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Wednesday, 3 December 2003
Page: 23659

Mr SOMLYAY (5:11 PM) —These bills, the Building and Construction Industry Improvement Bill 2003 and the Building and Construction Industry Improvement (Consequential and Transitional) Bill 2003, are the most significant reform ever attempted in the building and construction industry. This legislation is the government's response to the report by the Cole royal commission, which was tabled in March this year. The member for Rankin favours a Senate committee to examine this bill, but that makes no sense. These bills came out of a royal commission—an inquiry which had more wide-ranging powers of inquiry than any Senate committee could have. The inquiry has been done. The time for examining this and for further inquiry is over. This requires action, and that is what the government is doing by bringing on these bills at this time.

The royal commission was the first national review ever undertaken on conduct and practices in the building and construction industry in Australia, and its report is quite staggering. As you read through the volumes of this report, it is easy to feel like you are reading about another country where the rule of law, freedom of choice and freedom of association are not taken for granted and are not part of the culture. The report says that at the heart of its findings is a culture of lawlessness which is exhibited in many ways. There are breaches of the general law, breaches of the criminal law, breaches of the Workplace Relations Act 1966 and a lack of respect for occupational health and safety. It says that, when courts or tribunals make orders, some union participants, particularly those in the CFMEU, regard those orders as binding only if it means a benefit for them or for their union. Otherwise, they simply ignore it with impunity, because one of the problems in the industry is the weakness of current enforcement mechanisms.

There is an attitude that adherence to industrial law is optional because there is no body with the function, capacity or resources to enforce it. Head contractors and subcontractors cave in to union demands because of the severe cost penalties for any delayed completion resulting from union action if they do not comply with those demands. Every one of us on this side of the House has had builders and people in the construction industry who have given us specific examples over the years of that sort of behaviour.

According to the report:

The findings demonstrate an industry which departs from the standards of commercial and industrial conduct exhibited in the rest of the Australian economy ... They indicate an urgent need for structural and cultural reform.

That is an appalling verdict and one this government intends to rectify. It intends to provide that structural and cultural reform, and does so in these bills. It is not about penalising or picking on the industry, the unions, employees or anyone else; it is about trying to get it right for the good of all parties, as well as for the economic welfare of our country.

Let me tell you why. The building and construction industry is critical to both the welfare and prosperity of Australia and Australians. In the year 2001-02, total production in the industry was $59.7 billion. It accounted for 5.5 per cent of Australia's GDP and 7.5 per cent of employment. But indirectly it accounted—and accounts—for much more. Obviously, it is an industry that is significant to our economy. But its impact is much greater than those figures suggest because every business and every person uses the built environment and that has a flow-on effect.

However, over the past five years productivity growth has been less than average for the market sector. Economic modelling shows that if productivity growth in the industry were to at least meet that of the market sector then it would mean an accumulated gain in real gross domestic product over the next seven years of approximately $12 billion. As the minister is reported as saying in the Australian Financial Review, the Cole royal commission made a compelling case for change which would boost the Australian economy. The current problems mean higher prices, fewer jobs and a lower standard of living for everyone. Obviously, increased productivity would mean a gain not just for the industry but for allied industries, for the workers and for the economy.

To unlock these possible productivity benefits, and to ensure that commercial and industrial safety standards are met within the industry, the royal commission said that there were four areas of structural and four of cultural reform necessary. This legislation meets all of those requirements. I will outline the structural changes it found essential.

Firstly, we need to ensure bargaining at the enterprise level, and prohibit pattern bargaining in the industry. Chapter 5 of the Building and Construction Industry Improvement Bill 2003 does that. Secondly, mechanisms are required to ensure that participants of unlawful industrial action are responsible for any loss caused by their action. Chapters 6 and 10 of the mentioned bill do that. Thirdly, mechanisms must be in place to ensure that disputes are resolved in accordance with legislation or agreement. The rule of law must replace industrial might. That is inherent in each chapter of these bills.

Fourthly, there needs to be an independent body to ensure that participants comply with both general law and industry specific law. Chapter 2 of the Building and Construction Industry Improvement Bill 2003 does that by establishing the office of the Australian Building and Construction Commissioner. These structural changes all relate to mechanisms of the law, and are therefore easier to institute than cultural changes—changes to attitude—that the report deemed necessary.

The first cultural change goes to the heart of the problem:

There needs to be recognition by all participants that the rule of law applies within the industry.

The structural changes contained in these bills, including establishing the independent offices of the Australian Building and Construction Commissioner and the federal safety commissioner, as well as the introduction of a code of practice—the building code—will assist this cultural change. Secondly, all parties need to recognise that in Australia there exists freedom of choice to join or not to join an employee association or union. Chapter 7 of the bill covers freedom of association.

Thirdly, there needs to be an attitudinal change of participants regarding management of projects, because to avoid financial penalties—to get the job done—contractors often surrender management control to the unions. These bills cover awards, industrial action, discrimination, coercion, accountability and enforcement, all of which work towards ensuring that both sides do the right thing so that no side is forced into doing the wrong thing by coercion or standover tactics.

The fourth and last essential cultural change is in the attitude to safety not just by contractors and workers in the industry but by governments and clients as well. All employees have the right to expect a safe working environment. This bill addresses that need by establishing the office of Federal Safety Commissioner with responsibilities for promoting occupational health and safety, disseminating information about the building code and ensuring compliance with it.

You can see from this that the Building and Construction Industry Improvement Bill 2003 encompasses the main structural and cultural changes recommended by the royal commission. Its main objective is not to penalise one side or the other but to provide an improved workplace relations framework for work in the industry to ensure that it is carried out fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole.

I believe it is worth reading the aims of the legislation. I will not go through them—they are in the explanatory memorandum. How can the opposition, or anyone, argue against those aims? How can they argue against promoting respect for the rule of law and respect for the rights of all parties or against improving occupational health and safety? Only those who have no respect for those values in the first place could argue about enhancing them. On the other hand, this government is committed to ensuring the rule of law applies in the building industry as it does in other workplaces.

As you heard from the member for Rankin, the same cannot be said of the Labor government. For example, the Western Australian Labor Minister for Consumer and Employment Protection denounced this legislation as being impractical and unfair to unions. The assistant secretary of the CFMEU welcomed that response, reportedly saying that unions should not be expected to change how they operate. That comment is astounding if you have read the royal commission report on Western Australia. I will give some examples from the report. It says:

Doing business in the industry in Western Australia means doing business in accordance with the prescriptions and to the satisfaction of the Construction, Forestry, Mining and Energy Union (CFMEU).

It indicates that the industry:

... is marred by unlawful and inappropriate conduct. Fear, intimidation and coercion are commonplace ...

The CFMEU exercises a position of dominance and power often disproportionate to its on-site presence ...

Threatening and intimidatory conduct by the CFMEU is a hallmark of the industry.

The editorial in the West Australian on 25 October was more realistic. It said:

... WA was found by the Cole royal commission to be the national home of unlawful ructions, intimidation and questionable dealings—

and that the Labor minister's response showed `he is still a prisoner of the militant unions'. The fact that the problems are particularly bad in Western Australia does not mean they are not extensive in other states. In my own state of Queensland, for instance, the report says that there was evidence of a long list of problems, including `a culture of disregard for the law, and the rule of law'. It says that building sector unions often use `actual or threatened industrial action, most of which is unlawful, coercive and intimidatory' to get their way.

In 2001, there were 18,500 working days lost in Queensland as a result of disputes in the construction industry. I know the effect this can have on a business, a family and a community. I speak with builders, contractors, their clients and their workers in my electorate on the Sunshine Coast, where the building and construction industries are key to the local economy. A good example of what this legislation is all about involves a dispute at Nambour Hospital, which is in my electorate. Four unions combined to form a picket line from 23 May until 16 July to prevent employees and contractors of JM Kelly gaining access to the site. Workers were abused, threatened and intimidated. Many feared for their safety, and contractors and workers suffered financially.

Mr Slipper —Progress was held up too.

Mr SOMLYAY —The commission found that all four unions had acted unlawfully. Hopefully this legislation will eradicate such violent and unlawful behaviour. As the member for Fisher interjects, the project at the Nambour Hospital, which was badly needed by the community, was held up for months. Unfortunately, the opposition's workplace relations spokesman said that Labor is going to play games and delay this legislation for months by sending it to a prolonged Senate inquiry—because, he said, the government designed the legislation to fail and actually wants it to fail. If Labor really believes that, then all it needs to do is pass the legislation and see what happens—see if it fails for the government and for the economy. After all, what would such failure mean to Labor? It would seem that it does not support the government, the economy or the rule of law in the construction industry.

Not all opposition members are former union leaders, but many are part of the culture that condones and protects those union leaders who believe it is their right to behave in the manner deplored by the royal commission. At the very least, Labor acquiesces to this culture in the interests of retaining union, and therefore Labor, power. The opposition spokesman on workplace relations reportedly expressed concern over the fact that this legislation makes it compulsory to have a secret ballot before taking industrial action. We are lucky that we live in a democracy in this country but, unfortunately, the opposition and union leaders do not believe in democracy for all, especially not for their own union members.

Union leaders believe it is their right to tell their members how to vote and to then stand and watch to make sure individual members toe the line. Such union leaders believe it is their right to deprive their members of genuine freedom of choice, and they are fiercely supported by the Labor Party. It would be a very interesting exercise to conduct a secret ballot of all union members on whether or not they want the right to hold secret ballots before taking industrial action so they would have not only the right but also the freedom to say yes or no without fear of retribution. I think most of us in this House know what the result of such a referendum, vote or secret ballot would be.

It goes without saying that union members are also hardworking, law-abiding community members. Quite rightly, they seek to protect their jobs, their families and their communities. Of course that means negotiations—and maybe tough negotiations—but I do not believe most union members would deliberately seek to damage their employer or the economy in the process. Any reasonably intelligent person knows it does not make sense to deliberately endanger the future contracts of their employer, because such damage also endangers their job and the economic welfare of their family and perhaps the wider community. Unfortunately, that does not stop some union leaders, because to those leaders it is a power game. They gain power from the acquiescence—voluntary or otherwise—of union members and contractors. And, if they become powerful enough, they might even be given a safe Labor seat.

The optimum result for workers, contractors, governments, clients—and Australia—is for everyone to work together. To do that you need rules and accountability. You need respect for the law, you need a culture of cooperation instead of intimidation and you need an independent referee. With this legislation, the government has shown it is committed to working towards such an optimum result. This legislation provides rules and accountabilities with the means to enforce them so they cannot be blatantly ignored. It provides structures and law to help change the current culture in the industry, and it provides independent referees in the offices of the Australian Building and Construction Commissioner and the Federal Safety Commissioner. All previous reform attempts by both coalition and ALP governments have failed. The Howard government has taken heed of those past lessons and endeavoured to provide a structural framework and enforcement agency that will enable lasting, positive reform to the building and construction industry. I commend the legislation to the House.

Before I conclude, there is another issue I wish to raise. I am very disappointed with the response of ASIC to parts of the royal commission's final report. Chapter 11 of volume 10 of the royal commission report is entitled `Sunshine Coast Regional Group Apprentices Ltd'. The organisation conducts valuable training apprenticeships for people in the building industry and other industries, such as tourism, recreation and hospitality; there is no doubt about that. But the activities of the directors for a long time have been nothing short of disgraceful. These activities were brought to the attention of the royal commission, and the royal commission examined them. There are 31 pages in the report where the royal commission condemns the activities of this group called SCRGAL and the people associated with breaches of the Corporations Law.

The disappointing thing to me was the response of ASIC. The royal commission clearly identified breaches of the Corporations Law. I believe those breaches were serious. Some of the breaches would have brought fines of about $250,000 or over $1 million for a corporation, but ASIC decided not to prosecute and enforce the Corporations Law. I believe that that gives the wrong message to people in the building industry. I hope that the measures in this new bill will never allow that to happen, and I would urge the Treasurer, who is in charge of ASIC, to examine the findings of this royal commission and go ahead and do what the people of the Sunshine Coast expect them to do so that justice is done.