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First report of the Royal Commission into the Building and Construction Industry.

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Media Release


First Report of the Royal Commission into the Building and Construction Industry

The Royal Commission into the Construction Industry is one of the Government’s most important workplace relations initiatives.

The Employment Advocate's Report of May 2001 indicated that, since the commencement of the OEA’s operations, more than half of all complaints about breach of "freedom of association" principles came from the construction industry. This indicates that "no ticket, no start" is still the reality in this industry.

The construction industry strike rate in 2001 was five times that of the all industries average. It has been said that tenderers for CBD construction in Sydney typically allow for one strike day every two months - while tenderers in Melbourne allow for one strike day every two weeks. Commercial construction costs in Melbourne are reportedly a quarter higher than in Sydney which, in turn, is said to be a quarter higher than comparable construction under the conditions operating in domestic construction. In February last year, the abolition of the construction industry taskforce in Perth sparked a series of violent site invasions. At about the same time, the National Secretary of the Construction Division of the CFMEU warned that criminal elements were infiltrating his union.

Because of these consistent concerns about coercion, collusion and intimidation, the Government set up the Cole Royal Commission to try to stop unlawful practices driving up costs and to stop this kind of harassment eventually driving honest workers and honest businesses out of the construction industry. The problems of this industry are costing taxpayers; they are costing consumers; they are costing the economy and they are costing jobs.

Over the past nine months, evidence presented to the Commission has amply justified the Government’s concerns. Workers and contractors have testified that intimidation and threats are commonplace in workplace negotiations. There is a business culture under which irregular, unethical and illegal payments are frequently made to secure a fleeting industrial peace. Powerful figures in the industry exploit the law when it suits them and otherwise ignore it. In the past fortnight, as has been widely reported, the Commission has heard allegations about all-but-identical distribution warehouses built for Woolworths in Sydney and Melbourne: the NSW warehouse was finished on time, $5 million over-budget; the Victorian warehouse was completed more than seven months behind schedule and more than $15 million over budget. As has been extensively reported, the Commission has heard allegations that a potential $400 million investment could now be in jeopardy because the first Saizeriya plant is still not finished, six months behind schedule, despite the involvement of the Victorian Government.

Last week, just before the Government lodged its final submission, Commissioner Cole presented a First Report to the Governor-General.

In its First Report, the Commission flags the establishment of a national body to investigate and prosecute illegalities which existing law enforcement agencies lack the expertise or resources to tackle. Because the establishment of such a body might take some time and because the Commission’s own investigators will shortly begin to withdraw from the industry, Commissioner Cole has recommended the immediate establishment of an interim taskforce utilising the Government’s existing powers. Commissioner Cole is especially concerned to protect those who have testified from retribution. Reports of last week’s strike at Grocon, allegedly designed to have the company withdraw its evidence, can only underscore his concerns. The Commissioner is also concerned that a temporary reduction in scrutiny could see a new outbreak of illegal practices associated with an imminent round of enterprise bargaining.

The Government accepts Commissioner Cole’s recommendation.

An interim taskforce will be established to investigate and police breaches of the Workplace Relations Act and other laws in the construction industry. The Government aims to have this taskforce operational by the end of next month. The taskforce will work in the closest possible co-operation with agencies such as the Australian Federal Police, the Australian Tax Office and the Australian Competition and Consumer Commission. This taskforce will continue to operate until the Government is able to implement its response to Commissioner Cole’s final report.

I call on all parties in the industry to cooperate with the interim taskforce. In particular, I consider that all levels of Government can play a more constructive role to reform this industry.

Hundreds of people and dozens of organisations have taken heavy risks to testify to the Cole Commission. Their courage shows that this industry is capable of a new start. Honest workers, managers, shareholders and customers deserve a break and ought to know that this Government will do its level best to deliver a clean industry.


For further information contact:

Simone Holzapfel  0417 656 668