Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download PDFDownload PDF   View Parlview VideoWatch ParlView Video

Previous Fragment    Next Fragment
Education and Employment Legislation Committee
04/03/2020
Estimates
ATTORNEY-GENERAL'S PORTFOLIO
Australian Building and Construction Commission

Australian Building and Construction Commission

[11:44]

CHAIR: I welcome Commissioner Stephen McBurney. Mr McBurney, do you wish to make an opening statement?

Mr McBurney : Thank you, Chair. I don't have an opening statement.

Senator SHELDON: The quarterly report on the performance of the functions and the exercise of powers of the Australian Building and Construction Commissioner for the first quarter of 2019-20, operations from 1 July to 30 September inclusive, was tabled by the Attorney-General, the Minister for Industrial Relations, on 12 February 2020. It was presented to the minister by the department on 18 November 2019. I want to explore this question about the data, because it's not particularly transparent. For example, categories of matters investigated are separated, listed by totals are not provided. Nonetheless, in the annual report for 2018-19 the information provided suggests a significant bias towards the organisation prosecuting unions as opposed to investigating wage theft and sham contracting. I refer to that quarterly report on the functions and exercise. I note the report for the July to September period was handed to the Minister on 18 November 2019 and was not publicly released until mid-February. Is that correct?

Mr McBurney : The quarterly report is prepared after the close of the quarter and provided to the minister's office. The minister has a period in which he must table the report. That is within 15 sitting days of the receipt by him of the report. The quarterly report for Q1 was tabled within the time period stipulated.

Senator SHELDON: Correct me if I am wrong. The report is released in mid-February. I'm working backwards. You're saying that you gave the July to September report to the Minister on 18 November.

Mr McBurney : Yes, that's right. That's indicated in the front of the report. The letter of transmittal was 18 November 2019. That's when I provided the report to my responsible minister.

Senator SHELDON: So the minister didn't release the report in time—is that what you're saying?

Mr McBurney : No. The minister did release the report in time. The minister has 15 sitting days to table the report in parliament. I'm advised the report was tabled within the time stipulated.

Senator SHELDON: So effectively, by not releasing the report earlier, we had to then wait for three months for the report to be made available to the public to be able to consider it. To me this is quite a long period between the report—certainly for anyone listening to this—September, and then waiting for a quarterly report for nearly some five months later.

Mr McBurney : I just note that for the Q1 report, the letter of transmittal was 18 November 2019. Normally the Q1 report takes longer than other reports because once it's received by the minister, you then have the shutdown for the Christmas/New Year period. We endeavour to provide our report within eight to 12 weeks. Every report we provided to the minister includes the letter of transmittal showing the date it's provided to the minister. Since the quarterly reports have been required, since 2 December 2016, the responsible minister has always tabled the quarterly report within the stipulated time.

Senator SHELDON: Is there any particular requirement for information to be presented in a certain way in the report?

Mr McBurney : Yes. The manner in which the information is provided is as required under the legislation we operate.

Senator SHELDON: Can you explain how the report doesn't provide totals in relation to internal costs listed?

Mr McBurney : It's not a requirement to provide totals for internal costs listed.

Senator SHELDON: It's not a requirement, then let's not make it transparent. On page 12, you state that the internal costs are approximate. Why are they approximate rather than actual?

Mr McBurney : What we set out is the methodology there. It's an approximate internal cost because there is no actual cost. We're not like a law firm where we run time sheets and bill our clients for our work. It is an approximate internal cost based on our inCase system which generates those figures.

Senator SHELDON: Given that there are no totals included in the report, would you agree that this makes it rather difficult for anyone to assess the proportion of resources the agency allocates to various types of work?

Mr McBurney : I'm happy to provide further information on notice if that would assist. But what we provide in the report, as we have done since the first report, is what the federal parliament has required us to report on. We report in this manner because this is what the federal parliament decreed.

Senator SHELDON: So you will provide further detail about the actual allocation of work and estimated costs?

Mr McBurney : I have provided that detail previously to this committee and I'm happy to provide whatever advice and assistance this committee requires and further information. The quarterly report provides the information required in accordance with the reporting—

Senator SHELDON: Thank you, Mr McBurney. You explained that before.

Mr McBurney : More detailed information about how we apply our resources and our operations is provided in our annual report, as is the case for other government departments and agencies. This quarterly report is an additional reporting requirement that applies uniquely to my agency.

Senator SHELDON: Which came out five months after the quarter. I also note that in Section g) on page 18—legal expenses incurred as a result of enforcement action—there is no breakdown at all on the topics of complaint. Can you provide a breakdown in the same format as other parts of the report?

Mr McBurney : I'll take it on notice, and we'll endeavour to provide that information to you.

Senator SHELDON: Given that no totals were provided, I have done calculations based on the report on the costs incurred pursuing allegations made by employers versus complaints against employers. The report says that the ABCC spent over twice as much investigating employer complaints versus complaints against employers. Would that be correct?

Mr McBurney : I haven't done that calculation, but I'll take you at your word for that.

Senator SHELDON: Doesn't this demonstrate a failure by your organisation to properly implement your legislative charter, which is actually to approach in an equal-handed way both employers and unions and workers in this industry?

Mr McBurney : No, I don't accept that. On the contrary, what the quarterly report demonstrates is that we react to every matter that's brought before us. There are a broad range of matters set out in the quarterly report—coercion, right of entry, unlawful industrial action, wages and entitlements, unlawful picketing—the list goes on. That's set out comprehensively in the quarterly report. I would make the point that the work we undertake is based partly on the complaints and inquiries we have received. We report on that in our quarterly report and our annual report. Our outcomes are based upon our compliance activities. So where we have engagement with any building industry participant, the act makes clear that we must discharge our responsibilities impartially and apolitically. We do that everyday. What we see—

Senator SHELDON: There's an example of that impartiality—

CHAIR: You interrupted the witness.

Senator SHELDON: The witness was taking a breath.

CHAIR: He was at the comma stage of answering a question. If he wants to get to the full stop stage—

Senator SHELDON: I'm just mindful that we haven't got as much time as would be desirable, which may be all day, but we haven't got all day.

CHAIR: We have adopted a program and we'll stick with the program. If you could finish your answer, Mr McBurney, I'm sure Senator Sheldon will have a few more questions, and then we'll go to Senator O'Sullivan.

Mr McBurney : The quarterly report sets out our investigations in some detail. What the quarterly report doesn't include, Senator, is all of the details of our compliance activities. You won't see a detailed breakdown of court outcomes in the quarterly report because that's not required. You won't see a detailed breakdown of our code activities because that's not required. But we include all of that in our annual report.

Senator SHELDON: Isn't it correct that in respect to your internal costs, to investigations, just 14 per cent was allocated to investigating wages and entitlements and sham contracting matters. That's $42,247 out of a total of $301,408. It's a substantial difference?

Mr McBurney : Yes, there is, and if I could explain—

Senator SHELDON: I just want to put this in the picture. You've got an industry with over $320 million—some estimate higher, but certainly $320 million—in wages theft, and you have such little amount that's actually calculated in going after what is an industry rife with wages theft and, of course, serious concerns about safety and like matters. It seems a very different amount of money that's being spent on going after unions and workers than going after employers who are stealing and thieving and injuring people.

Mr McBurney : If I could just address your question. I caution against a misreading of the figures contained in the quarterly report. What you are referring to is only the internal cost for investigations of wages and entitlements. It doesn't include the internal costs for our audit activity on wages and entitlements. That's important because we have a dedicated wages and entitlements team. The vast majority of our recoveries are generated from our audit activity. Eighty-five per cent of the recoveries to date come from audit activity. All of the internal costs for our audit activity are separate from what's included in the quarterly report.

Senator SHELDON: That's $1 million that's been recouped by the ABCC out of $320 million that's been estimated as theft. It doesn't seem very successful.

Mr McBurney : I caution against using that $320 million figure.

Senator SHELDON: Is it higher?

CHAIR: Can we let the witness finish.

Mr McBurney : I just need to make clear that that $320 million figure is not a figure generated from us and it's not a figure generated by the Fair Work Ombudsman. It needs to be understood in light of our more refined jurisdiction. We do not have responsibility for residential building and construction. The $320 million figure you referred to includes that component. The $320 million figure has been provided by PricewaterhouseCoopers in their report. We don't have access to the data that underlines that estimate.

Senator O'SULLIVAN: Just on this line of questioning, can you explain to me the ABCC's work in recovering wages as primarily the result of proactive audits. Is that correct?

Mr McBurney : Yes, that's the case. Deputy Commissioner Pettit, who heads up our wages and inspectorate operations, can provide further detail, but we break up our wages and entitlements activities to reacting to complaints and inquiries received through our 1800 hotline or web inquiries or direct contact with the agency; and secondly, we have our audit program. I'll just defer to Mr Pettit and he can step you through that process.

Mr Pettit : That's correct. We conduct a large number of wage audits in the sector. In the period between 2 December 2016, when we acquired the jurisdiction, to 31 December 2019 we completed 488 audits. We currently have 94 audits ongoing. These are effectively desk based audits, where we request a sample of employer records. We analyse those records to assess them against the relevant Fair Work instrument. If we identify issues, we go back to the employer, notify them of the issues and work with them to review our reasoning, their records and rectify any resulting underpayments. That process has resulted in recoveries of $1,443,085 for 2,582 employees.

Senator O'SULLIVAN: Do you get many complaints from workers in the industry? If so, how do you go about resolving the issue?

Mr Pettit : We do get complaints. Over that same period, 2 December 2016 to 31 December 2019, we received 189 complaints. Where we receive a complaint—we will respond to every complaint—that goes to our wages team and they will have a look at it. If there's a prima facie breach they will commence an investigation and work with the employer and the employee to try and resolve the issue. Sometimes that does require us to use our statutory powers to get records from employers, but generally we are able to work through those. So the 189 complaints have ended with 105 investigations being concluded, and those investigations have recovered $256,874 for 64 employees. So you will see there that approximately 85 per cent of our recoveries come from the proactive audits.

Senator O'SULLIVAN: What about the unions in the industry who are supposed to represent the workers? Do they help you carry out your work as a regulator in recovering underpayments?

Mr Pettit : They have a complementary jurisdiction, so they do their own activities to recover wages. But they have not referred any matters to us.

Senator O'SULLIVAN: So they haven't referred any matters. Have you attempted to engage them on this matter?

Mr McBurney : Perhaps if I could answer that, Senator. When I commenced in the position in February 2018, I wrote to the union seeking their support and assistance and I had no engagement as a result of those approaches.

Senator O'SULLIVAN: They weren't forthcoming in responding to that request?

Mr McBurney : They were not forthcoming in responding to that request.

Senator O'SULLIVAN: Surely they don't hinder the actual work of the ABCC in that regard?

Senator SHELDON: The government's very biased.

CHAIR: Settle down.

Mr McBurney : To answer your question directly, we have, and I've provided previous evidence to this committee of the hindrance and obstruction of my inspectors in going about their wages and entitlements function. That was highlighted on the Royal Hobart Hospital site where the union posted photos of my inspectors on their website. They advised the workers, the foreign workers who'd been underpaid on that project, not to talk to the ABCC. So they took the approach of not cooperating with us and telling the workers they should not speak to the ABCC. Can I just raise one further issue.

Senator SHELDON: We'll be getting to those matters a bit later on actually.

Mr McBurney : Could I raise one further issue. As well as my initial approach to the union as recently as 7 February 2020, I've written to the national construction secretary of the CFMMEU and I have sought his advice and details from him of the wages and entitlements the union has claimed to have recovered since we've had responsibility for this on 2 December 2016. And that request for the details of the union's recoveries has been refused. The union has responded to me—Mr Noonan on 27 February 2020—advising he would not be providing any information about the recoveries made by the CFMMEU for workers.

There are good reasons why I've requested that information. We want to see and compare what the unions have recovered to what we've recovered, because we can then consider as regulator whether there are any court proceedings that ought to be taken against employers who have deliberately or systemically underpaid workers. The unions refused to provide that information. We also want that information to guide our future audit activities. We want to compare which employers the unions recovered money from with who we've recovered money from, because that will inform where we can target our wage recovery activities.

We're serious about recovering wages. We've got a dedicated team of staff who are doing a terrific job. We're recovering 85 per cent on our own proactive audits. We want to continue to perform that function and we welcome cooperation from the union to assist us to perform that function. I would much prefer to spend more money and more resources on that function rather than having to devote a huge chunk of my resources and legal budget on putting the union before the court for contraventions of the act.

Senator SHELDON: Can I request that both letters—

Mr McBurney : I'm happy to table those letters.

Senator SHELDON: That would be great.

Mr McBurney : Could I just clarify that you are wanting the recent letters—my letter to the CFMMEU and the CFMMEU's response?

Senator SHELDON: Yes.

Mr McBurney : I'll table those.

Senator SHELDON: Thank you.

Senator O'SULLIVAN: Before I jump to this balance question, I have another question in relation to the CFMMEU. We've heard that, when the CFMMEU are recovering workers' benefits, there's a practice of taking a bit of a finder's fee. Have you seen evidence of this? Is this happening? These are workers' benefits that the union is taking, allegedly.

Mr McBurney : We haven't been provided the details from the union. I'm aware of at least one complaint where a worker claimed that, as part of a settlement of his entitlements, a proportion was retained by the union. All I can say is that when we as regulator recover workers' wages we don't take a commission, we don't retain a profit, we don't charge an administrative fee, we don't levy legal expenses and we don't ask for a donation. It is returned in full on our calculations as to the extent—

Senator O'SULLIVAN: The full entitlement goes back to the worker—is that correct?

Mr McBurney : That's what we endeavour to do.

Senator O'SULLIVAN: I'm sure the chair will only give me a few more minutes; so I'll run through these questions quickly. When you hear of an issue, whether it's with an employer or with another organisation, what do you do? What's your general approach?

Mr McBurney : We take an open mind to any inquiry that comes into the agency, and we attempt to work with any building industry participant to answer their question and resolve their issue. Why do we do that? Because that's what our act requires. We must firstly provide advice and assistance to any building industry participant—be it an employer, a worker or a union—and attempt to resolve their query. Where we believe there has been a contravention of the law, we will commence an investigation. We will take that investigation as far as we can and apply an open mind to that investigation. Ultimately, if we're not satisfied as to there being sufficient evidence, we can take it no further. Where we obtain sufficient evidence, that's where we consider litigation and we proceed to court.

Senator O'SULLIVAN: Are there any particular entities that do not engage with you as the regulator when you're seeking to rectify a problem?

Mr McBurney : We have very limited engagement with the unions generally, and the CFMMEU specifically. My primary means of engagement with the CFMMEU is in court appointed mediations after we've commenced proceedings.

Senator O'SULLIVAN: In the Castlemaine Police Station case, where the court asked the CFMMEU counsel specifically whether the CFMMEU wanted to apologise for its law-breaking action and maybe show some contrition or confirm that they won't do it again, the counsel's response was no. Is that correct? Do you find the CFMMEU failing to show any remorse for its law-breaking actions? Isn't it the case that this illustrates an organisation that has adopted law-breaking as a particular business model?

Mr McBurney : I would just defer to the judgements of the Federal Circuit Court and the full Federal Court on this very issue. We have had a number of matters where the union has admitted contraventions and it has proceeded to a penalty hearing. But time and again we see the judges commenting on two specific issues relevant to the CFMMEU: its no contrition and its no remorse. We see repeat offending from the union on a scale that is not present for any other building industry participant—no other union, no employers and no workers. We have this unique feature with the CFMMEU that the courts have commented on—that this is a business model for them to refuse or fail to comply with.

Senator O'SULLIVAN: Would it be right in thinking that, when you are talking about the costs of litigation, there is a disproportionate focus here on the CFMMEU, because they are, in fact, repeated law-breakers?

Mr McBurney : We can only conduct investigations with an open mind. What our current litigation shows is that we have a broad range of matters. We have an age discrimination case that we're proceeding against an employer. We have a wages case that we're proceeding against an employer. We finalised a wages related case last week, with penalties against an employer. But 28 of our 36 current cases are against the CFMMEU and its respondents and officials. We have a much lower number against everyone else. It's eight against the rest of the industry but 28 against the union. Last year we were successful in 15 of 16 cases, and the courts imposed penalties of $4.2 million—$4.1 million was on the CFMMEU, so that gives you an indication of where it sits.

Senator O'SULLIVAN: Thanks for the extra 90 seconds, Chair.

CHAIR: Because we're going to go through to quarter to one, I might remind everybody of the timings. So far on the timings, One Nation have had 19 minutes, the Greens have had three minutes and 53 seconds, the LNP would have had approximately 24 minutes and Labor would have had approximately 108 minutes. So Labor are getting plenty of time. Anyway, Senator Sheldon has the call.

Senator SHELDON: To remind you of what estimates are for, it's actually for the opposition to turn around and ask questions.

CHAIR: It's for the senators.

Senator Payne: It's for the whole Senate, actually.

Senator SHELDON: Even worse, concerns were raised in regard to the correspondence that you, Mr McBurney, referred to before, regarding the so-called independence of your organisation. Are you aware that there's a case with the Finance Sector Union which was taken against the Commonwealth Bank? The Fair Work Ombudsman decided to also get engaged in proceedings, which has prejudiced the case that's been taken forward by the Finance Sector Union. I'm not saying that the Fair Work Ombudsman—unlike what I would say this about your organisation—is discriminatory. Clearly, your organisation does have a complete imbalance regarding its approach to employees and workers. It has an illogical bias, in my very clear view. But there is a prejudice with the Fair Work Ombudsman, even in a situation where there's a balanced position, when they get involved in certain cases. I'm giving this example of the Commonwealth Bank. I raise this because, in the correspondence that the CFMMEU came back to you with, they said that there was $1 million. You say now that those figures have slightly increased in an industry that has hundreds of millions of dollars stolen at the same time the CFMMEU has obtained $60 million. This is the allegation in this letter, 'The ABCC is now directing contractors not to audit subcontractors who seek to ensure compliance with statutory on their sites.' Is that correct? I'd like you to answer this.

Mr McBurney : You said that the unions recovered $60 million in the time that we've recovered $1 million. The correspondence indicates that the union is claiming to have recovered $60 million in the last five years. I need to place on the record we've had this function since 2 December 2016, and I'm not requesting information from the union about the last five years. I'm asking for—

Senator SHELDON: So did they calculate for it to be $40 million in comparison with your $1 million?

CHAIR: Can we stop interrupting the witness, please.

Mr McBurney : I've requested the union provide us with details for a confined period since 2 December 2016, because, prior to that date, it was the responsibility of the Fair Work Ombudsman. I'm not proposing to go into competition with the union for the recovery of wages. Where an employer and an employee reach a resolution in relation to recovery of wages, that's a good thing. If it doesn't come to the regulator, that's a good outcome. Where a union—be it the CFMEU or any of the other unions that operate in our sector—is able to recover wages for employees, we think that's a good thing. We're not seeking to cut into their activities in that regard, but what we are seeking to do as a regulator is to get an understanding of the extent of the problem, to get an understanding of what these wage recoveries look like and to be able to use it to get better outcomes for workers. In response to your question about the issue raised in your letter, I might just defer to my manager for the building code, who is able to address how the 2016 building code impacts upon this particular issue.

Senator SHELDON: Is this the issue of auditing companies, auditing their sites for compliance with the law?

Mr McBurney : Yes.

Ms Drennan : The issue that you've referred to comes out of a provision that's in the Building Code 2016. Section 11 of the code relates to the content of enterprise agreements. Section 11(3)(k) says:

clauses are not permitted to be included in enterprise agreements that:

… … …

… provide for the monitoring of agreements by persons other than the employer and employees to whom the agreement applies …

Further, section 11(4) says:

A code covered entity must not engage in conduct, or implement a procedure or practice … in respect of building work which has, or is likely to have, any of the effects described in subsections (1) or (3) if the conduct, practice or procedure was contained in an enterprise agreement.

So essentially the effect of that is, if a head contractor engages a subcontractor and the subcontractor pays its employees in accordance with an enterprise agreement, the head contractor is prevented from auditing the subcontractor's compliance with their enterprise agreement. If they're covered by an award, they're not so prevented. In those circumstances, it's just code-covered contractors that it applies to. We'd then advise those contractors that, if an enterprise agreement applies, they are able to get a statutory declaration from the subcontractor which says that they're paying in accordance with that.

Senator SHELDON: I've worked in the construction industry on the transport side of it. That's my previous experience for some 30 years. In that case, you're saying that if someone gives you a statutory declaration in an industry that widely uses wage theft, has large examples of migrant exploitation and has large examples of phoenixing and where decent companies have to compete with those companies, you're telling contractors they cannot audit a company to see if they're complying because you received a statutory declaration?

Ms Drennan : No, sorry, I'll just clarify: we don't receive the statutory declaration. The provision of the code prevents those companies in that circumstance auditing the enterprise agreement. But they're also required to—

Senator SHELDON: So when wage theft is carried out by those companies, because they've received a statutory declaration, they can't carry out an investigation?

Ms Drennan : They'd be required to, if they had any—

Senator SHELDON: That's to make sure there's compliance.

CHAIR: Senator Sheldon, let the witness please get to the first comma of her answer.

Ms Drennan : If the contractor had any information at all that would suggest that the subcontractor wasn't complying with the law, they'd have an obligation to report that to the ABCC. We would then be able to conduct that investigation and our wages team would be able to conduct those inquiries.

Senator SHELDON: You're interfering with an employer making sure that the law is being abided by people that subcontract to them on a contract. You're interfering with that. So you're making it more complicated to turn around and make sure that people are abiding by the law. All I can see is that you're pushing yourself into a situation where resources, time and effort are being wasted, rather than going after the auditing of subcontractors. You've mentioned before that you do auditing. Is your position that you can audit subcontractors? You're telling me that you'd like subcontractors to be notified to you, when there are how many thousand subcontractors in the industries that you cover—how many subcontractors?

Mr McBurney : I don't have that figure.

Senator SHELDON: What are the figures on wage theft that you identify separately within the industry that you have responsibility for?

Mr McBurney : The figure that we recover?

Senator SHELDON: No, the figure that you identify as ongoing wage theft that is within the industry. What is your estimation of actual wage theft?

Mr McBurney : I don't have an estimate.

Senator SHELDON: You don't know.

CHAIR: Senator Sheldon, he didn't say he didn't know. He said he didn't have the answer with him. There is a difference there.

Mr McBurney : Just bearing in mind that I've gone to the definition of where building work starts and finishes. Our jurisdiction is prescribed by the Building and Construction Industry (Improving Productivity) Act. It sets out the definition for our jurisdiction—

Senator SHELDON: I'm not interfering with your answer, because you've given that answer before to a previous question. Do you have the figures or are you able to get the figures for us today on the amount of wage theft that you say exists within the industry that you have responsibility for?

Mr McBurney : The figures I can give you are the figures of our recoveries for wages and entitlements of workers.

Senator SHELDON: So you can't say the amount of money you estimate—

CHAIR: Senator Sheldon, the witness is answering your question. Stop interrupting him.

Mr McBurney : I can't say, Senator, and I'm not sure that anyone else can for our jurisdiction.

Senator SHELDON: It would be an appropriate thing to say that there's hundreds of millions of dollars in light of the PwC report?

CHAIR: Senator Sheldon, you're badgering the witness.

Senator SHELDON: Regarding subcontractors that have been audited, how many prosecutions have you carried out against subcontractors from those random audits from 2 December 2016 that you've responsibility?

Mr McBurney : Senator, there are—

Senator SHELDON: Don't you carry out random audits?

CHAIR: Can you let the witness answer your first question? I don't think he even got to the first word of the answer.

Senator SHELDON: I wanted to make sure he had both questions at the same time so he could answer it efficiently.

CHAIR: Maybe ask the questions consecutively or let him try to answer the first question. Please answer the first question and then we'll get to the second question.

Mr McBurney : Could you remind me of the first question?

Senator SHELDON: Thanks for wasting time.

CHAIR: We're not wasting time.

Senator SHELDON: In subcontracting, how many audits have you carried out on subcontractors randomly since 2 December 2016, and how many prosecutions?

Mr McBurney : I will take the question about the number of audits conducted under the building code on notice. Our code audit activities do not result in prosecutions. Invariably, the final outcome of our code audit activities is either voluntary rectification or the recommendation to the minister for a sanction. We do not commence proceedings under the Building Code 2016. If you're asking about proceedings commenced by the agency in relation to wages and entitlements, we have commenced one proceeding, which is the SWAT building case. I can take you to the details of that case if you wish.

Senator SHELDON: No, that's fine. I'm aware of that case.

Mr McBurney : We have a second wages related case we have commenced and finalised. A decision was handed down by the Federal Court last week in relation to that case. I'd be happy to provide you with the details of that case. That case bein Big Li.

Senator SHELDON: I'm aware of that case as well. That adds up to $1.4 million. There are two companies that have been in those circumstances that payments have been received from since 2 December 2016?

Mr McBurney : Yes.

Senator SHELDON: That's all?

Mr McBurney : Two companies have been before the court in relation to our wages and entitlements function, one being a specific wages case and the second being a company that refused to comply with our statutory notices issued in furtherance of a wages investigation.

Senator Payne: And there continues to be the opportunity for approximately a month, if there are concerns from you or your colleagues on these matters in the building code context, to actually make a submission to the discussion paper which has been released by the Minister for Industrial Relations. You haven't made submissions to the previous two, but perhaps this one might be of interest.

Senator SHELDON: So we've got a month, you're saying?

Senator Payne: Yes. Until 3 April as I understand.

Senator SHELDON: I'm done, Chair.

Senator Payne: I guess that was a no.

Mr Pettit : Could I correct an answer I gave earlier? I was asked before for the total level of our recoveries. I think I may have jumbled two numbers. Just to make it clear on the record: our total level of recoveries from 2 December 2016 to 31 December 2019 is $1,699,959 for 2,646 employees. That number comprises $1,443,085 for 2,582 employees as a result of our audit activity. I believe our number of investigations was correct: $256,874 for 64 employees as a result of investigations.

Senator WALSH: Before we go to a different line, I want to clarify a couple of things that have been said. Can you confirm that you are advising head contractors that they can't audit their own subcontractors?

Ms Drennan : In terms of head contractors that are covered by the Building Code 2016, there's a prohibition in the code on auditing third-party monitoring of enterprise agreements. If they're engaging a subcontractor and that subcontractor is covered by an enterprise agreement, they wouldn't be able to audit the subcontractor's compliance with their enterprise agreement. They could refer, though, to us if there were an issue and we'd be able to do those inquiries.

Senator WALSH: So it's correct that you are providing advice to head contractors along the lines that you've just described, that they can't audit their own subcontractors?

Ms Drennan : In the circumstances that I've described, we're outlining the requirements of the code.

Senator WALSH: In relation to the proactive audits that you just went back to, I think you described it as a desktop review, where you're getting payroll records from the relevant employers.

Mr Pettit : That's correct.

Senator WALSH: If an employer were doing an underpayment by using employees who are off the books, who are being paid cash, they wouldn't be picked up, but if there were sham contracting involved, where people are on ABNs, they would also not be covered by your desktop audit—is that correct?

Mr Pettit : We can't say we always identify those things, but our inspectors, as they're doing the wage audits, if there are flags that come up—for example, if we contact an employer who we know is conducting work on a building site and, when we ask for their records, there are no time or wage records and they say they have no employees, that would be a red flag to us. We'd actually be contacting that employer, perhaps even doing a site visit to talk to workers on the site, to work out what the arrangements are for that company conducting its business.

Senator WALSH: Sorry if I missed this in all of the back and forward, but did you give us some figures on what wages you've recovered in relation to sham contracting that you might have followed up in that way?

Mr Pettit : We have concluded 26 sham contracting investigations. One of the issues we have is a matter of definition. Under the legislation, sham contracting is three separate provisions—sections 357, 358 and 359—which talk about the employer misrepresenting the employment relationship. When an inquiry comes in to us or a complaint, if that is the allegation, that the employer has mischaracterised the employment relationship, it will go onto our system as sham contracting. However, some of the other ones we record simply as just a wages investigation. It may also have those sham contracting elements as well.

Senator WALSH: For the interest of time, I'm just wondering whether you have a dollar amount that you've recovered for people that you would say have been on sham contracts?

Mr Pettit : Of those 26 investigations that have been concluded, there were two that resulted in wage recoveries for the employees. It was $15,397.64.

Senator WALSH: So you've recovered around $15,000 for two individuals on sham contracts?

Mr Pettit : That's correct.

Senator WALSH: Over what time period?

Mr Pettit : From 2 December 2016 until 31 December.

Senator WALSH: Since you had the power?

Mr Pettit : Yes.

Senator WALSH: That's $15,000 for two people on sham contracts?

Mr Pettit : Yes.

Senator WALSH: You provided the number of employees who were assisted with the proactive audits. How many companies did you recover the money from and can you tell us who those companies are?

Mr Pettit : I can tell you the total number of employers we've recovered money from. Are you after just the audit number or the total number?

Senator WALSH: The number that relates to the figures you just gave—the $1.69 million and the 2,600 employees.

Mr Pettit : Our total number of recoveries relates to 126 employers, the audit number relates to 97 employers and the investigations relate to 30 employers.

Senator WALSH: Can you provide the committee with the names of those employers on notice.

Mr Pettit : We'll take that on notice.

Senator WALSH: Are you taking the question as to whether you can provide the names on notice or are you saying you will provide the names on notice?

Mr Pettit : I think we'll take both of those on notice.

Mr McBurney : We'll take the question on notice and seek advice as to whether we can provide that.

Senator SHELDON: It's a very important disincentive to employers that break the law—to be named and shamed—and it's been a current issue. If you are able to provide those names, that would be very helpful.

Mr McBurney : We'll take advice on that.

Mr Pettit : Can I just point out that the other side of that is that, if we release the names of companies that have underpaid their workers, it is a disincentive to cooperate with the regulator. Some of that could be inadvertent mistakes that the employers have made. Some of these are quite small employers.

Senator WALSH: We'll take that as a comment and also make the comment that it would also have a significant deterrent effect as well.

Senator SHELDON: That's an interesting approach. We note that you are taking on LendLease because of issues in regard to the Code for the Tendering and Performance of Building Work 2016. I'm going to ask you some questions about the interpretation of section 13(2)(j) in the 2016 code. People are being prosecuted for having Eureka flags on sites. There's a case against LendLease at the moment because of wearing stickers on hats. I understand that your inspectors are shoving cameras in people's faces and taking photos of their helmets because they have CFMEU stickers on them. They have a safety sticker on them along with that. I understand that you've been taking photos of posters that have a CFMEU label on them.

I understand that LendLease has said they are concerned about the position between the code of practice and freedom of association and people's right to express themselves under the regulations and certainly under High Court standards. The regulator doesn't prosecute many employers; we know that. But they are going to prosecute an employer because he has a sticker on his hat. How do you interpret section 13(2)(j) of the 2016 code and have you prosecuted the Master Builders Association when someone has a Master Builders Association sticker on their truck, on their helmet or on their clothing?

Mr McBurney : I'm not aware of any prosecution of any person for breaching section 13(2)(j). Your question was prefaced on that basis. We have not prosecuted anyone for a breach of section 13(2)(j). In respect of—

Senator SHELDON: Sorry, it was a compliance notice which threatened sanctions against LendLease if they failed to comply, relying on an interpretation of section 13(2)(j) of the 2016 code.

Mr McBurney : Yes. I'll come to the LendLease matter. We are not prosecuting LendLease. I need to make that clear.

Senator SHELDON: Have you threatened sanctions, saying they need to comply?

Mr McBurney : What's occurred is that LendLease have been served with a compliance notice. That compliance notice requires them to address issues relevant to section 13(2)(j) of the Building Code 2016. LendLease have exercised their legal right to challenge that compliance notice in the Federal Court, and we have accepted service of that proceeding and we will proceed to the Federal Court because, above and beyond everything else, LendLease are entitled to test the notice and test our guidance on section 13(2)(j). That is the matter that is currently before the court. There have been no sanctions threatened or imposed in relation to this case. All that's happened to date is that a compliance notice has been served on LendLease by an ABCC inspector, and that compliance notice is currently before the Federal Court to determine whether the compliance notice is valid.

Senator SHELDON: If the compliance notice was found to be valid and there was still people with Eureka flags and stickers on their hats, would they potentially be prosecuted?

Mr McBurney : No. A person cannot be prosecuted for wearing a sticker on a hat. I am aware of the information that has been put out by the union talking about the fines for workers. There has not been one fine for a worker for wearing a sticker on a hat. There has not been one fine for a union for flying a flag. They are beyond the scope of the Building Code. The Building Code can only apply to a contractor, a code covered entity. I just need to make the point that, in relation to the code, they can't be fined. The ultimate sanction is a referral to the minister, and the minister can impose a sanction. But fines are not—

Senator SHELDON: So you're saying your inspectors aren't enforcing the fact that flags should not be on sites? They're not putting an expectation on contractors, workers or the unions regarding stickers? There is no expectation from the inspectors, they are not raising that at all? Is that what you're putting to me?

Mr McBurney : No, I'm not putting that to you at all. What I am putting to you is that a compliance notice—

Senator SHELDON: I'm asking for—

CHAIR: Senator Sheldon, let the witness finish, please.

Senator SHELDON: Mr McBurney, you appreciate what I'm asking about?

Mr McBurney : Yes, sure. Can I answer it this way. The compliance notice has been served on LendLease. That matter has to be tested before the court. I've got to be careful about what I say because that matter is before the court.

CHAIR: We have the two letters here. Are we happy for them to be tabled?

Senator SHELDON: Yes, thanks.

CHAIR: The letters that you handed up before are now tabled. Thank you for that.

Mr McBurney : Thank you, Chair.

Senator SHELDON: I've been told that ABCC inspectors are routinely taking photos of workers onsite—for example, when they have hard hats with union stickers on them. We are told that inspectors get very close to the workers, who feel that the behaviour is intimidatory. We've also heard that ABCC inspectors are taking photos of hard hats hanging on hooks et cetera. Can you confirm that ABCC inspectors take photos of workers onsite?

Mr McBurney : I'll have to take the question on notice. I have received no complaints about ABCC inspectors taking photos of workers onsite. I am aware that our code audit activities require us to obtain whatever evidence is available of breaches of the code. When we are investigating potential breaches of section 13(2)(j), if a crane is flying a flag, we will take a photo of that flag flying from the crane. If there is a notice up on the sheds or the huts or the noticeboard saying 'No ticket, no start', we will take a photo because that breaches the code. If there are stickers applied to hard hats that are hanging on a hook in the mess room, we will take a photo of that hard hat. I am not aware of the extent to which we have taken photos of workers wearing hard hats with offending stickers, but I can take that question on notice and provide a response.

Senator SHELDON: If there is a Master Builders Association flag on the site, do you take a photo?

Mr McBurney : I'll just defer to my director, the manager of the building code for clarification.

Ms Drennan : Yes. The Master Builders Association is a building association as defined in the code. I'm not aware of any Master Builders Association flags that have been found. But, essentially, what inspectors are looking at is—if it is a code-covered entity—the clothing, property or equipment that they supply or provide on-site. The requirement is that the code-covered entity must ensure building association logos, mottos or indicia are not applied to that clothing, property or equipment. That includes employer associations or employee associations.

Senator SHELDON: Have you taken any action against anyone whom has had a sticker from the Master Builders Association on their vehicle, on the site or on their clothes?

Ms Drennan : I might just clarify. Building workers are not—

Senator SHELDON: Sorry—just to put it in context. All of us regularly walk past building sites. It is not irregular to see somebody with a Master Builders Association logo. It could be on their vehicle, on the site or adjacent to the site. It could be a sticker on their hat. It could be on their shirt. Do you take action? Have you taken action? That's two questions.

Ms Drennan : I'll have to take it on notice as to whether any of those stickers have been observed in any compliance activities—I'm not aware. But we enforce the provision as it's written. It only applies to building code projects and to code-covered entities on the clothing, property or equipment that they supply. So, when our inspectors conduct their compliance activities, that's what they're looking at.

Senator SHELDON: I'm not aware of any action being taken against the Master Builders Association for clothing. But I'm not asking for action to be taken against them. I would expect if you're taking action even-handedly, it's rather ridiculous to be worrying about people's freedom of association and wearing Master Builders Association logos, stickers and flags. It's absolutely ludicrous.

CHAIR: Senator Sheldon, you have two more minutes.

Senator SHELDON: I have some questions regarding the taking of photos of individuals, which you're taking on notice. I would like to know what the procedure is, and what the advice is to staff about taking photos. I want a copy of that procedure. I would like to know what photos have been taken of individuals. Are they kept on file? Have those individuals been asked permission for those photos to be taken?

Senator O'NEILL: How securely are they stored?

Senator SHELDON: How securely are they stored?

Mr McBurney : We will take all of those questions on notice.

Senator O'NEILL: You're taking all of those questions on notice?

Mr McBurney : Yes.

Senator SHELDON: Do they compel the worker to identify themselves when they take those photos?

Mr McBurney : I'll take that question on notice.

Senator SHELDON: Minister, if these allegations are true—and I'm purporting that they are true—do you think it's appropriate for someone to have a camera put in their face and a photo taken of them without permission, without reasonable cause?

Senator Payne: I think people should always act within the law on both sides of this discussion. As I understand Mr McBurney's earlier contribution, he has had members of his organisation whose photographs have been taken, published on websites and publicised. So I would return to my opening response. I believe all should act within the law in circumstances such as this.

CHAIR: Senator Davey.

Senator DAVEY: It actually flows on quite well from Senator Sheldon's questions. We have heard through this committee—

Senator SHELDON: I am pleased to provide a great deal of assistance.

Senator DAVEY: You are very helpful. Thanks. We heard evidence before this committee in the past about the CFMMEU's track record in the courts. But I have also heard stories of the CFMMEU in the past, including some of its high-profile staff seeking to intimidate and harass ABCC inspectors. Is that behaviour still happening? Can you explain how that happens?

Mr McBurney : In terms of alleged conduct towards inspectors, we have two ongoing cases alleging improper conduct by CFMMEU officials against state WorkSafe inspectors. With respect to our inspectors, we have several decisions. The most high-profile one was Barangaroo South, which was handed down in April 2019. In that case, my inspectors—or my predecessor's inspectors—were subject to abuse and intimidation onsite. Mr Luke Collier was the respondent in that matter. He said to one of my inspectors, 'You're an effing grub, and you're lower than a pedophile. You grub.' That was the subject of a finding of contravention by the court, and that fine stands as the highest fine levied since the ABCC was reincarnated on 2 December 2016; $1.7 million in penalties in that case.

Senator DAVEY: Wow. Is this sort of behaviour and intimidation limited to onsite visits or does it transcend into social media platforms?

Mr McBurney : Regrettably, we have seen it on social media. The question I was asked earlier was about photos. We have had repeat instances of my staff being photographed without permission and against their will. Those photographs have been posted on CFMMEU Facebook sites, and they have been subjected to a stream of abuse in relation to those matters. It's a matter of grave concern for both myself as the head of the agency and for the affected staff. I can say, without any hesitation, we would never do that to a worker. We would not post a photo of a worker on our site and we would not open up the prospect of abuse and intimidation towards that worker in any way, shape or form. But that's what my staff are being subjected to.

Senator O'NEILL: It seems that those who have had their photograph taken by members of your staff have a very different view.

CHAIR: Thank you, Senator O'Neill, for that.

Mr McBurney : Senator, I can assure you no photograph has been posted—

Senator DAVEY: There's a big difference. You justify—

Senator SHELDON: Taking photos of people in the community —

CHAIR: Okay. Labor senators.

Senator DAVEY: the CFMMEU taking photos, posting them and bullying and intimidating people who are just going about their business. Is that what you're saying?

Senator O'NEILL: What's the ABCC budget for photos of people with some graphic while they're having their lunch, wearing a little image—

CHAIR: Senators, this is not a reality TV program called Bad Senators. You have one more question.

Senator DAVEY: I have one more question, because this is actually very concerning. It is a work, health and safety issue. The ABCC has a duty of care for its staff. Does this happen across the board or is it gender specific? Have you got female staff who are also being intimidated?

Mr McBurney : We have had both male and female staff subjected to social media abuse. I cannot go into specifics, because we have taken action in relation to these matters and I need to be mindful to protect our staff.

Senator DAVEY: Absolutely.

Mr McBurney : But I just note that. It was a female inspector at Barangaroo South. The court in that case made note of a witness, a female police officer, who gave evidence of the intimidation from the union in that case, and that was the subject of a finding by the court and that fit into the $1.7 million in penalties in that case. So we see it across the board, but some of the most disturbing social media abuse has been reserved for female members of staff. That's what we cannot tolerate, and we will take whatever steps are available to us to protect our staff.

CHAIR: On that point, I will thank you for coming along today.

Senator SHELDON: Thank you for the usual bias.

CHAIR: Senator Sheldon, please. There's a sand pit outside the childcare centre if you're going to play like that. Thank you for your coming along today. You are released. Have a safe trip home.