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Tuesday, 20 March 2012
Page: 2236

Senator CAMERON (New South Wales) (12:23): I am very happy to participate in this second reading debate on the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2012, which is in relation to the abolition of the so-called building and construction watchdog. The ABCC was established by the Howard government to do one thing, and that was to attack and bust trade unionism in the building and contraction industry—simple. It was a flawed institution at its inception. You cannot point to any other country in the world with similar legislation to the building and construction legislation introduced by the Howard government that is against its citizens. You have to remember that it was part of the legislative package of the Howard government. It was part of Work Choices and the building industry and the ABCC. They were two huge attacks on the rights of workers in this country.

The ABCC is a flawed institution, and its flaws will be its downfall. It has been heavily biased against workers and their unions. I listened intently to the contribution of Senator Michaelia Cash and I did not hear one criticism of the conduct of employers in the building and construction industry—not one. I am not surprised, because the coalition stand up for the bosses and they always have a go at the workers. That is the coalition's position. The ABCC turned a blind eye to unlawful conduct on the part of employers. John Lloyd, the then ABCC commissioner, told me at estimates hearings that there was no sham contracting or corporate phoenixing in the industry. Well, what load of nonsense. When it was looked at seriously, it did not take very long to find that sham contracting was going on.

The ABCC has engaged in spin and deception to justify its own existence. It has shown a disregard for its obligations to be a model litigant, and there has been judicial criticism piled upon judicial criticism of the ABCC. Apart from this criticism standing on its own with respect to individual cases, you need to look at it in the context of the ABCC's obligation to be a model litigant under the Commonwealth Legal Services Directions made under the Judiciary Act 1903. The Legal Services Directions mandate the conduct of Commonwealth government agencies and departments in legal proceedings. In essence, being a model litigant requires the Commonwealth and its agencies, as parties to litigation, to act with complete propriety, fairly and in accordance with the highest professional standards. The expectation that the Commonwealth and its agencies will act as a model litigant has been recognised by the courts. Lawyers engaged in litigation on behalf of the Common­wealth—whether the Australian Government Solicitor, in-house or private—need to act in accordance with this obligation and to assist their client agencies to do so.

There is a body of judicial criticism of the ABCC's conduct in litigation which indicates that the ABCC has been guilty of serious lapses in carrying out its obligation to be a model litigant. I have some examples of judicial criticism of this flawed, politically-driven body. In the case of Steven Lovewell v Bradley O'Carroll & others, where Lovewell was an ABCC inspector, the ABCC commenced proceedings in December 2007 against Bradley O'Carroll and the Queensland branch of the CEPU, alleging that O'Carroll had attempted to coerce a head contractor not to engage a subcontractor on the Southport Central project on the Gold Coast. After hearing the evidence, Justice Spender did not feel constrained to make some adverse comments about the merits of the case brought by the ABCC. He observed:

The case, as brought and as evidenced by the evidence yesterday, was misconceived, was completely without merit and should not have been brought.

There is room for the view that if the Commission was even-handed in discharging its task of ensuring industrial harmony and lawfulness in the building or construction industry, proceedings, not necessarily in this court and not necessarily confined to civil industrial law, should have been brought against a company, Underground, and its managing director and possibly another director.

Justice Spender was referring here to the employer in the case, Underground, setting up its employees as independent subcontractors. His Honour said that this arrangement 'is and was a matter requiring thorough investigation'. Did the ABCC conduct an investigation on the employer? No, it did not. It was an investigation that the ABCC was never prepared to undertake. Its sole focus was prosecuting unions, blind to the unlawful behaviour of employers. Justice Spender went on to say:

The present arrangement in the present proceedings, on the material presently available to me, strongly suggests that the arrangement of the workers as 'independent subcontractors' was a sham, a bogus arrangement. It was an example of dishonest fraudulent financial engineering by Underground, whose intended purpose was to avoid payments made under the certified agreement which bound Underground at the time.

Justice Spender went on to say:

The present arrangement in the present proceedings, on the material presently available to me, strongly suggests that the arrangement of the workers as independent subcontractors was a sham, a bogus arrangement. It was an example of dishonest or fraudulent financial engineering by Underground, whose intended purpose was to avoid the payments made under the certified agreement which bound Underground at the time.

Justice Spender also remarked in the admissions made by the ABCC solicitors relating to the managing director of Underground. It was admitted by the ABCC and noted by His Honour that the managing director is a 'foul-mouthed cowboy'. Justice Spender said if the conduct of the managing director of Underground had been engaged in by a union official, it would be extraordinary if that were not the subject of serious investigation and likely prosecution. His Honour went on to say:

The promotion of industrial harmony and the ensuring of lawfulness of conduct of those engaged in the industry of building and construction is extremely important, but as one which requires an even-handed investigation and an even-handed view as to resort to civil or criminal proceedings, and that seems very much to be missing in this case.

In his concluding remarks, Justice Spender said:

The commercial arrangements that Underground entered into with its workers is a species of black economy, which, unfortunately, seems to exist in the building industry, and equally, that it is to be stamped out if at all possible in the payment to workers in such an ad hoc way as to avoid the obligations of the income tax legislation and the superannuation legislation. It is not to be ignored or a blind eye cast when it is engaged in by the employers.

So what Justice Spender has blown apart is this argument of some even-handed, white knight, building industry watchdog out there looking after the interests of the industry. It is clear that Justice Spender has belled the cat and that the ABCC was biased. It was a political operation. It was set up by the Howard government to attack the trade union movement and ignore the behaviour of employers. What could be clearer than a senior judge outlining these flaws and problems with the ABCC? There are a range of other legal cases—if I get time I will come back to them.

I want to turn to this argument that was promoted by Senator Abetz and Senator Cash that somehow the ABCC on its own is responsible for huge improvements in productivity and huge savings to the government purse. The ABCC and its cheer squad, as we have on the other side of the chamber, have consistently claimed that its coercive powers have resulted in large productivity improvements in the industry. The claims, particularly those made in the Econtech 2007 and 2008 reports, have been hotly contested. The coalition speakers on this bill will stand up and say there was an independent analysis. There has been no independent analysis. Econtech were paid and given the brief by the ABCC to tell the ABCC what a great job, supposedly, the ABCC has done in the building and construction industry. Senator Abetz and Senator Cash—and I am sure Senator Back—will repeat the nonsense that there was a $5.9 billion a year benefit through the establishment of the ABCC. It is absolute rubbish.

Murray Wilcox—again, a very highly respected judge—looked at the ABCC and deals with these issues at some length in his report at pages 40 to 60. I challenge Senator Back to go to what Justice Wilcox says and continue the nonsense and fabrications that the coalition are putting. Justice Wilcox asked this question in his October 2008 discussions paper:

The only possible justification of having specially restrictive rules for the building and construction industry must be that this is necessary to provide industrial peace and an acceptable level of productivity. Many people assert that the industry's present happy position, in these respects, is attributable to the BCII Act and the activities of the ABCC. Is there any hard evidence that supports that assertion?

After Justice Wilcox's inquiry, he could not find any. There was not an employer, nor was the ABCC able to justify the nonsensical claims that Senator Abetz has put forward about the so-called fantastic performance of the ABCC.

Like Anzac Day or Moomba, one of the rituals of life these days is the release by Econtech KPMG of its latest modelling report to demonstrate the miraculous effect on productivity that the Stasi-like powers of the ABCC have. The 2007 Econtech report estimated that, as a result of the BCII Act and the ABCC's activities, labour productivity in the building and construction industry had increased by 9.4 per cent—and we have heard these claims repeated constantly by the coalition—the CPI had been reduced by 1.2 percent and the gross domestic product had increased by 1.5 per cent. This had apparently all been achieved in the 15 months between the commencement of the ABCC's activities and the end of 2006.

On this, Justice Wilcox, in his report—on page 42, paragraph 5.33, for Senator Back's interest—notes that, according to a report by Allen Consulting, productivity in the industry had been rising far more steadily and over a longer period of time than is acknowledged by the ABCC. Justice Wilcox said:

Multi-factor productivity in the non-residential construction industry has displayed similar trends to those of labour productivity The multi-factor productivity index measures industry gross value added per unit of capital and labour input. Multi-factor productivity increased strongly through the 1990s and peaked just prior to the introduction of the GST. Following a short but sharp fall in productivity following the introduction of the GST multi-factor productivity rebounded quickly and has been increasing since 2001.

Others have had a look at the nonsense that you will hear from Senator Back about productivity. An analysis was done by Professor David Peetz, and his criticisms were particularly devastating because in his view Econtech had stuffed up badly. All the arguments you hear about how well they have done have been analysed by Justice Wilcox, independent companies and Professor David Peetz and none of them came to the same conclusion as the coalition or the ABCC.

What Professor Peetz showed is that Econtech had got its sums wrong. Rather than a 9.4 per cent reduction in the gap between housing and non-housing construc­tion costs the reduction had been 1.3 per cent. Peetz pointed out problems with Econtech's efforts to compare actual productivity in the sector with projected productivity based on the rest of the economy, including how, in spite of the absence of the ABCC and royal commissions, construction industry produc­tivity had surged far above predicted levels in the late 1990s.

Peetz found that the cost comparisons between the domestic house construction sector and the commercial construction sector were deliberately framed so as to create the misleading impression that costs in the housing sector are lower because of the absence of unions in that sector. Again, the ABCC and Econtech have concocted an absolute piece of nonsense in terms of productivity. Peetz concluded:

If ever there was an example of how economic modelling results are driven by assumptions and not data, this is it.

I have raised on a number of occasions in this place the assumptions that were put in. What some of the assumptions were was that on some of the big construction sites if there are no penalty rates paid, if you work 365 days a year and 24 hours a day, and if there are no public holidays and no annual leave, you can gain all these increases in productivity and reduce the costs in the industry. Sure, if workers become slaves it will be extremely cheap to build any construction in the building and construction industry. But we are not slaves in this country and, apart from Work Choices and the ABCC attempting to push workers' wages and conditions down, we have always had a view that if you go to work, you should be treated fairly, you should be treated well and you should get a decent pay for the effort you put in. That is the philosophy of the Labor Party. Unfortunately, it is not the philosophy of the ABCC or the coalition or the Work Choices warriors on the other side of this chamber.

A year later after these devastating analyses on the so-called economic modelling by Econtech, the ABCC released an updated report by Econtech. The report quietly fixed the howling error made the previous year but kept the claims about massive economic benefits. Despite its wholesale overturning of the cost comparisons data relied on in the 2007 report, it repeated the same fabricated assertions made in 2007 and you will hear Senator Back—because his speech is already written, the nonsense is already written in his speech—run the same line that the ABCC ran; namely, that the GDP is 1.5 per cent higher, the CPI is 1.2 per cent lower and the price of dwellings are 2.5 per cent lower.

The report defied logic. No-one who has looked at this in an independent manner believes these figures—except the coalition for the propaganda and their attacks on the trade union movement. That is the only group in the country: the coalition who love Work Choices, who love getting rid of penalty rates for workers, who love attacking the trade union movement and who in 40 minutes of speeches on this bill have never once criticised the employers in the industry who behave badly—not one criticism.

I challenge Senator Back, who is speaking after me, to deal with these criticisms of the economic modelling and nonsense that has been put up about the ABCC. I challenge Senator Back to deal with the judicial criticisms of the ABCC. Not only is the ABCC acting outside of what is regarded as good and proper legal procedures; it is fudging figures to try and justify its existence. The ABCC is a blight on democracy in this country. We are the only country in the world that provides penalties against building and construction workers, ordinary Australians, that are worse than penalties against terrorists. It is because the coalition are Work Choice warriors. Their position is clear: they do not want workers to be in unions and they do not want workers to have a fair go. This bill is a good deal. Get rid of the ABCC.