Court order not to break their certified agreement. Despite this, work stopped in October last year because the builder's client had engaged, to run the plant, a third party proposing to employ staff on individual contracts rather than a union endorsed enterprise agreement. On 11 October, the Industrial Relations Commission made section 127 return to work orders. On 23 October, the Federal Court made orders based on union undertakings that they would not encourage members to refuse to work. On 6 November, the builder obtained additional Industrial Relations Commission orders requiring workers to cross picket lines. The court then issued a further injunction noting a `compelling prima facie case' that the picket was a union organised effort to stop the use of Australian workplace agreements. Notwithstanding these three court injunctions and two commission orders, the picket remained and the strike continued for seven weeks until the AWAs were finally withdrawn.

Commissioner Cole gives a considered analysis of the effectiveness of workplace law in volume 3 of his report. It reads:

Australian industrial systems generally rest on the assumption that parties will enforce the law against each other. In the construction industry, more than any other, meaningful workplace law requires an effective workplace policeman. Workplace law has been essentially unenforceable in this industry because no company can afford to take on the CFMEU. As long as its victims are required to take action against it, the CFMEU's power is effectively unchallenged—hence, the union's relentless hostility to the building industry task forces set up in New South Wales and Western Australia in the early 1990s but abolished by incoming governments, and to the Office of the Employment Advocate set up in 1997 to try to secure freedom of association in Australian workplaces generally.

Commissioner Cole finds that the OEA has had little effectiveness in the construction industry, partly because of limitations on the power of inspectors and the modest penalties for coercive conduct but mostly because of the guerrilla tactics of the CFMEU. He reports that OEA officers have been abused, had objects thrown at them and had their property vandalised. The arrival of OEA inspectors frequently leads to work stoppages and sometimes site invasions. For obvious reasons, under these circumstances, neither offenders nor their victims are eager to cooperate in law enforcement.

It is, of course, a criminal offence to obstruct federal workplace inspectors, but police forces generally take the same indulgent attitude to industrial law-breaking as the community once took to drink-driving. As Commissioner Cole finds, `On construction sites, the police attitude is that it is their function to maintain the peace, not enforce the criminal law.' But the rule of law is not a smorgasbord from which a few favoured items can be chosen and the rest ignored. Freedom under the law requires compliance with the law generally, not just those laws people find most expedient to their current purpose.

Commissioner Cole's 212 recommendations, which I table today, are designed to secure an industry which is free, fair and, above all, law abiding. The chief recommendations are: a special act for the building and construction industry; a building and construction industry commission, modelled on the Australian Competition and Consumer Commission, to investigate and prosecute unlawful conduct; a stronger national code of practice for federal government construction projects; a new commissioner for health and safety to monitor federally funded projects; a new act to provide security of payments for subcontractors; and better information sharing between federal and state revenue agencies to combat tax avoidance.

Commissioner Cole recommends new legislation to provide: genuine enterprise bargaining; secret ballots before strikes; the exclusion of non-employment matters from certified agreements; much heavier penalties for workplace offences, up to $20,000 for individuals and $100,000 for organisations; tighter definitions of protected action with compulsory cooling-off periods after 14 days; stronger prohibitions on closed shops; simplified award provisions; an expert panel to assess damages arising from unlawful industrial action; and deregistration of unions which do not pay damages judgments.

Commissioner Cole has come to the firm conclusion that new laws are of little use without strong enforcement mechanisms. The proposed Australian Building and Construction Commission will have a watching brief over the industry. As proposed, it is to monitor right of entry permits and observance of freedom of association laws, investigate unlawful behaviour and launch legal proceedings, and enforce judgments imposing civil penalties. He proposes that the existing secondary boycott provisions of the Trade Practices Act should be mirrored in the new building act, with enforcement the responsibility of the building commission.

Those claiming yesterday that the royal commission had neglected safety, tax avoidance and illegal workers should have turned off their political autopilot and judged the report on what it actually says. The report makes 19 recommendations on safety issues, 20 recommendations on pursuing tax dodgers and 33 recommendations about protecting worker entitlements.

As well as a new safety commissioner, the report recommends a safety component in federal tender assessment, safer design practices in the industry generally, and dedicated health and safety inspectors on major federally funded projects. Commissioner Cole also recommends tighter controls over entry permits to ensure health and safety issues are less readily abused as industrial weapons.

Although the industry has a higher than usual incidence of tax avoidance, Commissioner Cole found that `the ATO is aware of the nature of tax avoidance in the ... industry and has instituted appropriate risk management procedures and enforcement activity to improve compliance ... as well as to recovering unpaid tax'. Commissioner Cole notes that the ATO already has 220 field staff just monitoring this industry, with another 50 about to start. Even so, he recommends further measures against bankrupts going into business and phoenix companies.

Commissioner Cole also examined CFMEU claims of widespread illegal migrant workers and found, instead, that the Department of Immigration and Multicultural and Indigenous Affairs gives `significant priority' to pursuing information the union provides. In the two years to March 2002, the department had followed up 1,620 leads provided by the CFMEU and discovered 120 illegal workers. In total, the department had found 155 illegal building workers and issued 65 warning notices to building employers in this period. In addition, Commissioner Cole found that the department had appropriately handled the deficiencies identified in a 1999 review of illegal migrant labour.

Despite the provocation of regular mass protests outside commission hearings and the generally truculent attitude of union leaders, the royal commission report is the rigorous and fair-minded analysis expected of a senior former appeals court judge. Ultimately, the report will speak for itself and be judged on its merits. It would only take micro-improvements in the workplace culture and economic performance of a $40 billion a year industry to make its $60 million cost an excellent investment. Commissioner Cole has provided a compelling case for change, and the government will carefully consider his specific recommendations in the weeks and months ahead.

Hundreds of Australians have taken big risks to testify to this commission. Thanks to them, Commissioner Cole has broken the code of silence which normally protects this industry's rorts, rackets and rip-offs. Their economic future and even their personal security depend upon a nationwide commitment to reform, and the Howard government, for its part, is determined not to let them down. I present a copy of volume 1, the summary report, and volumes 3 to 11, which are the recommendations, together with a copy of my ministerial statement.

Mr McGAURAN (Gippsland—Minister for Science) (9.17 a.m.)—I move:

Mr McGAURAN (Gippsland—Minister for Science) (9.17 a.m.)—by leave—I move: