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Wednesday, 15 February 2012
Page: 1378


Mr FRYDENBERG (Kooyong) (13:00): I rise to speak on the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2011. This will see the abolition of the Office of the Australian Building and Construction Commission and with it the role of the commissioner and the high penalties that applied to the industry for breaches to industrial law.

This bill is another ideologically driven, economically damaging, decision by this government. At a time when we are seeing heightened levels of industrial disputes, falling productivity and increasing unemployment there could not be a worse moment for such legislative change. To understand the seriousness of this decision, we need to retell the story of the birth of the ABCC, the rationale for its existence, its record of achievement and the impact of its abolition.

The ABCC was established by the Howard government in 2005 following the findings of the Cole royal commission, which reported in March 2003. Commissioner Cole, who had a broad mandate to look into coercive, violent and unlawful practices in the building and construction industry, detailed over 100 different types of unlawful conduct, painting a disturbing picture of lawlessness in this most important sector. The inadequacies of existing regulatory bodies were also highlighted, paving the way for the independent ABCC.

In the words of Cole, the building and construction industry 'departs from the standards of commercial and industrial conduct exhibited in the rest of the Australian economy' and that to date:

… there has been an insufficient determination on the part of government to establish structures which will enable the industry to operate fairly and productively and in a manner respecting the rights of individuals. There has been an inadequate structure to enforce the law and usual standards applicable in other industries.

One of the cases that Cole focused on was in my home state of Victoria, involving the well-known Japanese food processor, Saizeriya. Saizeriya had planned a major investment of over $200 million in Victoria, which would have created hundreds of jobs directly and up to 3,000 jobs indirectly. Unfortunately, this company became the target of disruptive union behaviour—strikes, boycotts, work bans, restrictions on contractors. As a consequence, the first plant was opened more than a year after schedule in 2003 and the parent company became so disillusioned with the experience that they withdrew all their further investment, dealing a significant blow to the state of Victoria. In the words of the royal commission:

Saizeriya Australia's experience starkly calls into question the effect upon foreign investment requiring building and construction work of any magnitude in Victoria when such work may be subject to unlawful and inappropriate conduct and actions by unions.

Regrettably, in my state of Victoria, Saizeriya has not been the only such experience. The Wonthaggi desalination plant is another recent case in point with 193 days lost to industrial action as a result of unruly union behaviour.

With the building and construction industry contributing billions of dollars each year to our economy—in fact making up a remarkable 7.7 per cent of GDP—we cannot afford anything but a most efficient and effective sector. It is in that context that one can see what a negative impact the abolition of the ABCC will have. Under the ABCC, productivity increased by 10 per cent providing a windfall economic gain of $5.5 billion, GDP rose by 1.5 per cent, inflation fell by 1.2 per cent and the number of working days per 1,000 employees in the construction industry decreased from 224 in 2004 to 24 in 2006 and building costs were slashed by between 20 and 25 per cent. This is the report card of the Australian Building and Construction Commission. In fact, over the past year its investigations have uncovered more than 900 breaches of workplace relations laws and the imposition of $2.5 million in penalties. During its operation, the ABCC has prosecuted more than 70 cases. Unfortunately, these dramatic improvements to these key indicators are now under threat from Labor's new legislative regime. There will be, under this legislation, no equivalent substitute for the ABCC. In its place will sit a new body that is within the confines of Fair Work Australia, the Fair Work Building Industry Inspectorate, which is responsible up the line to the minister, a stark contrast to the independent body, the ABCC, capable of a frank and fearless approach and not beholden to a political directive.

The minister will not be passive, nor is it envisaged that he or she will be. They will have the express authority to give the regulator written directions about its programs and priorities, which could forseeably see less focus on the unlawfulness of union conduct. The perceived conflict of interest here is real. A Labor Party, whose campaigns are funded to a significant degree by the union movement, is going to be reluctant to display an even hand when it comes to regulating their behaviour in the workplace.

What is more, the government's legislation will also lessen the penalties for unlawful conduct and reduce the deterrent for such behaviour. Under the legislation penalties will be reduced by a third, with maximum sanctions being $33,000 for a body corporate and $6,600 for a person. Significantly, as John Lloyd, former ABCC commissioner and now Director of the Work Reform and Productivity Unit at the prestigious Institute of Public Affairs, has pointed out, this comes at a time when the courts are responding 'to repeat offences by a number of unions and their officials' with higher penalties. In fact, he said, '12 cases have resulted in penalties in excess of the Fair Work Act maxima', the majority of which have been made since 2009.

Other worrying changes in this legislation include the watering down of the coercive powers, the switch-off provisions and additional red tape through new administrative processes. It is no wonder, then, that industry stakeholders, respected economic commentators and state governments are lining up to condemn the government's legislative changes. Heather Ridout, outgoing head of the Australia Industry Group, has said, 'The ABCC is carrying out a vital role and is needed today as much as ever.' The National Electrical and Communications Association has said:

… the ABCC has been effective in removing the worst instances. Removing the ABCC or emasculating its powers will see increased inappropriate behaviour and this will lead to the costs of projects blowing out and delays in construction.

The Australian Mine and Metals Association is concerned the changes 'can only lead to more unlawful behaviour and economic vandalism'. Master Builders Australia has said that the 'parliament cannot ignore such court findings and convictions and should not agree to any watering down of the current powers'. And the government of Victoria, where the building and construction industry employs 9.2 per cent of the workforce, contributing 6.6 per cent of the gross state product, said in its submission that the bill 'would hamper the ability of the industry regulator to deal with unlawful industrial action quickly and effectively'.

There it is: universal and unanimous condemnation of the government's actions, yet they refuse to listen. But it should not be any surprise to us. We have seen this government's record when it comes to the workplace and industrial relations reform. The Gillard government have overseen an economy that is now characterised by declining productivity, rising unemployment, worsening industrial action and now a weakening in the accountability mechanisms which protect both workers and their employers. On their watch they have seen unions emboldened, penalty rates smash small business and investors take their money offshore. This cannot continue, but unfortunately it will with this Labor government at the helm.

The minister, Bill Shorten, tells us he has 'always supported, and continues to support, a strong regulator in the building and construction industry'. But, again, these are just cheap words, betrayed by a completely different intent. In my short time in this place I have quickly learnt: do not judge Labor by what they say but by what they do. The abolition of the Australian Building and Construction Commission is another perfect example. This government do not believe in lawful industrial relations practices, this government do not believe in accountability, transparency and rising productivity—and, most of all, this government do not believe in putting a cop on the beat to police their union mates. This is bad legislation, and I join with my colleagues from the coalition in opposing it.