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Education and Employment Legislation Committee
Australian Building and Construction Commission

Australian Building and Construction Commission


CHAIR: Mr McBurney, do you wish to make an opening statement?

Mr McBurney : No, thank you.

Senator SHELDON: Has the ABCC ever investigated to ascertain what role employer associations played in suspected breaches?

Mr McBurney : I'm not aware of specific cases. I'd need to take that question on notice.

Senator SHELDON: So, you're not aware that there have been any employer associations that have been investigated?

Mr McBurney : I know that employer associations have been investigated. I'm aware of one case, which we advised the committee of last year and earlier this year.

Senator SHELDON: Can you remind me of that?

Mr McBurney : That was the Royal Hobart Hospital site. Part of our investigation, on which we corresponded with the committee, concerned the inductions performed by the MBA in Hobart in relation to that site.

Senator SHELDON: That's correct, and I'll come back to that. On your website the ABCC says that in certain circumstances it will institute proceedings for contraventions of the Building and Construction Industry (Improving Productivity) Act and the Fair Work Act, particularly in relation to wages and entitlements. How many proceedings has the ABCC commenced since it was re-established in 2016 for the recovery of unpaid or underpaid employee entitlements.

Mr McBurney : One.

Senator SHELDON: One very big one? Or one very small one?

Mr McBurney : One proceeding.

Senator SHELDON: Only one proceeding?

Mr McBurney : Yes.

Senator SHELDON: How much has the ABCC recovered for employees who have been underpaid in that one example?

Mr McBurney : That matter remains before the court.

Senator SHELDON: So, there's been no successful prosecution or recovery of wages?

Mr McBurney : We assumed that responsibility on 2 December 2016. Since that time we've commenced one case, and that case is currently before the court. So, there's been no recovery referable to that case.

Senator SHELDON: What's been the total amount of legal costs, internal and external, incurred by the ABCC in proceedings commenced against employees, unions and union officials, as opposed to employers and employer associations?

Mr McBurney : I'd need to take that question on notice.

Senator SHELDON: I'd hazard a guess that, with one case of underpayments, there hasn't been a great deal when it comes to employers. And thank you for drawing my attention to the matter that was raised before at estimates. As you're aware, there was a question raised regarding the inductions of 1,150 workers on a project performed by Master Builders, who charged $99 per worker, receiving an estimated $113,000 in construction, and you made a complaint to John Holland regarding the potential breach of the 2006 building code, which prevents inductions being delegated to Master Builders. The union said the induction courses for the Chinese plasterers were inadequate and many had told the union that they were not provided with access to an interpreter, despite their speaking little or no English. Master Builders Tasmania also confirmed executive director Matthew Pollock said in September the contracting companies did not identify the need for interpreters during its induction sessions. It also was revealed in September about 130 mostly foreign nationals were allegedly not paid by subcontractor Accuracy Interiors for up to two months. Have you investigated the 130 people, mostly foreign nationals, who were allegedly not paid by subcontractor Accuracy Interiors for up to two months?

Mr McBurney : Yes, Senator.

Senator SHELDON: Have you commenced prosecutions against that company?

Mr McBurney : No, we have not.

Senator SHELDON: And why not?

Mr McBurney : I'll take you through that, Senator. If I can explain our involvement, that will then lead to what the current status is and what the outcome of our investigation was. On 6 September 2018 we received information from the John Holland Fairbrother Joint Venture that a plastering subcontractor, Accuracy Interiors, was allegedly not paying its employees. On 11 September 2018 we attended at the project to speak with representatives of the principal contractor. Our inspectors attended the project on three subsequent occasions to speak with workers, including through the use of an interpreter. In addition to trying to engage with Accuracy workers in person, we sent translated letters and emails to the workers.

On 2 October 2018 Accuracy Interiors was placed under external administration. Subsequently, we engaged with the liquidators to seek access to employment records held by Accuracy. Unfortunately, very few relevant documents were available. We also engaged with the principal contractor to gather information and gain access to records regarding Accuracy and the Accuracy workers. On 12 October 2018 a request was made to the CFMMEU to assist my agency with our investigation; however, no response was received to that request. On 8 February 2019 the CFMMEU did provide information to my agency that was in response to a statutory notice issued under my act.

On 10 May 2019 we closed the investigation due to insufficient admissible evidence to substantiate any contravention of the Fair Work Act, resulting from the paucity of written records and the lack of cooperation from potential witnesses. Furthermore, there was an inability to directly pursue Accuracy as a result of it entering into external administration. One further fact to note is that Accuracy's director left Australia—left the country, left the jurisdiction—and there was a lack of other identifiable accessories to the potential contraventions. When we looked at the potential contraventions we were looking specifically at whether the employees has been correctly paid. The second investigation we commenced was into whether employees were required to pay fees for induction training prior to commencing work on the project.

Senator SHELDON: What action did you take regarding the payment of induction fees?

Mr McBurney : In relation to the payment of induction fees, that was an investigation that was commenced in September 2018. There were two aspects to that investigation: firstly, whether Accuracy Interiors' employees had been forced to pay to the MBA for induction training fees which would be in potential contravention of section 325 of the Fair Work Act; and secondly, where the John Holland Fairbrother Joint Venture had unlawfully imposed an obligation on Accuracy Interiors to make payments to Master Builders Tasmania for induction training in potential contravention of sections 345, 348 and 349 of the Fair Work Act. The investigation into the arrangements between the parties identified that the payments were required to be made in accordance with a lawful contractual term which did not breach or contravene the 2013 Building Code. Had it been a 2016 Building Code site, the arrangement would have been in breach of the code. Because it was a 2013 Building Code site, it was not. I wrote to the committee on 22 March 2019, advising that the investigation into the payment of induction fees had been completed and the investigation into the underpayment of wages was ongoing.

I'll just complete the picture for you. In relation to the induction fees, during the course of the investigation we attended the project site on four separate occasions to speak with Accuracy Interiors employees. Unfortunately, our efforts to gather evidence from them was frustrated and hampered by interference being run by the CFMMEU who instructed the workers not to speak to the ABCC even though we were investigating both the issue of underpayments and the induction fees. But that was as far as we could take our investigation.

Senator SHELDON: I hear your assertions. Are you aware that John Holland Fairbrother paid $1.5 million in wages and entitlements to those plasterers?

Mr McBurney : Yes.

Senator SHELDON: So, even though that company paid that money, you have not taken action against the directors that wound that company up?

Mr McBurney : No. The company's in external administration, and the sole director has fled the jurisdiction.

Senator SHELDON: It's a notorious industry, isn't it? But there's one company you've gone after, and the Master Builders Association got a tick. Can I ask you some more questions?

Mr McBurney : Yes.

Senator SHELDON: In its history, since December 2016, how many employers has the ABCC prosecuted or referred to other relevant agencies for investigation for the following: sham contracting?

Mr McBurney : We've not prosecuted an employer for sham contracting since 2 December 2016. In relation to referrals, I'll take the question on notice.

Senator SHELDON: Wage theft?

Mr McBurney : As I explained earlier, I've got one case before the court.

Senator SHELDON: One case and one case only. Are you aware how much money is owed in this industry? The Master Builders Association has stated publicly that over $6 billion, as I understand, occurs in wage theft.

Senator PRATT: Just in the construction industry?

Senator SHELDON: Just in the construction industry.

Mr McBurney : All I can do is advise you of what steps we've taken to fulfil our statutory remit to recover wages in the building and construction sector.

Senator SHELDON: Has the ABCC prosecuted or referred other relevant agencies for nonpayment of superannuation?

Mr McBurney : We've not commenced a prosecution for that.

Senator SHELDON: So there are hundreds of millions of dollars owed by employers in this industry and you've taken no action. Breach of award or enterprise agreement?

Mr McBurney : I can take you to the work we've done on recovering wages and entitlements since we assumed that responsibility on 2 December 2016—

Senator SHELDON: No, I'm asking if you've taken action against any employers for a breach of award or enterprise agreement?

Mr McBurney : We've not taken court action for that.

Senator SHELDON: A breach of occupational health and safety laws?

Mr McBurney : At this stage, I might defer to my deputy commissioner, Mr Pettit, who's responsible for our wages and entitlements operations.

Mr Pettit : The one proceeding we would've filed would have been for a breach of an enterprise agreement on a modern award. I'm not sure which one it would have been for, but I can get you that detail if you'd like it.

Senator SHELDON: The detail would be helpful. It's obviously not high on the priority list, even though I do note that my opening comments and questions from the statements that the ABCC says that they're supposed to be pursuing since December 2016. A breach of immigration laws?

Mr McBurney : We're not responsible for prosecuting breaches of immigration laws.

Senator SHELDON: Have you referred to other relevant agencies for investigation?

Mr McBurney : We have made referrals, but I'd have to take the question of the number of those referrals on notice.

Senator SHELDON: Breach of taxation laws?

Mr McBurney : We're not responsible for prosecuting breaches of taxation laws. I do have an information-sharing power to make referrals to the Australian Taxation Office, and I have done that and I can provide the details of the referrals to you on notice.

Senator SHELDON: So we've no sham contracting, one case of wage theft and nothing with regard to superannuation. We may have one with regard to enterprise agreements. The Fair Work Commission has a detailed litigation policy, the latest version of which was published in October 2018. Can you point me in the direction of where I can find the ABCC's formal litigation policy?

Mr McBurney : We are subject to the Attorney-General's legal service directions, and all of our litigation complies with those legal service directions.

Senator SHELDON: The ABCC was provided the opportunity to respond to allegations, which you have, regarding this matter, which I've been bringing your attention to. There's another matter, which I'd like just to briefly raise. The ABCC brought proceedings in 2015 and a decision was made by Justice North, which was later dismissed. The ABCC's application for penalty orders in March 2018 was also not successful. The court ruled that the site was solely entered for the purpose of a social visit to a friend and described the case 'as a storm in a teacup'. By this stage former Commissioner Hadgkiss had resigned in disgrace and Mr McBurney was at the helm.

Mr McBurney, there have been a number of appeals within this matter. During the appeals against cost judgements, which was unanimously dismissed on 9 March 2019, in the court's judgement they said that none of the commissioner's three alleged errors in the cost judgement had any merit. The court reiterated Justice North's finding, that there was no indication at any stage that the commissioner developed any insight in respect of the triviality of the claim he was pursuing nor the cost burden he was imposing on the respondents in the process.

I understand the ABCC was provided the opportunity to respond to allegations regarding these matters, and they have. ABCC's activities, since it's established together with the strategic priorities identified by the ABCC commissioner, are consistent with its full service regulator function. I don't think the court had the same view as you do. This report was tabled prior to a court deciding that an application brought by the ABCC was tainted with unreasonableness. Is that true?

Mr McBurney : Can you repeat the question, please?

Senator SHELDON: There are a series of court actions which you—

Mr McBurney : Sorry, can I first clarify the case you refer to was a case in the Federal Court before Justice North?

Senator SHELDON: Yes, that's correct.

Mr McBurney : Justice North delivered his judgement. We did not appeal his decision on the substantive case. There was only one appeal and that appeal was an appeal against a limited costs order made against the ABCC.

Senator SHELDON: That's correct.

Mr McBurney : That appeal was heard by the full court and was decided against us. The case has been finalised on that basis. We are now liable for a limited costs order for the initial proceeding before Justice North, and we are liable for the costs on the appeal, that appeal being confined to the first decision by his honour to make a limited cost order against us in a no cost jurisdiction.

Senator SHELDON: Can you give me a break down of the proportion of time, effort and resources directed at enforcing security of payments laws?

Mr McBurney : Yes, I can. We have assumed a responsibility for security of payments, and that arises in two respects. Firstly, it arises under the Building and Construction Industry (Improving Productivity) Act 2016, because that act creates the Security of Payments Working Group, and I sit on Security of Payments Working Group.

Secondly, we have responsibility for monitoring security of payments. Although it is a state function and subject to state laws, we have a remit, because of the Building Code 2016. Under the Building Code 2016, contractors must comply with state security of payments laws. If they fail to comply with those laws, they can be subject to action by my agency and a referral to the minister for an imposition of a sanction under the Building Code 2016.

To directly answer your question, I understand that the current staffing for people who are predominantly involved in security of payments for my agency is within the building code group and within the desktop audit team, and I'll confer with my code manager to give you that number. We have three people in that team. We have recruiting processes underway to supplement that team with three further members of staff. That's as a result of the government's additional funding provided to the agency. When the minister announced that additional funding it was earmarked in part for our security of payments function and jurisdiction. Quite aside from the dedicated desktop audit team, the investigators and the inspectorate, who are responsible for all of the matters arising under our act and the Fair Work Act, have responsibility for proceeding with code inspections, code audits and other compliance activity to assess and monitor compliance with security of payment laws.

Senator SHELDON: Thank you. What percentage of the Australian workforce comes under your jurisdiction?

Mr McBurney : I don't know what the percentage is but I understand it's 1.1 million workers.

Senator SHELDON: Can you explain to me why there's a comparative low amount of underpayments rectified as enforced by the ABCC?

Mr McBurney : I don't regard it as a comparatively low amount. We've recovered over a million dollars since we assumed responsibility on 2 December 2016. That is a significant amount, and it is a significant amount for the individual employees who've been the subject of underpayments and whose wages we've recovered for them.

Senator SHELDON: I pointed out to you before, and I gathered you weren't disagreeing with the figure and I'm hoping for you to contradict it, that over $6 billion in underpayments in the construction industry exist and you're telling me that $1 million is a good job well done?

Mr McBurney : Senator, if I can take you to the break-up of the figure and explain to you why I say that is the case. We recover underpayments in two respects. The first is where a complaint is made to us. So a worker claims to have been underpaid and contacts and the ABCC and we investigate the matter. The second is through our proactive audit activity. So in respect of wages recovered, last year we recovered $823,724 for 1,376 employees. In respect of those 1,376 employees—

Senator PRATT: From how many employers?

Mr McBurney : I don't have that figure. I'll take that on notice.

Senator PRATT: But you do have that data?

Mr McBurney : We do have that data, yes. I'll ask—

Senator PRATT: Why don't you put the number of employers in your report?

Mr McBurney : The relevant information for inclusion in our—are you referring to our annual report or our quarterly report— ?

Senator PRATT: That's right.

Mr McBurney : In our annual report we report on the amount of wages recovered and the number of employees that relates to.

Senator PRATT: Maybe I suggest to you that you put the number of employers that were involved in that behaviour.

Mr McBurney : We can take that under consideration.

Senator PRATT: Thank you.

Mr McBurney : In relation to those figures for last financial year, of the $823,724 recovered, $722,211 was as a result of our proactive audit activity and $101,512 was as a result of investigations conducted by our agency as reactive—that is, a complaint's been made or an inquiry has been made by the worker. So the vast majority of the money recovered was as a result of our proactive audit activity. We haven't recovered as much money from workers coming to us to say they've been underpaid. I want to make it clear we're available to assist any building industry participant. We will take a referral from any worker who has a concern about their pay. We have published guidance and education materials, and we have an app on a phone which provides building industry participants, workers in our industry, with direct information about their wages and entitlements, and we encourage them to contact us at any time.

I'll just add one further thing. We welcome referrals from any union. Under the act, I need to act without distinction between building industry participants. If the union is minded to refer matters relating to underpayment of wages to my agency, you can rest assured I will take all necessary action under my act.

Senator SHELDON: You annual report states: 'Employers are provided with education and an opportunity to voluntarily rectify any underpayments.' Is this consistent with the approach that all industry participants are provided after the ABCC identifies possible contraventions of the act it's meant to be enforcing?

Mr McBurney : Yes, it is. Firstly, we look at education and prevention. Secondly, one of the key components of our activities is voluntary rectification. That's voluntary rectification by any building industry participant who has breached the code, who has breached the act or who has, in the circumstance you were talking about, underpaid workers. We use litigation as a last resort where those avenues have failed or where the matter, the underpayment, is serious enough to warrant having the matter put before the court.

Senator SHELDON: So in an industry that has more than $6 billion worth of wage theft you educate people by talking to them. Do you see that as being a deterrent to the $6 billion?

Mr McBurney : Could I just clarify your $6 billion. Are you putting to me that it's $6 billion in underpayment of wages to employees, or is that inclusive of security of payment—subcontractors?

Senator SHELDON: I am saying theft within the industry. If you want to clarify your view of what the wage theft is and what the theft from the industry is, contrary to the Master Builders Association or inconsistent with them, I'm happy to hear it.

Mr McBurney : What we'd need to examine is the extent to which it falls within our jurisdiction, where it falls within the definition of building work under the BCIIP Act—how much is within and without. Putting that to one side—

Senator SHELDON: How many billions is it roughly, Mr McBurney?

Mr McBurney : I don't have those figures. We are unable to do a calculation of how much money is underpaid when we're not hearing from the victims of those underpayments. What we can do, and what we do, is act on every complaint that is made to my agency, and we assist those people. But we do more than that. As well as assisting those who complain to us we do proactive audits to recover underpayments for those who don't even know they've been underpaid. That's what our audit activity found last year. And the 1,346 employees who we recovered $722,211 for had not referred those matters to the agency. We found those underpayments and we recovered those underpayments.

Senator SHELDON: So I can just be clear: you're saying you don't know whether a figure exists about the amount of wage theft and nonpayment that exists within the construction industry that you oversight. You have a responsibility also to enforce wages and entitlements.

Mr McBurney : Yes.

Senator SHELDON: Would you be surprised if I found that disappointing?

Mr McBurney : Senator, you don't know what you don't know. We can't be expected to know what underpayments are occurring if they're not referred to us and are not subject to our audit activity. We cannot audit every employer in the building and construction industry, but we expend significant resources on our audits, which are producing results in the recovery of wages to date.

Senator SHELDON: Mr McBurney, I suggest—and, hopefully, this is helpful—that you talk to various government departments, you talk to employer associations and you pick up the paper and read it. You would find out that many billions of dollars are being stolen in this industry in the form of wage theft. Do you have any KPIs or performance indicators for your enforcement techniques?

Mr McBurney : Yes, we do.

Senator SHELDON: Could you outline those for me?

Mr McBurney : Yes, I can. There are KPIs referable to our litigation. The average time taken to commence a civil penalty proceeding must be less than 12 months. We have set the KPI for successful civil penalty proceedings at 80 per cent, and we achieved that KPI last year. That's across all of our investigations. Wages and entitlements are included in those totals.

Senator PRATT: Mr McBurney, why do you think workers aren't coming forward to you to disclose possible wage theft from them? I've certainly seen circumstances in which that takes place. Sometimes it's because people are in vulnerable visa situations and they don't want to come forward, for example.

Mr McBurney : Yes, I agree with you. That's certainly one reason why people would not complain or refer a matter to us. There are a variety of reasons for it not occurring. I believe the reason you have just offered was a factor in the Royal Hobart Hospital investigation. It's also a matter of us educating the industry that we have responsibility for wages and entitlements, and we've spent a significant amount of our educational resources on doing that. We've made it prominent on our website. It's also fair to say—and it's a matter for individual workers—that those represented by unions in many cases take it up with the union, who can represent them and act on their behalf, and recover wages through the union.

Senator PRATT: So it doesn't happen through your process?

Mr McBurney : No. We can act only on matters that are brought to our attention and are referred to us.

Senator PRATT: But, essentially, you're saying that many of those issues get fixed through the union's advocacy, which is the ordinary business of unions.

Mr McBurney : Yes, and the same situation would apply for the Fair Work Ombudsman.

Senator PRATT: Yes. I understand that, but you would be well aware in this industry that there are many cohorts of vulnerable workers which the union has no access to and some companies go out of their way to organise themselves accordingly, which goes some way to highlighting the robust industrial nature of the construction industry. What are you doing to get in amongst those workers to make it easier for them to report?

Mr McBurney : I'll defer to Deputy Commissioner Pettit because it does inform our audit strategy on wages and entitlements as to the parts of the industry that we target with our audit activity.

Mr Pettit : As a starting point, we've done those things that all Public Service agencies do in making sure education materials are available in a variety of languages. If workers go to our website, they can find the information they need in their language. In terms of actually accessing those cohorts of workers, one of the key things that our inspectors do is go on building sites to hold a conversation, look at the site and see if there are breaches of any of the laws that we administer.

Senator PRATT: But how do you actually go about making workers feel safe in coming forward to tell you their story without feeling their job is at risk? Because, in the main, people won't want to come forward, not necessarily through a lack of understanding language or even through a lack of your visibility, but because they would be frightened in the knowledge that their employment might cease, or that their migration status might be at risk, if they came forward.

Mr Pettit : Senator, it's a vexed issue for all the workplace regulators. The best we can do are simple things like offering to meet people outside of the workplace. Last year, in one of our education campaigns, rather than leaving large flyers and the like, we left small business card sized flyers that workers could simply pick up and put into their phone case without other workers seeing them doing it. They could then contact our 1800 line, and we could meet them after hours.

Senator PRATT: Do you have the power just to audit the employers themselves without a complaint? For example, if you have visibility of isolated networks of people in particular companies, do you ever go in and just do an off-the-cuff audit of them?

Mr Pettit : We definitely do. That was one of the things I was saying about our staff visiting building sites. If they go onto a building site and they've got suspicions that there's a large group of, for example, Korean tilers or Chinese plasterers, they bring that back and pass that intelligence to our wages team. We keep a register of those companies to fit into our audit program to go out and we seek a one-month sample of that employer's records and go and check those against the award.

Senator PRATT: Is that where you are generating the $1 million that you've recovered? Are you doing that through your own audit process? That's pretty much what you said before.

Mr Pettit : Yes, that's right.

Senator PRATT: Does that not demonstrate that that's where the efforts of the ABCC should be going?

Mr McBurney : It is, Senator, and we are doing that and we're seeing a better return on our audit activity than on reactive investigations to complaints and queries coming in.

Senator PRATT: I'm not surprised, given the vulnerabilities of the workers in this context. We will be asking the Fair Work Ombudsman later about progress and the activities of the sham contracting unit announced in this year's budget. But can I ask you, in the ABCC, where you focus your own activity in relation to phoenixing and sham contracting. It's relevant to this discussion as well.

Mr Pettit : I'd say that sham contracting and underpayments are intertwined. Normally sham contracting is undertaken to underpay the worker. So I think, when you look at our numbers, the two numbers blend together. However, the problem we have is that in the construction industry—in particular, commercial construction—a lot of the workers who are on ABNs want to be there. I'm not talking about your people from culturally-and-linguistically-diverse backgrounds but, for example, a trades qualified worker wants to be on an ABN for a range of reasons. Normally, they only come to us when the relationship breaks down, which makes it quite difficult.

Senator SHELDON: Just a quick question—I don't want to break your train of thought—on that point about most people wanting to be on ABNs, is that from a survey that you have carried out?

Mr Pettit : The ABCC in its former reincarnation did a sham contracting inquiry, and that was one of the findings of that former inquiry.

Senator SHELDON: That's a public document as well, is it?

Mr Pettit : Yes. But I will say that, when we do our audit activity, we do actually look for sham contracting as well. So, where we find employers who say they actually don't have any employees but they're engaged in the construction industry, that's a red signal to us. We normally then go out, make further inquiries and look through invoices to try and determine if they're actually engaging, particularly when you look at the trades—plastering, tiling and those sort of trades. If we come across an employer who says they have no employees yet they're doing those sorts of trades in the industry, we'll look further into those and we may try and contact some of the workers to find out what the employment arrangements are.

Senator PRATT: Chair, I think you had—

CHAIR: I think we've got some other questions here.

Senator PRATT: We've certainly got plenty more, but we've had an extremely good run.

CHAIR: We still intend to shift to the Fair Work Ombudsman at 5.30. We've got about 10 minutes of questions here and then we'll come back to you in the last five minutes, if that's okay. Senator Davey.

Senator DAVEY: You were talking before, during questioning from Senator Sheldon, about underpayments, and you made the comment that you don't know what you don't know. How many referrals for underpayment have you actually received from unions themselves?

Mr Pettit : Since we've been the ABCC—from December 2016—I don't think we've received one.

Senator DAVEY: So the unions who are representing the employees' interests have not referred any instances of underpayment to you?

Mr Pettit : No. But, to be open with you, the unions have complementary powers to our powers, so they can investigate and commence their own litigation as well. If they would like to refer any matters to us, we would be happy to investigate and litigate them as well.

Senator DAVEY: That's great. So you'll openly investigate any referral that comes your way from any party?

Mr McBurney : From any source. To add to Mr Pettit's answer, we've not received referrals from the union. When we've asked for their assistance, when we've asked for their cooperation to help workers who we say have been underpaid, there has been no voluntary cooperation from the unions. The Royal Hobart Hospital is the most recent example of that.

Senator PRATT: But that's a somewhat difficult situation given you also regulate those unions.

Mr McBurney : Yes.

Senator PRATT: It is not a very 'complementary' situation, in terms of asking for their assistance.

Senator DAVEY: Are you concerned about underpayment or not?

Senator PRATT: The issue is that unions resolve underpayment cases themselves.

CHAIR: Order! Let's not debate across the table. Put questions to the witnesses, please. Senator Davey.

Senator DAVEY: Can you give us an overall figure for the number of court-ordered penalties levied against the CFMMEU in cases taken by the ABCC and its predecessors?

Mr McBurney : Yes, I can. In the last financial year, the penalties imposed on trade unions were $4.221 million. Penalties imposed on the CFMMEU comprised all of that figure. Since the ABCC commenced on 2 December 2016, total penalties imposed on the CFMMEU have been $1.8 million, $2.6 million and $4.2 million. Other unions accounted for $182,000, and the rest of the penalties imposed were against employees and employers. Total penalties to date against the CFMMEU by the ABCC and its predecessor agencies are $16.74 million.

Senator DAVEY: Talking of litigation, I understand that you continue to be involved in proceedings against a number of unions, with a number of cases taking place since your last estimates appearance. Can you take me through the case concerning Aldi Altona's construction and what the court's ultimate decision was?

Mr McBurney : I might defer to my deputy commissioner legal, who's across the details of that case.

Mr Kelleher : The Aldi Altona decision was handed down by the Federal Court on 11 October 2019, imposing total penalties of $92,000 against the CFMMEU and an experienced organiser for their involvement in a blockade of Aldi's Altona store during its construction in 2014. The blockade in that case followed the union's demand that the construction company sign an enterprise agreement with the union. On 5 December 2014, CFMMEU organiser Drew MacDonald blocked the entrance to the site with a vehicle, preventing trucks carrying equipment and materials from accessing the site. As a result of that blockade, work—including the installation of precast concrete panels, structural steel work and concrete preparation work—could not proceed. On 8 December 2014, Mr MacDonald again blocked the entrance to the site with a vehicle, preventing work, including excavation and formwork for a concrete pour and structural steel work. The CFMMEU was penalised $80,000 and Mr MacDonald $12,000, and, in that case, Justice Bromberg also ordered Mr MacDonald to personally pay his penalty, and that personal payment order is one of, now, six imposed by the Federal Court.

Senator SHELDON: I don't want to break your full train of thought, but what was the difference in wages between the workers that were working for the company that was the contractor, and the amount of money that was being pursued under the EBA for those workers to be covered by—

Mr Kelleher : I'd have to take that question on notice.

Senator SHELDON: Thank you.

Senator DAVEY: Can you also go over the Geelong Grammar case, because I understand that case concerned some contrived safety claims.

Mr Kelleher : Yes. The Federal Court found, in that case, on 9 November, that Mr Murphy had contravened section 500 of the Fair Work Act on 3 December 2014 by:

… intentionally hindering and obstructing Harris HMC, its subcontractors and their workers by calling and conducting a meeting on the Site, causing the subcontractors and their employees to leave the Site and causing work to cease …

and also by:

… acting in an improper manner by failing to provide notice of his entry in contravention of the FW Act …

and also:

… refusing to leave the Site when requested, making threats about not re-opening the Site and acting rudely and aggressively on the Site.

On 13 September this year, the Federal Court handed down penalties totalling $34,500 against the CFMMEU and its official Brendan Murphy. In the liability judgement in that matter, the Federal Court rejected Mr Murphy's claim that he was concerned about safety at the site. Her Honour Justice Mortimer said: 'I am not satisfied there were any real health and safety issues,' despite Mr Murphy's reference to people working in the dark, and, in handing down the penalty judgement, Justice Mortimer took into account Mr Murphy's conduct, including:

… his aggression, his language, the interference with work on the site, the refusing to leave when told to, the contrived OH&S concerns, the threats not to allow the site to re-open …

and Her Honour went on to say that Mr Murphy's conduct was:

… confrontational, aggressive and rude. Mr Murphy was bullying and overbearing, and deliberately so.

And Justice Mortimer also said of the CFMMEU:

This level of contravening conduct can only indicate a continuing readiness to disregard and flout the industrial laws of this country, when it suits the CFMMEU and its officials to do so.

Senator DAVEY: I'm seeing a bit of a pattern: they're both cases where the union's taken action to prevent or block or otherwise inhibit the activities of subcontractors. Would you say that that is a pattern of behaviour? How do the courts view it? Is this a pattern of discrimination, and what do you think the reasons behind it might be?

Senator PRATT: They're trying to protect the wages and conditions.

Senator DAVEY: Taking action against subcontractors—

CHAIR: Not across the table; to the witnesses, please.

Mr Kelleher : Certainly that sort of conduct is conduct that the agency does see regularly. That case that I just spoke of—Geelong Grammar—occurred at a time prior to the Building and Construction Industry (Improving Productivity) Act coming into force, which now includes a picketing provision, making such conduct unlawful, which also increases the maximum available penalty that a court can impose to $210,000 for a corporate body, such as the CFMMEU, and also $42,000 against an individual, and the agency does have before the court at the moment cases involving such allegations around the country.

Senator DAVEY: Would you say that in certain instances this sort of behaviour could have safety concerns? I understand the Living City project actually went one step further and involved a union official putting a worker in danger. Can you explain that case to us?

Mr Kelleher : Yes. That case is currently the subject of appeal on the question of penalty. That's the union's appeal. The facts of the case were such that, at the Living City project in Devonport in June 2017 during an unlawful entry onto the project, CFMMEU organiser Mr Hassett put the safety of workers at risk by climbing into the cabin of a crane while it was being operated. In that case, Justice O'Callaghan imposed penalties, which are under appeal. The court, in that decision of Justice O'Callaghan said:

… the conduct of Mr Hassett on 5 June 2017 was a serious breach … It was serious because it was very dangerous, which Mr Hassett must have known, and it was serious because Mr Hassett gained entry to the site purportedly in respect of safety concerns—only to place the crane operator and others potentially in harm’s way. And it was made all the more serious by the fact that when he was told to get off the crane, he refused.

Senator DAVEY: Thank you.

Senator O'SULLIVAN: Commissioner, we heard Senator Sheldon refer to the PUG's case in which you were unsuccessful. Can you clarify for me: of all the matters that you took to court in the most recent financial year, how many were unsuccessful?

Mr McBurney : One case out of 17. We were successful in 16 out of 17 cases—94 per cent.

Senator O'SULLIVAN: So it is the case that Senator Sheldon has selected one particular loss on the organisation's otherwise sparkling record?

Senator Sheldon interjecting

Senator PRATT: Indeed.

CHAIR: Not across the table, please.

Mr McBurney : Senator, the case I was questioned on earlier was our only unsuccessful case.

Senator O'SULLIVAN: Your only loss. We also heard the good senator refer to comments made by the court in the PUG's case that were critical of the ABCC. In the interest of balance, can you give us a couple of brief examples of the courts making comments that were critical of the CFMMEU and its conduct in the many, many, many more cases in which the ABCC was successful?

Mr McBurney : Probably the best way to answer that is to provide you with the most recent statement of the Federal Court about the offending of the CFMMEU, and I will defer to Deputy Commissioner Kelleher, who can provide that to you.

Mr Kelleher : Senator, in a decision on 14 October this year, the Federal Court imposed penalties totalling $69,000 against the CFMMEU and Kevin Pattinson for contraventions of section 349 of the Fair Work Act. In handing down his judgement, Justice Snaden said:

The Union is a "serial offender" that has, over a long period, exhibited a willingness to contravene workplace laws in the service of its industrial objectives; and one that appears to treat the imposition of financial penalties in respect of those contraventions as little more than the cost of its preferred business model.

His Honour went on to say:

I regard the Union's Agreed Contraventions—viewing them, as I do, against the backdrop of its sorry record of statutory contravention—as very much of the gravest, most serious kind. It is bad enough that it should so casually intrude upon rights of free association so valued by societies of conscience; much worse that it should do so, yet again, in deliberate defiance of the law that it has been told time and time again that it must obey.

His Honour went on to say:

… it appears to be wholly unmoved by the prospect that it might be forced yet again to dig into its members' "big pots of gold" in the name of "fight[ing] the good fight" …

Senator PRATT: Mr Kelleher, do you have any similar quotes from judges pertaining to their findings and determinations in relation to underpaid workers who've been exploited in their visa conditions? You're supposed to be bipartisan, to treat the two parties equally—that is, employees and employers and the union.

CHAIR: Looking at the time, it is 5.30. We did agree that we'd move on to the Fair Work Ombudsman. At this point, I'd like to thank representatives from the Australian Building and Construction Commission. Consider yourselves released from further appearances today.