SCHMITKE, Mr Shaun, Deputy Chief Executive Officer, Master Builders Australia

[12:46]

CHAIR: I now call the representative of Master Builders Australia. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I invite you to make a short opening statement. At the conclusion of your remarks I will invite members of the committee to ask questions. I remind members of the committee that we will suspend at 1 pm.

Mr Schmitke : Thanks, Chair. In light of that comment, our office sent an opening statement to the committee earlier today and I'd be happy for that to be taken as read.

CHAIR: Okay, excellent. I wish more witnesses would take that approach, for those who are listening and yet to appear! I'll hand over to Senator O'Sullivan.

Senator O'SULLIVAN: Thank you. On page 8 of your submission is a report extract which outlines how building unions approach bargaining, referred to as 'the system'. Is this still a common feature of the sector?

Mr Schmitke : Yes, regrettably, it is a common feature of how enterprise bargaining is utilised in our industry. Enterprise bargaining and the need for enterprise agreements are a bit of a mixed blessing for building and construction employers. Obviously, they allow certainty, they allow people to implement innovative work practices and they put in place arrangements that suit their own needs. But, at the same time, if I'm to look more broadly, the use of EBAs is essentially the cause of a large degree of industrial action which happens in the building and construction sector.

I think there are many Federal Court cases and royal commission reports, and a number of reviews and inquiries, which have all found how it is that building unions use EBAs, and that is that you need to have a union EBA, and if you don't have one then you're either going to get harangued until you agree or you don't get work. There was a Federal Court judgement handed down earlier this week, I think, in Queensland. It was a $200,000 penalty against the CFMMEU. It involved a small subcontractor who wanted to get onto a larger building site. They didn't have a union EBA and, as a result, they were effectively banned from getting on site. In fact, I think in that case it was recorded that a CFMMEU official was literally standing in front of the workers of the subbie, saying: 'See this agreement here? You need to get your boss to sign this agreement before you can get on site.' Then, of course, I understand that there were a few expletives directed at the subbie by the CFMMEU as well. As I said, I think there was a $200,000-plus fine. That's not uncommon. There's a litany of other decisions like that where the union basically says, 'It's our way or the highway.'

Senator O'SULLIVAN: So, essentially, anyone who is trying to make a non-union EBA runs the gauntlet?

Mr Schmitke : 'Runs the gauntlet' is exactly right. I understand that the committee has been looking at this issue more broadly, and I know other witnesses have provided evidence about the use of enterprise agreements and how there's been a general decline. Building and construction is responsible for one in three enterprise agreements made. We're down to about 2,800, and it used to be double that number. So I think there's a number of different reasons why employers are more and more reluctant to make enterprise agreements.

I've only been in building and construction for five years, but not once have I heard an employer say to me: 'I want to make an enterprise agreement.' They say: 'I need to make an enterprise agreement,' or, 'I have to have an enterprise agreement.' The reasons for that are various, but, essentially, there are two major reasons. Firstly, there's the way in which the CFMEU and other building unions go about negotiating enterprise agreements. Secondly, there are all the complexities associated with the system which make the approval process for enterprise agreements very difficult—hence, we are very supportive of the measures outlined in schedule 3 of this bill.

Senator O'SULLIVAN: I'm conscious of time, so if you'd just keep the answers brief. What does this bill do to address those concerns that you and your members have?

Mr Schmitke : Schedule 3 in particular, we say, will remove a lot of the uncertainty that exists in relation to making an approval of an agreement. Our members will say to us: 'We can agree to a deal. We can speak to our employees. We can come to an arrangement. We can follow all the obligations that we are required to follow to lodge an agreement. But, if we do lodge one, well, it's likely to attract the attention of the building union, when they haven't been involved and they don't have members in that workplace, but all of a sudden they want to get involved with that agreement.' And then, if the commission seeks to approve the agreement or when they approve the agreement, it's common, probably about 25 to 30 per cent of the time, to have the CFMEU seeking to intervene. The grounds on which they intervene are highly speculative. The overwhelming majority of the time, the grounds have no basis in fact. I've in fact put an example of that in the submission. So, for all of those reasons, they just simply think it's all too hard. In fact, a lot of employers will say—well, I've had employers say to me: 'We try and keep ourselves small; we could be three or four times larger than we are, but we don't want to get too big and we don't want to take on new jobs and new staff because, if we do, we'll attract the attention of the CFMEU and then who knows what will happen after that? So we try and fly under the radar. We pay our people right. We could be taking on more work but we simply don't.' So we think that, by addressing some of these problems, it will go some way—obviously, it will not fix all of the concerns we have, but it will go some way—to encouraging more people to use EBAs, and, as I think the committee understands and has heard in evidence, the more EBAs, the better for wages and for jobs.

Senator O'SULLIVAN: Your members are employers. They're the ones that are making the decisions about the jobs that will be available, who they'll hire and the conditions on which they can be paying those people. Are you confident that, based on the feedback that you've had from members with regard to this bill, these changes will assist employers—your members—to be able to create more and better paying jobs?

Mr Schmitke : Absolutely confident, yes.

Senator SHELDON: Thank you for joining us. Are you familiar with the A1 Earthworx Mining & Civil enterprise agreement 2019-20?

Mr Schmitke : I can't say I'm specifically familiar with that agreement.

Senator SHELDON: I'll just give you a copy of it. It's from the submission from the CFMEU.

CHAIR: It needs to be tabled before it can be given to the witness.

Senator SHELDON: Yes. Just while we're doing the process, because I'm mindful we're short of time, and the veracity or not will be decided by the committee of what I'm putting to you—

CHAIR: Just checking: what is this?

Senator SHELDON: This is part of the CFMEU's submission. It's actually in the documents already.

CHAIR: So it's part of—

Senator SHELDON: This is a photocopy of that.

Senator O'NEILL: It has already been received by the committee.

Senator SHELDON: It's already been received by the committee. What I'm putting to you is that that document goes to the specifics of that particular case. It says quite clearly that those workers were $79 to $169 worse off per week and the Fair Work Commission did not approve that agreement. If the union was unable to intervene in this matter, which would be the case under these provisions that have been proposed by the government, then that agreement would likely have gone through, wouldn't it?

Mr Schmitke : I think the bill has an exceptional circumstance provision in relation to how the commission can inform itself if there's any concerns about the allocation of the BOOT. If you had a situation like this—I apologise: I remember this particular matter and certainly I've heard the CFMMEU's views in relation to it—if the bill passes, there will still be the capacity for the commission to inform itself appropriately, having regard to the non-traditional parties involved in making the enterprise agreement. We say that is acceptable, but this is one EBA that is made in our sector, where we have 3,000 EBAs. Each quarter, there are 400 or 500 enterprise agreements lodged and approved by the commission. This, I would suggest, is a failure of the commission to discharge its role in terms of approving enterprise agreements. There is no additional role for a union to assist the commission in terms of approving non-union agreements. It is the commission that has a role to determine whether an agreement passes or doesn't pass. In this situation, if it was the case that the agreement didn't pass the better off overall test, the commission shouldn't have approved it. It's as simple as that.

Senator SHELDON: But we're both asserting that, under the proposed bill, the union would not have had the opportunity to have turned around and carried out the exact same oversight that the commission now has a right to do. The commission more generally calls on the union to have an oversight as an interested and appropriate party to represent the interests of workers and their rights. You've made the point that people want to go under the radar. Isn't that really what you are putting to me about companies like A1 Earthworx Mining & Civil—that they wanted to go under the radar and not have union oversight? This is the point you asserted yourself: 'under the radar and less union oversight'.

Mr Schmitke : No, I said under the radar insofar as not attracting the ire of the union. It doesn't mean that employer wants to go under the radar and not pay appropriate conditions or anything like that.

Senator SHELDON: This employer certainly did.

Mr Schmitke : This company is not a member of Master Builders. If an agreement was approved that did not meet the better off overall test, it shouldn't have been approved. This bill has an exceptional circumstances provision to allow people like the CFMMEU to intervene in circumstances where they think there's a pressing problem. And I would have thought that if there was a demonstrated failure to comply with the BOOT, the commission would be entertaining whatever submissions the CFMMEU or any other union put to it. Certainly, the approval of an agreement is appellable. If there has been a demonstrable error, there are all sorts of further appeal process to address it.

One thing I would say about the fair work laws is that I think they are very good in terms of respecting the fundamentals of a fair go for hours and a fair day's pay for a fair day's work. Whether you look at the Fair Work Act ,or former legislation or earlier iterations at the state and federal level, it's pretty good at fixing problems when there's a demonstrable wrong or where somebody has been badly treated. This is a situation where that has occurred, and it was addressed. I don't think the bill will necessarily have any material impact in terms of the capacity for the commission to inform itself—appropriately. But I would say that it does balance the overwhelming problem we have where there is an intervention from unions in circumstances where there are absolutely no grounds to intervene—they don't have members, they haven't been involved in bargaining. In terms of our history, the BOOT is not one we necessarily get too close to having problems with on the basis of wages. We have a good-paying industry—higher than average. This is a very isolated example. As I said, it is one agreement in 3,000—

Senator SHELDON: The CFMMEU were not members—and you are just using a word—they were not party to the agreement and they intervened. Quite clearly, under this act, their capacity to intervene in the same circumstances in a non-union agreement would be stifled.

Mr Schmitke : It would be stifled, that's right—

Senator SHELDON: Thank you. The next question I want to ask you—

CHAIR: What were going to do—

Senator SHELDON: Isn't it the case that, under the bill—

CHAIR: Sorry, Senator Sheldon. It is 1 o'clock. That concludes the evidence. The committee will now suspend and recommence at 1.30. I'm sure there will be some questions on notice from Senator Sheldon and others coming to you.

Senator O'NEILL: Chair, there will be a lot of questions on notice. Can I once again reiterate concerns about the truncated nature of this inquiry. Three days is wholly inadequate for the scale of this omnibus bill.

CHAIR: I'm sorry, Senator O'Neill. Thank you very much. This committee hearing has suspended and will recommence at 1.30. Thank you, everybody.

Proceedings suspended from 13:00 to 13:32