Download PDFFinal Report of the Royal Commission into the Building and Construction Industry
National Perspective Part 1
Vol ume Three Royal Commissioner, The Honourable Terence Rhoderic Hudson Cole RFD QC
February 2003
Final Report of the Royal Commission into the Building and Construction Industry- Volume Titles
Volume 1 Summary of Findings and Recommendations
Volume 2 Conduct of the Commission - Principles and Procedures
Volume 3 National Perspective Part 1
Volume 4 National Perspective Part 2
Volume 5 Reform - Establishing Employment Conditions
Volume 6 Reform -Occupational Health and Safety
Volume 7 Reform - National Issues Part 1
Volume 8 Reform - National Issues Part 2
Volume 9 Reform - National Issues Part 3
Volume 1 0 Reform - Funds
Volu me 11 Reform - Achieving Cu ltural Change
Volume 12 State and Territory Overviews
Volume 13 Hearings - New South Wales Part 1
Volu me 14 Hearings - New South Wales Part 2
Volume 15 Hearings -Victoria Part 1
Volu me 16 Hearings - Victoria Part 2
Volume 1 7 Hearings - Queensland Part 1
Volu me 18 Hearings - Queensland Part 2
Volume 19 Hearings -South Australia, Tasmania, Northern Territory and Australian Capital Territory
Volume 20 Hearings - Western Australia Part 1
Volume 21 Hearings- Western Australia Part 2
Volume 22 Administration
Volume 23 Confidential Volume
ISBN : 0 642 21096 9
© Commonwealth of Australia 2003
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Final Report of the Royal Commission into the Building and Construction Industry
Contents
Abbreviations
2
3
A National Perspective
Preface
Findings
A question of attitude
Governments
The future
Notes to A National Perspective
Structure of the Industry
Introduction
Size and scope of the industry
Growth in building and construction
Firms in the industry
Structure of the industry
Th e building and construction process
Notes to Structure of the Industry
Profile of Participants
Providers of capital and clients
Superannuation funds
Other roles of governments
Industry associations
Head contractors
Subcontractors
Unions
Role of the Australian Council of Trade Unions and trades and labour councils
The workforce
3
3
4
14
35
4 1
43
49 49
53
57
59
62
67
72
75
75
79
88
92
102
103
110
121
122
National Perspective Part 1 iii
4
5
Regulatory Framework
Trade Practices Act 1974 (C'wth)
Other Acts
National Construction Code
Awards
Bargaining framework
Office of the Employment Advocate
Industrial tribunals
Federal Court of Austral ia
Notes to Regulatory Framework
Industry Culture and Practice
157
165
167
167
167
168
173
177
189
198
205
Industry culture 205
Problems in the industry 214
National issues 222
Scope to improve performance 224
Reasons for continuing problems in the building and construction industry 225
Notes to Industry Culture and Practice 233
Attachment 1 Financial Analysis of Principal Employer and Employee Associations 237
Introduction 239
2
3
Employee Associations
The Australian Manufacturing Workers Union
The Australian Workers Union
Communications, Electrical and Plumbing Union
The Construction, Forestry, Mining and Energy Union
Employer Associations
Australian Industry Group
Civil Contractors Federation
The Master Bui lders Associations
National Electrical and Communications Association
Employer Plumbing and Allied Industry Associations
Attachment 2 ACA members
Attachment 3 Union Governance and Objects
Attachment 4 State Tribunals
Attachment 5 Workplace Relations Act 1996 (C'wth) Extracts
iv Final Report of the Royal Commission into the Building and Construction Industry
241
241
242
244
247
251
251
252
252
253
255
257
263
279
307
Attachment 6 Industrial disputes in the building and construction industry
Attachment 7 Failure of Existing Remedies
Notes to Attachments 1 - 7
317
323
355
National Perspective Part 1 V
Vi Final Report of the Royal Commission into the Building and Construction Industry
Abbreviations
Australian Bureau of Statistics
Australian Construction Industry Council
Austral ian Construction Industry Forum
Australian Constructors Association
Australian Council of Trade Unions
Australian Industry Group
Australian Workers' Union, The
Auto motive, Food, Metals, Engineering, Printing and Kindred
Industries Union (referred to as the Australian Manufacturing Wqrkers Union)
Building Workers Industrial Union of Australia
Civil Contractors Federation
Commonwealth
Com munications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia
Construction & Building Unions Superannuation Fund
Construction Industry Development Agency
Construction, Forestry, Mining and Energy Union
Department of Industry Science and Resources'
ABS
ACIC
ACIF
ACA
ACTU
AIG
AWU
AMWU
BWIU
CCF
C'wth
CEPU
Cbus
CIDA
CFM EU
ISR
-----------------------------------------------------------------
Economic Development Committee EDC
Federation of Industrial, Manufacturing and Engineering Employees FIM EE
FED FA Division FED FA
Housing Industry Association Limited HIA
Master Builders Australia Inc MBA Inc
National Building and Construction Committee NatBACC
National Perspective Part 1
National Code of Practice for the Construction Industry
New South Wales
Royal Commission into Pro ductivity in the Building
and Construction Industry
the Rules of the Automotive, Food, Metals, Engineering,
Printing and Kindred Industries Union '
Contractors
Baulderstone Hornibrook Pty Ltd
Grocon Pty Ltd
Leighton Contractors Pty Ltd
Westfield Design and Construction Pty Ltd
2 Final Report of the Royal Commission into the Building and Construction Industry
the National Construction Code
NSW
the Gyles Royal Commission
AMWU Ru les
Bau lderstone
Grocon
Leightons
Westfield
1 A National Perspective
Preface
This volume describes the building and construction industry from a national perspective. It
outlines the culture and practices within the industry, how pressures have arisen which result in
unlawful and inappropriate practices and conduct and how the remedies currently available to
the industry have failed to address these problems. It describes national institutions,
organisations and regulation.
2 It draws together all the material , including material addressed in the vo lumes relating to the
States and Territories and hearings, the 18 Discussion Papers issued by the Commission, the
responses thereto, private consultations with industry participants and general submissions
1·eceived.
3 Thi s Royal Commission was created to inquire into and report on the building and construction
industry throughout Australia. It was not a Commission created to inquire into practices and
conduct in each State and Territory. In order to obtain a national perspective of the matters
identified in the Terms of Reference, however, it was necessary to obtain information and
material from each State and Territory. One way in which that was done was by holding
hearings in New South Wales , Victoria, Queensland, South Australia, Western Australia,
Tasmania, and the Northern Territory. Matters arising in the ACT were dealt with during the New
South Wales hearings.
4 In each State and Territory, in addition to calling overview evidence, which was evidence at a
high level of generality about the state of the industry, Counsel Assisting called evidence of
particular incidents that they regarded as representative, or that were illustrative of particular
problems, together with evidence of the extent and effect of such practices. That evidence was
designed to explore the nature and extent of the various types of practice and conduct
described in my Letters Patent.
5 My findings in relation to the particular incidents examined in evidence, any unlawfulness
disclosed by those case studies, and my conclusions on what was to be drawn from them are
set out in the hearings volu mes (volumes 13-21).
6 I have explained in detail my approach to the Commission's investigation of particular incidents
and the making of findings in relation to them in volume 2 of this report, Conduct of the
Commission - Principles and Procedures .
National Perspective Part 1 3
7 The overview evidence, the material disclosed in the hearings volumes and other material
relevant to eac h state and terri tory is assembled in a vo lume entitled State and Territory
Overviews (volume 12). A picture of the building and construction industry in each State and
Territory is there described.
8 The problems exposed in this national perspective, and the recommended solutions to these
problems are addressed in the reform volu mes (vo lumes 5-1 1 ).
9 This volume does not address in detail issues relating to occupational health and safety (OH&S)
and industry funds. Those issues are addressed in volumes 6 and I 0.
Findings
I 0 In the building and construction industry throughout Australia, there is:
(a) widespread disregard of, or breach of, the enterprise bargaining provisions of the
Workplace Relations Act 1996 (C'wth);
(b) widespread disregard of, or breach of, the freedom of association provisions of the
Workplace Relations Act 1996 (C'wth);
(c) widespread departure from proper standards of occupational health and safety;
(d) widespread requi rement by head contractors for subcontractors to have union -endorsed
enterprise bargaining agreements (EBAs) before bein g permitted to commence work on
major projects in State capital central business districts and major regional centres;
(e) widespread requirement for employees of subcontractors to become members of unions
in associat ion with their employer obtaining a union-endorsed enterprise bargaining
ag reement;
(f) widespread requirement to employ union-nominated persons in critical positions on
building projects;
(g) widespread disregard of the terms of enterprise bargaining agreements once entered
into;
(h) widespread application of, and surrender to, inappropriate industrial pressure;
(i) widespread use of occupational health and safety as an industrial tool;
U) widespread making of, and receipt of, inappropriate payments;
(k) unlawful strikes and threats of unlawful strikes;
(I) threatening and intimidatory conduct;
(m) underpayment of employees' entitlements;
(n) disregard of contractual obligations;
(o) disregard of National and State codes of practice in the building and construction
industry;
4 Final Report of the Royal Commission in to the Building and Construction Industry
(p) disregard of, or breach of, the strike pay provisions of the Workplace Relations Act 1996
(C'wth);
(q) disregard of, or breach of, the right of entry provisions of the Workplace Relations Act
1996 (C'wthj;
(r) disregard of Australian Industrial Relations Commission (AI RC) and court orders;
(s) di sregard by senior un ion officials of unlawful or inappropriate acts by inferior union
officials ;
(t) reluctance of employers to use leg al remedies available to them;
(u) absence of adequate security of payment for subcontractors;
(v) avoidance and evasion of taxation obligations;
(w) inflexibility in workplace arrangements;
(x) endeavours by unions, particularly the Construction, Forestry, Mining and Energ y Union
(CFMEU), to regulate the industry; and
(y) disregard of the rule of law.
11 These findings demonstrate an industry which departs from the standards of commercial and
industrial conduct exhibited in the rest of the Australian economy. They mark the industry as
singula r. They indicate an urgent need for structural an d cultural refo rm.
12 At the heart of the findings is lawl ess ness . It is exhibited in many ways. There is criminal
conduct. In volume 23, which I have recommended not be made public , I have recommended
that certain conduct be referred to the relevant auth orities for consideration whether criminal
charge s should be brought. My recommendations concern activities an d persons in New
South Wales , Victoria, Queensland and Western Australia. There are breaches of laws of
general application to all Australians where the sanction is a penalty rather than possible
imprisonment. My findings in respect of such conduct as was examined are sum marised at the
end of each State and Territory overview. There are breaches of many provisions of the
Workplace Relations Act 1996 (C'wth) . Those findings are also found at the end of each State
and Territory Overview. The unsatisfactory record in respect of occupational health and safety
ind icates breaches of the various State acts addressing that matter. There is disregard of or
breach of the revenue statutes, both Commonwealth and State. When Courts or Tribunals
become involved and make orders, some union participants, particularly the CFMEU , regard
such orders as not binding upon them. There is the commonly held view, translated into
practice, that agreements entered into are binding upon unions only insofar as they confer
upon th e union a benefit, but not insofar as th ey confer an obligation. Underlying al l of this
lawlessness is an understanding and expectation, which reflects the reality, that those
eng aging in unl awful conduct wi ll not be held to account by criminal proceedings, proceed ings
for penalties, or for loss occasioned to others by unlawful conduct.
13 Subsidiary to this widespread conduct, which is plainly unlawful, are categories of conduct
wh ich would be regarded by most Australians, and which I regard, as inappropriate. For legal
reasons explained in volume 2, I have not made find ings of inappropriate conduct against
National Perspective Part 1 5
individuals or organ isations, unless they conceded such inappropriate conduct. Shortly stated,
it might have been regarded as unfair now to make a finding of inappropriate conduct judged
against a previously undefined standard of reference. That does not mean, however, th at
widespread inappropriate conduct and practices do not exist within the industry. They do, and
are accepted as part of th e industry culture. The reasons why such conduct is in appropriate
are various . Some conduct plainly infringes the objects of the Workplace Relations Act 1 996 (C'wth) although not, in all circumstances, the specific provisions of the Act. Other conduct
interferes unnecessarily with the building and construction process. Further conduct reduces
productivity for no reasonable commensurate purpose. Other conduct impinges upon a
person's right of free choice. Other conduct departs from recognised norms of civility and
behaviour. Some conduct interferes with what most Australians would recognise as the ir
freedom to conduct their businesses and their lives without interference from third parties. All of
this conduct unsettles participants in the industry; it causes them concern and uncertainty, and
inhibits any relati onship of trust and confidence.
14 The types of inappropriate conduct which exist throughout the building and construction
industry include: 1
⢠industrial action, or threats thereof, on a site and other related or unrelated sites, if all
subcontractors did not have a union-endorsed enterprise bargaining agreement (EBA);2
⢠stoppage of work by a union because a subcontractor would not enter into a union endorsed EBA; 3
⢠harassment by union officials of a subcontractor because it wou ld not enter into a union endorsed EBA;4
⢠union officials restricting, or threatening to restrict, a subcontractor's opportunity to
obtain work if it did not sign a union-endorsed EBA;5
⢠unions taking industrial action on government sites to pressure a government to adopt a
policy that contractors have a union-endorsed EBA in order to do government work;6
⢠unions demanding that if all subcontractors cannot be required to have a union-endorsed
EBA, EBA term s and conditions are to be applied by all subcontractors irrespective of
other agreements;?
â¢
â¢
â¢
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union officials pressuring head contractors to replace subcontractors on a site because
they did not have a union-endorsed EBA; 8
the threat by union officials to prevent subcontractors with Australian Workplace
Agreements (AWAs) from working on site; 9
disregard by union officials of the wishes of employees , or their failure to consult with employees; 10
the initiation of a bargaining period by a union, although uninvited to do so by employees,
and where no employees were union members; 11
⢠interference by unions in industrial and safety issues where no employee had made a
complaint and no employee was a union member; 12
6 Final Report of the Royal Commission into the Building and Construction Industry
⢠unions seeking to have subcontractors enter into a union-endorsed EBA, without
seeking the views of employees, or where that was contrary to the wishes of
employees; 13
⢠a union refusing to sign an agreement agreed by its members with their employer, despite
the unanimous wishes of the members that it do so; 14
⢠agreement between a head contractor and a union about the appointment of a job
delegate, without regard to the wishes of workers on site; 15
⢠the lack of flexibility in union pattern EBAs;
⢠the payment to workers, pu rsuant to a pattern EBA, of a productivity allowance, with no
corresponding increase in productivity; 16
⢠head contractors and unions making ag reements which overrule agreements made
between subcontractors and their employees; 17
⢠agreements between head contractors and unions restricting the way subcontractors
can conduct their business; 18
⢠unions in sisting on the payment of a travel al lowance to workers who did not travel in
their work; 19
⢠a union taking or threatening to take industrial action in its own interests; 20
⢠union members engaging in sympathy action in support of matters not related to the site
on which they are working;21
⢠a union taking industrial action against an employer because of the public expression of
an opinion with which it disagrees; 22
⢠unlawful industrial action by a union forcing businesses to move outside the state, or to
determine not to work in that state;23
⢠unions seeking to act as the arbiter of who can and cannot work in the industry or in an
industry sector;24
⢠union officials attempting to regulate an industry by seeking 'donations' from contractors
to fund the salary of a union organiser; 25
⢠a union circulating 'approved subcontractor lists ';26
⢠a union requ iring a contractor to submit to a wage book inspection before permitting a
contractor to start work;27
⢠a union requiring a contractor to submit to a wage book inspection by a third party
nominated by the union, but paid for by the contractor; 28
⢠a union issuing notices purporting to have a statutory basis and authority, which they do not; 29
⢠the calling of unauthorised meetings by union officials; 30
National Perspective Part 1 7
⢠union officials acting with the apparent belief that their righ t of entry was effectively
unlim ited; 31
⢠the refusal by union officials to leave site upon request by the head contractor or occupier; 32
⢠the making by unions of groundless, unspecified or disputed wage claims, and
supporting such claims with threats of black bans or other industrial action; 33
⢠the failure of union officials to refer asserted breaches of awards and other industrial
issues to the relevant authorities; 34
⢠the fai lure by a union to provide particularisation of wage claims, while maintaining
pressure in support of the all eged claim; 35
⢠threats by a union to conduct wage book inspections to achieve its industrial aims; 36
⢠payment by a head contractor of unpaid debts of its subcontractor, pursuant to an
im plicit or explicit un ion demand; 37
⢠a union pressuring a head contractor to withhold payments from a subcontractor, in turn
placing pressure on the subcontractor to accede to the union's industrial aims; 38
⢠the employment by a contmctor of a particular person at the behest of a union; 39
⢠the enforcement of union-endorsed EBAs or union membership by un ion delegates; 40
⢠a union asserting a right to dictate when work may take place on a site; 4 1
⢠a un ion asserting a right to require the engagement of unnecessary labour; 42
⢠a union asserting a right to determine who may work on a project; 43
⢠a union asserting a right to determine who will be employed as a crane operator; 44
⢠unions preventing access to site; 45
⢠unions preventing the removal of equipment from site; 46
⢠union officials using abusive language and intimidatory behaviour; 47
⢠demarcation disputes between un ions, occasioning loss and delay; 48
⢠inadequate accounting procedures within a union; 49
⢠a union handling money received in settlement of wage claims differently from the way it
represented th at the money would be handled; 50
⢠the fa il ure of unions to account to employers fo r moneys paid fol lowing book audits; 5 1
⢠a practice within the industry that the response to the unlawful or inappropriate exercise
of power by a union is the payment of money or a 'commercial solution' rather than resort
to the law; 52
⢠contractors paying money to a union (or to an organisation nominated by the un ion) in an endeavour to buy industrial peace;53
⢠a union imposing informal 'penalties' upon contractors; 54
8 Final Report of the Royal Commission into the Building and Construction Industry
⢠the disguising of payments of money by contractors to a union; 55
⢠a union using industrial power to raise money for its own purposes; 56
⢠unions accepting membership fees in respect of employees who did not wish to join a union; 57
⢠unions demanding that they be paid money equivalent to membership fees for particular
persons, even though they did not want those persons to join the union; 58
⢠head contractors bowing to, accepting and supporting demands made by a union of
subcontractors by the application of commercial pressure; 59
⢠contractors paying union su bsc riptions for employees in order to enable those
employees to work on a site; 60
⢠head contractors acceding to union pressure to withhold payments from a
subcontractor, in turn placing pressure on the subcontractor to accede to the union's
industrial aims; 61
⢠a head contractor engaging a uni on-nominated delegate, who is al lowed to exercise an
inappropriate level of control over the site, such as determining which subcontractors
may commence on site, performing site inductions or having responsibility for safety and compliance issues; 62
⢠head contractors ceding control to unions over the erecti on of cranes; 63
⢠a head contractor stopping a subcontractor from working as a resul t of a complaint by a
union official , wi thout the head contractor undertaking any investigation of the matter; 64
⢠a head contractor co-operating with a union to render ineffective the work of an industry
task force; 65
⢠the unwi llingness of contractors to take legal action against unions to protect thei r
property or rights, or to recover loss; 66
⢠a head contractor and a su bcontractor agreeing to di sgu ise from a client payments to the
subcontractor, wh ich payments were required by a union; 67
⢠unions or head contractors applying pressure upon subcontractors in support of union
membership on sites; 68
⢠union 'show card' days; 69
⢠unions asserting the rig ht not to work with non-union labour;70
⢠compulsion upon non-members to attend meeting s called by un ion officials; 71
⢠the use by a union of OH&S issues as an industrial tool, interming led with legitimate
OH&S issues; 72
⢠the ra ising of alleged OH&S issues by a union in pursuit of industrial ends; 73
⢠unions making unqualified and incorrect assertions about OH&S processes; 74
National Perspective Part 1 9
⢠unions refusing to accept the results of repeated independent and expert safety inspections of a site; 75
⢠unions fai ling to refer asserted OH&S breaches to the relevant authorities; 76
⢠union officials preventing persons from working on site to rectify asserted safety hazards,
because of the existence of the safety hazards; 77
⢠employers failing to observe proper OH&S standards; 78
⢠disregard of the provisions of agreements entered into; 79
⢠disregard of dispute resolution procedures, both legislative and agreed; 80
⢠head contractors paying money to unions to entice them to adhere to dispute resolution procedures; 81
⢠a government department divulging confidential information to unions; 82
⢠a government department intervening in an industrial dispute in a way that lent support to activity by unions which was unlawful;s3
⢠a government department using a prequalification mechanism to pressure a contractor
to sign a union-endorsed agreement; 84
⢠a government being unwillingly to award a tender to a contractor, despite it being
satisfactory in all relevant respects, because of fears of possible disruption by a union; 85
⢠a WorkCover authority being susceptible to pressure from officials of a union; 86
⢠an industrial relations consultant to a state government being willing to arrange for
payments to be made to a contractor for services which were not provided; 87
⢠the covert commitment by a state government of public moneys to assist a private
company to overcome the effects of unlawful and inappropriate industrial action by
unions. 88
15 The question immediately arises why this unlawfulness and inappropriate conduct and
practices occurs, and why they have been allowed to continu e.
16 The answer is complex, but can be simply stated. The unlawful and inappropriate practices
occur because of a clash between the short term project profitability focus of the providers of
capital , clients, head contractors and subcontractors on the one hand, and the long term aspirations of the union movement, especially the CFMEU, to dominate, control and regulate
the industry for its benefit and what it perceives to be the benefit of its members, on the other hand.
17 This clash of short term focus with a longer term objective usually resul ts in those with the short
term focus surrendering to those with the longer term objective. The short term project driven profitability focus means that surrender to demands is the better immediate economic
alternative to long drawn out conflict. It means that quick fix solutions driven by commercial
expediency supplant insistence on legal rights, adherence to ethical and legal norms and the
pursuit of legal remedies. Those with longer term objectives know that those with a short term
focus are vulnerable to delay and cost. There is thus an inequality of bargaining power when
1 0 Final Report of the Royal Commission in to the Building and Construction Industry
conflict occurs. Sometimes unlawful or inappropriate conduct occurs for the sole reason of
exploiting or reinforcing that power.
18 The unions with coverage of workers in the building and construction industry have the
capacity to organise and engage in industrial conflict which can cause debilitating disruption to
major projects with little risk of being held to account. They have long term objectives but often
take a short term view towards the interests of their members and the resolution of disputes.
Short term outcomes for members, such as increased entitlements or benefits, tend to prevail
over long term outcomes, such as increased employment in the industry or more flexible work
practices. Underlying much of the conduct of unions, and in particular the CFMEU, is a
disregard or contempt for the law and its institutions, particularly where the policy of the law is
to foster individualism, freedom of choice or genuine enterprise bargaining. Overwhelmingly,
industrial objectives are pursued through industrial conduct, rather than reliance on
negotiations or the law and legal institutions.
19 The unwillingness and incapacity of head contractors to respond to unlawful industrial conduct
causing them loss is due, principally, to two structural factors. The first relates to their desire to
be long term participants in the industry. To be so, having regard to the competitive nature of
the industry and the low profit outcomes, requires them to not only address the short term
focus on profitability of a given project, but to consider the long term relationship with union
participants. They know that unless there is significant acceptance of union demands, there will
be continuous industrial disruption on other current and future projects. Clients, including
governments, who are major participants in the industry, will not select contractors who are
unable to deliver projects on time and within budget. prospect of industrial disruption is a
disqualifying feature for the obtaining of future work, and thus being a long time participant in
the industry. This is well understood both by the contractors, and by the unions. It places
enormous power in the hands of unions. It encourages unions to use that power to obtain
otherwise unattainable outcomes. The threat of the use of power is as effective as its exercise.
Each of the unions and the contractors knows this and factors this circumstance into their
relationships.
20 The second structural factor is the weakness in the mechanisms for enforcing laws of general
application, including criminal law, the industrial law, especially the Workplace Relations Act
1996 (C'wth), and the civil law for recovery of loss caused by unlawful action. There is no body
to ensure that the industry operates with in the law. The Task Forces established in New South
Wales on the recommendation of the Gyles Royal Commission in 1991 , and in Western
Australia in 1994 were soon abolished at the behest of the unions. The Office of the
Employment Advocate (OEA) established by the Commonwealth Government in 1996 is
responsible for all industries, not just the building and construction in dustry, is under-resourced
to address thi s industry, and has no special building and construction industry focus . There is
no organisation either to monitor the industry, or to ensure that normal standards attaching to
criminal, industrial and civil behaviour are adhered to.
21 Regarding the criminal law, there is an attitude within police forces that whenever conduct
which might offend against the criminal law occurs on or in relation to a construction site, the
matter is one of an industrial nature. On construction sites, the police attitude is that it is their
function to maintain the peace, not enforce the criminal law.
National Perspective Part 1 11
22 The efforts , inadequate and ineffective though they were, by the Office of the Employment
Advocate, to enforce the Workplace Relations Act 1996 (C'wth) on building and construction
sites, were defeated by the unions by a consistent policy of obstruction and threat of industrial
action if contractors co-operated with the Office of the Employment Advocate. The CFMEU in
New South Wales issued pamphlets advising workers that if representatives of the Office of
Employment Advocate entered a site, they should say nothing and immediately contact the union. The men were directed to sit in the sheds whenever an inspector was on site. The threat
of future union action if there was co-operati on by contractors with the OEA in spectors was effective in en suring there was no such co-operation.
23 Resort to the AIRC by employers for relief against unlawful action was equally ineffective.
Consistent with its charter, the Australian Industrial Rel ations Commission (A IRC) sought to
resolve disputes by negotiation. If that failed, orders coul d be made, but not enforced,
notwithstanding that such orders were, by statute, mandatory. Both contractors and unions
know this. The unions adopted the view that, notwithstanding statutory provisions making
orders of the AIRC mandatory, they would decide, at their whim, whether they would adhere to
those orders. The process of enforcement involved taking yet further proceedings in the
Federal Court. Orders of the Federal Court were equally regarded by the unions as not
mandatory, to the despair of some Fed eral Court judges. Justice Merke l said, in relation to the
non-compliance by a senior union official with a court imposed penalty order:
The failure by all persons interested to seek to enforce the penalty order punishing [the
official] for his wilful contempt of court had the potential to bring the administration of
justice into disrepute. That IS especially so in view of [the official's] continuing wilful and
public defiance of the order. 89
24 From the contractor's viewpoint, faced with the prospect of little effective support from legal
structures, and ongoing loss, the pragmatic commercial decision was almost invariably taken
to resolve the dispute by surrendering to the union demands to the least extent possible. The
loss suffered by contractors is immediate, being the cost of standing charges while work
ceased, and prospective, being the cost of liquidated damages if projects were not completed
on time. Liquidated damages on a major project can equate to at least $250 000 per day.
Overhanging, remains the prospect of future retaliation by the union. The incentive to surrender is great.
25 If unlawful industrial action occurs causing loss to a contractor, the existing law, although
expansive and complex, provides theoretical relief. In reality there is no relief. To recover losses,
a separate action is necessary either in the Federal Court or a court of competent jurisdiction.
That litigation will be expensive, will not conclude for at least twelve months and more likely for
two years, may be subject to appeals, and the outcome may be uncertain. Th e litigation would involve a focus on a particular project. By the time litigation is ready for hearing, that project
may be conclud ed . Th e business focus of the contractor is on its next job. The inducements to
resolve any such litigation and move on are great. Contractors and unions both appreciate this.
26 In any such litigation to recover loss from unlawful industrial action, the unions invariably raise
technical objections relating to their absence of responsibility. Unions are quick to seize, exploit,
and publicise the benefits and advantages of collectivism. They are equally quick to deny
1 2 Final Report of the Royal Commission into the Building and Construction Industry
responsibility for collective action when it causes others loss. For example, in consequence of
a dispute involving the Lavarack Barracks in Queensland, and the Kwinana Freeway in Western
Australia, the CFMEU decided to take industrial action against Th iess. The decision to take that
action was made during a telephone conference arranged by Mr John Sutton, the National
Secretary of the CFMEU, Construction and General Division. The participants in the telephone
conference were Mr Alex Bukarica, then the Assistant National Secretary of that Division, and
the Secretaries of the Divisional Branches of the Construction and General Division in each
State and Territory, including Mr Andrew Ferguson (New South Wales), Mr Martin Kingham
(Victoria), Mr Kevin Reynolds (Western Australia) and Mr William Trohear (Queensland). The
industrial action cost Thiess over $300 000. The CFMEU submitted to me that it was not
responsible for the nationwide industrial action . The basis for this was that: 'The telephone
hook-up was only between State Secretaries of the CFMEU and Bukarica . It was not a meeting
of the CFMEU.' It submitted that, 'The CFMEU did not co-ordinate any industrial action. The
CFMEU did not co-ordinate anything.' These submissions were apparently based on the
assertion that the CFMEU could not be responsible for the nationwide industrial action unless it
was implemented as a result of a decision of the National Executive of the CFMEU.
27 Whatever the legal merits of this su bmission on the current state of the law, such a position is
obviously absurd. Yet that is the type of barrier placed before those wishing to sue a union for
unlawful industrial action causing loss.
28 The result is that, even if litigation to recover loss from unlawful industrial action is commenced,
it is regarded , as Mr Kingham has said, only as a 'bargaining chip '. The unions and the
contractor know that whilstever unions control major construction sites, a matter I will address,
there must be rapprochement between the union and the contractor. They know that the
contractor cannot afford ongoing industrial disputes because of immediate losses, prospective
losses from liquidated damages, and prospective injury to reputation affecting future work.
Frequent short stoppages have an equal effect. The union is under no constraints of loss or
damage to reputation. While it controls major sites, it controls a significant element of the
labour force with the capacity to cause disruption and loss. The bargaining chip of litigation and
recovery of loss already caused is bargained away in that rapprochement. That is the recent
Grocon experience.
29 In the result, there is one category of participants, the contractors and subcontractors, who
have the potential to suffer serious present and future loss from unlawful industrial conduct by
unions. They know, in reality, that loss is irrecoverable. Opposed to them are unions, especially
the CFMEU, who know that engaging in unlawful industrial action causing loss to contractors
and subcontractors will not attract criminal sanctions, wi ll not attract penalties, cannot be
stopped by the AIRC, w ill rarely be the subject of Federal Court proceedings and, if they are
sued for loss , that litigation will be resolved without cost to them as part of future industrial
negotiations.
30 Governments have stood by and allowed this situation to eventuate. It is no wonder that the
CFMEU , and other unions, applied such pressure to governments for the removal of the Task
Forces in New South Wales and Western Australia, and mounted such an intense campaign
against the OEA when it sought to intervene. Th ey were the only three bodies with any
prospect of controlling unlawful industrial action.
National Perspective Part 1 1 3
31 The attitude of the unions, particularly the CFMEU , to the obl igation of their officials to adhere
to the law is exemplified by banners and placards carried in demonstrations against the Royal
Commi ssion, and most recently, in demonstrations in Melbourne relating to the charging of
Kingham by the Director of Public Prosecutions, not the Royal Commission, alleging breaches
of the Royal Commissions Act 1902 (C'wth). The banners reading 'Touch One- Touch All ' are
carried in mass meetings of protest. Th ey encapsulate a view that, even if it be that conduct by
a union official is agai nst the law of Australia, that law either has no application to or should not
be enforced against a union official. Implicit in the disruptive demonstrations is that if the law,
applicable to all other Australians , is applied against uni onists, disruption to construction sites
and normal civic life will occur. The demonstrations place implicit pressure on the judicial
system to take account of consequences that might flow if, in accordance with proper
principles of law, a union official were convicted of an offence. No other Australian citizen ,
charged with an offence, is entitled to disrupt commercial and civic life. No other Australian
citizen is entitled to maintain a position th at application of the law of this country against him or
her will result in commercial and civi l unrest. The attitude implicit in the statement 'Touch One
Touch All ' in this context is that unions, and especially their officials, are immune from the
normal law applicable to all Australians. Collective action, having as its purpose the defeat of
the operation of the law, cannot be permitted to prevail over the will of the Australian people,
expres sed through th e Parliam ent and applied through the courts. I acknowledge the rights ,
advantages and merits of collectivism, but where they conflict wi th the ru le of law, the rule of
law mu st prevail . Otherwise, there is anarchy.
A question of attitude
32 The extent of unlawful and in appropriate conduct differs amongst the States, and differs
between unions. By far the worst is the co ndu ct and practices of the CFMEU and its officials.
In contrast, the Australian Workers' Union (AWU) has a general approach of adhering to
agreements made, and generally respecting the rights of others. Between these two are the
Communications , Electrical, Electronic, Energy, Information, Postal, Plumbing and Al li ed
Services Union of Australia (CEPU) and the Au tomotive, Food, Metals, Engineering, Printing
and Kindred Industries Union (AMWU).
33 There is also a difference in the lm1el of unlawfulness between the building and civil construction sectors of the industry. By far the worst is the building industry sector where the CFMEU predomi nates. The structure of the civil construction segment of the in dustry is somewhat
different to that of the building industry. In the construction sector the major contractors and
subcontractors have many more permanent employees, are frequently engaged on major
works in more remote areas, and operate in a construction enviro nm ent where there is not
such a close interaction between various trades.
34 It is important to understand the attitude of the participants in the industry. Thi s attitude has
evo lved from the operati on of the factors, pressures and outcomes which I have just discussed.
1 4 Final Report of the Royal Commission into the Building and Construction Industry
The attitude of the CFMEU
35 The CFMEU has an attitude of dominance. It is fully aware of its capacity through unlawful
industrial action to cause harm for which it will not be held responsible. It knows that it has a
network of militant unionists throughout Australia who will adopt the direction, intimation or
suggestion of union officials. It knows it can bring pressure to bear on major contractors
operating throughout Australia by threatening action on projects unrelated to any dispute on a
particular project. It knows it can ignore agreed dispute resolution mechanisms, favouring
instead industrial action to achieve its objectives. It knows, ultimately, that that pressure will be
so intense that even the most major contractors will ultimately surrender to the pressure. As
Kingham said in relation to the Sun Metals dispute: 'Inevitably the company is going to have to
back down very shortly and negotiate a settlement to this dispute'.90
36 Thi s attitude permeates throughout the union structure, being exhibited at all levels .
37 At the top of this structure in the CFM EU is Mr John Sutton, National Secretary of the
Construction and General Division of the CFM EU. Mr Sutton was, with Mr Ferguson , a
signatory to the Deed of Adherence dated 16 March 199491 between the State of New South
Wales, and the CFMEU Building Unions Division , New South Wales Divisional Branch, and the
Building Workers Industrial Union of Australia (BWIU), New South Wales Branch. By that Deed
those unions avoided deregistration. Th e unions undertook:
⢠to continue to comply with the dispute settlement procedures contained in the awards
and agreements to which unions were a party (Clause 3. 7);
⢠not to resort to industrial action in support of paym·ent for lost time in relation to a period
during which members were engaged in industrial action (Clause 3.8);
⢠not to pursue or seek to enforce any mechanism implying that compulsory unionism
applied on any construction site in New South Wales, contrary to established legal rights
(Clause 3.9);
⢠to be opposed to and not engage in or support victimisation , threats and intimidation
against any person or persons in respect of whether a worker was or was not a union
member (C lause 3.1 0); and
⢠to abide by the right of entry provisions contained in State and Federal industrial
legislation , awards and agreements to which the unions were respondent (Clause 3.1 3).
38 The unions also agreed to abide by their own Code of Conduct. 92 That imposed upon union
officers the following obligations:
⢠No person was to use their position for individual advantage or gain (Clause 4).
⢠No officer engaged by the unions was to converse in an abusive or derogatory manner
towards any person with whom they came into contact, irrespective of provocation
(Clause 5).
⢠All agreements entered into by unions were to be adhered to and honoured (Clause 8).
⢠No arbitrary fines or money penalties were to be imposed upon any builder or
subcontractor under any circumstance (Clause 13).
National Perspective Part 1 I 5
⢠All officers were to respect and abide by the relevant dispute settlement procedure
(Clause 16).
⢠All officials were to conduct themselves in accordance with their legal obligations arising
from their right of entry permits (Clause 17) .
39 The obligati ons set out above do no more than state the then and presently ex isting law and proper standards of behaviour. Although th e Deed applied and sti ll applies only in New South
Wales, adherence to the law and proper standards of behaviour would result in the CFMEU and
its officials acting in accordance with those obligations throughout Australia. Each of the
obligations is regularly breached and has been for many years . A reading of the case studies
throughout Australia makes that plain. There was no evidence before me to suggest that
Mr Sutton has taken any steps, and certainly not any effective steps, to ensure that the
undertakings he and Mr Ferguson, the other sig natory, gave were adhered to. The evidence
makes it plain that there is no point in making an agreement with the CFMEU because it will
adhere to that agreement only so long as it is in its interests to do so. Yet notwithstanding plain
and repeated breaches of the Deed of Adherence, nothing has been done by Government in
New South Wales since abolishing the New South Wales Task Force in 1995, to require
adherence to the terms of the Deed .
40 A similar contumelious disregard for the law was exhibited in 1997. On 22 May 1997 a meeting
of delegates of the CFMEU was held on the Stadium Australia site. The then Government of
Western Australia had recently introduced new industrial relations legislation . The contractor's
industrial relations report of that meeting stated:
Flyers were issued (refer attached) and John Sutton requested a letter to be written by all
national builders that they would not implement the new I.R. - laws on Western Australian
projects. 93
41 Four days later, the CFMEU organiser on the Stadium Australia project, Mr Barrios, was
informed by Mr Sutton that Multiplex had seven days to write a letter addressed to the CFMEU
stating that Multiplex would not follow the new industrial relations legislation on its Western
Australian projects94
42 Th is incident exhibits an attitude that it is for the union and its offi cials to decide whether it will
follow the law of a sovereign State, and further, that the union and its officials regarded it as
appropri ate to seek to pressure contractors to disregard the law.
New South Wales
43 The same attitude of dominance and disregard of the law permeates the State Branches of the
CFMEU. In New South Wales, a company, Deemah Marble and Granite, went into liquidation
leaving its employees owed wages. Ferguson, the State Secretary, claimed that Multiplex New
South Wales, as head contractor of the Establishment Hotel Project, was liable to pay certain
moneys in respect of those wages, as were Baulderstone, Leightons, Westfield and Grocon.
Multiplex paid to the CFMEU the amounts in excess of $70 000 said to be owing on its own
behalf and on behalf of Baulderstone, Leightons and Grocon. It did so 'under duress'. The
duress was that Ferguson told Stagg, a Multiplex director, that unless the moneys claimed from
the other companies were paid 'immediately then the Establi shment Hotel site would suffer
l 6 Final Report of the Royal Commission into the Building and Construction Industry
immediate industrial acti on' . Thus Ferguson threatened industrial action to force payment of moneys not owing by Multiplex.95
44 In the Hackett Laboratory Services Pty Ltd (Hacketts) case study, that company did not have a
union-endorsed enterprise bargaining ag reement. In May 2000 Ferguson attended a meeting
with representatives of Hacketts and said he wanted Hacketts to take up a CFMEU endorsed
enterprise bargaining agreement. He said 'I want a deal and I want it today', that he had friends
in the Australian Taxation Office (ATO) , and cou ld have the company 'go down the tube' and
have Mr Hackett, a director of the company, put in gaol on tax matters 96
45 The attitude of disregard for the law is someti mes explic it. A company, Griffiths Landscape
Management Pty Ltd (Griffiths Landscape Management), failed, owing money to two
subcontractors. In March 2002 Ferguson contacted Zadro Constructions Pty Ltd (Zadro
Constructions) and asked it to pay money it owed to Griffiths Land scape Management directly
to the two subcontractors. Th e moneys should have been paid to the admini strator of Griffiths
Landscape Management. When the administrator raised with Ferguson the issue of Zadro
Constructions' legal oblig ations to him as administrator to pay the moneys to him, Ferguson responded, 'The union doesn 't believe in that law' 97
46 The dominant position the CFMEU asserts is illustrated in New South Wales by Ferguson's
attempt to regulate sectors of the industry. Ms Hi ll, the proprietor of Christies People Pty Ltd
(Ch risties People), a labour hire fi rm, knew that it was necessary to obtain a union-endot·sed
EBA with the CFMEU if she was to be able to provide labour to contractors on major projects
in th e CBD. She met with Ferguson to seek such an agreement. Ferguson told Hil l th at the
CFM EU would not be making a 'building EBA with Christies People'. He said that he was
endeavouring to regulate the industry and that there was no way that Christies People would
be a player in the building industry. He tol d Ms Hill that Christies People only had a 'civil' EBA
and that she was to get off all building sites immediatel y. When Hill protested that about 50 per
cent of Christies People's workforce was employed in the bu ilding industry, and asked whether
Christies People were supposed to put these employees off work, Ferguson said, 'yes'. He told
Murphy, an organise r, that if such workers were put off by Christies People, he would try and
help them get jobs with other builders and companies.98
47 Ferguson has attempted to regulate the cleaning industry. Focu s Property Services Pty Ltd had
a contract on a Baulderstone Pty Ltd project worth about $94 000. Ferguson al leged that
Focus Property was paying its employees cash in hand and keeping three sets of books. There
was no credible evidence presented to the Commission to support Fergu so n's allegations .
Ferguson told Clarke, Managing Di rector of Focus Property Services Pty Ltd, that it should not
work on the project. Clarke told Ferguson that Focus Property had a contract worth $94 000
and Ferguson replied, 'Bad luck' 99
48 This attitu de of dominance and disrespect for the rights of others to conduct business has
permeated down to the organiser level in New South Wales . On 11 Feb ruary 2002 Holland,
Construction Manager for Manu Enterprises Pty Limited, met Mitchell, a CFMEU organi ser.
Mitchell told Holland he wanted Bal l, a blocklaying contractor, 'off the site and out of business'.
When Holland demurred, Mitchell told Holland that Manu had to get rid of Ball or the union
would see that Man u 'went down too' . Later there was a meeting between Holland and union
National Perspective Part 1 1 7
officials including Parker, the Branch Assistant Secretary. Parker told the meeting that Ingleside
Bricklaying (Ball) was a 'pack of shonks' and that unless Manu got rid of Ingleside there wou ld
be 'lots of trouble'. Parker said that the CFMEU would stop the site and make life difficult for
Manu, that Manu would not get any work from clients, and that the CFMEU would spread the
word around and put black marks against Manu. 100
49 I heard evidence of a head contractor engaging an individual as a construction worker who in
the space of a few days took it upon himself to act as though he were a site delegate, did little
or no actual construction work, removed cases of beer from the site office, went to a political
rally, and fa il ed to report for work as requ ired. In short, the worker repeatedly showed contempt
for his employer and a disinclination to do any of the work for which he had been employed.
When the worker was retrenched, the CFMEU alleged that he was being victimised because of
his union activities and orchestrated a two day strike in support of his reinstatement. The
worker was re-employed for a few days, before he was permitted to resign so that he could
take up employment as an organiser with the CFMEU . The head contractor paid $20 000 to
the CFMEU for it to take the worker off the company's hands. The deal was structured to
enable the union to announce a win to its members and to sound a warning to other
contractors.101
50 A diary note taken by a site manager for Grindley Construction Pty Ltd records the actions of a
CFMEU organ iser, Brcic, who entered a Grindley site while a dispute about payment of a site
al lowance was current, and met with the workers:
Victo ria
[Brcic] even said that if the demands were not met, he would carry out a safety inspection
& would find faults that would close the site, if the demands were met he would go away
& not cause trouble on the site again. This was not accepted by Alan & that further
negotiation would be required & to meet again Monday [Brcic] wasn't happy with this &
he left the office & addressed the men again. He told them that management would not agree to the terms & he told the men that the job was stopped & to go home & come
back Monday I managed to speak to approx half the men & advised them that th e job
was not shut. I told them that above Level 4 would be out of bounds until the dispute was
settled & that the proper procedure to follow was in the E.B.A endorsed by unions &
agreed by them. While I was trying to talk to the men [Brcic] was interrupting telling them
not to listen to me. When I was asking [Brcic] on what grounds he was clos1ng the job &
he said it was on safety issues - this was based on not even carrying out an
Inspection. 102
51 The National Gallery of Victoria (NGV) case study illustrates graphically the problems with in the
building and construction industry in Victoria. The three phases of that study illustrate the
central role and immense power wielded by the building unions. That power was wielded not at
the behest of employees or members of the unions involved, but at the behest of officials , and predomin antly for the purpose of maintaining or enhancing union power.
52 The issues involved included the awarding of contracts fo r demolition works by the Victorian
Government to Able Demolitions and Excavations Pty Ltd (Able), it being known that there were
disputes between Able and the CFMEU . It was also known that there were demarcati on
I 8 Final Report of the Royal Commission into the Building and Construction Industry
disputes between the CFMEU and the AWU regard ing coverage for work. Subject to those
matters, Able Demoliti ons was plainly the most su itable contractor. Th e State prevaricated in
awarding the contracts because of possible industrial action. That action occurred wi th a
disgraceful invasion of, and rampage through, the NGV on 1 0 August 2000 organised by
officials of the CFMEU . It was a physical demonstration of union power. A mob of unionists
caused damage of between $100 000 and $150 000. It was led by union officials, including
Kingham, Oliver, Cummins and McPartland , all senior CFMEU officials.
53 There was no respect by th e union for the law, for public property, for the rights of contractors
and their employees to work, or for safety. It was a raw exercise of union power aimed at
demonstrating to the Victorian Government its displeasure at a contract being awarded to
Able. It was aimed at showing the union's dominant position and demonstratin g that if
Government incurred its displeasure, consequences would follow, as they did.
54 Yet nobody did anything about this. The police investigation concluded with a statement that
wh ile, 'Serious offences of criminal damage were committed ... investigation has not disclosed
sufficient admissible evidence with which to charge any person with a criminal offence given
the burden of proof attached to such proceedings '.
55 The response of the State Government to submissions in this matter makes plain that the
principal reason why proceedings were not taken to recover the losses suffered from the
CFMEU and its officials was union power. Victoria submitted:
ff the question of recovery of foss after 10 August 2000 was considered, it would first
have been necessary to ascertain the extent of the damage sustained by the State and
quantify its loss (as distinct from the foss suffered by Able). The next question would have
been whether any person or organisation could be proved responsible for the foss. That
would no doubt have involved disputed matters of fact, as the Victoria Police
investigation confirmed. It would then have been necessary to obtain legal advice as to
the prospect of recovering the foss, and weigh that prospect against the legal costs
involved. Next, at a policy level, other issues would require consideration, including the
advantages of governmental condemnation of the actions of 10 August 2000 and the
public perception that such behaviour would lead to punitive action, but also the
consideration that a dispute threatening delivery of several major projects might become
intractable, with consequent damage to the State and its economy There was no single
correct way of resolving these issues .
56 As I concluded in that case study:
f do not doubt tha t 'the consideration that a dispute threatening delivery of several major
projects might become intractable, with consequent damage to the State and its economy'
weighed heavily in any deliberations regarding whether those who caused the damage
should be required to pay for it. Officials of the CFMEU had demonstrated in August 2000,
their capacity to shut down State projects. The State Library, Federation Square, the Myer
Music Bowl and the State Hockey and Netbafl Centre were afl the subject of stoppages and
bans between 11 and 14 August 2000. And because of the power, capacity and
wiflingness of CFMEU officials to cause further and greater damage, apparently recognised
by the State, lawlessness went unpunished and w1Jfuf damage unpaid for.
National Perspective Part 1 l 9
57 I have no doubt that if those who organised and engaged in that rampage , and caused that
loss were other than the CFMEU and its offi cials, appropriate action would have been taken.
This graphically illustrates the power of the threat of future industrial action. If it can stop the
State of Victoria, with all its power and resources, from taking appropriate action, the prospect
of individual head contractors, let alone small subcontractors, resisting such pressure is
remote. Th is illustrates the core problem with in the bu ilding and construction industry
throug hout Australia, and especially in Victoria, namely, lawlessness and damage caused by
unlawful action attracts no sanctions whatsoever, and the unions, especially the CFMEU as the most powerful within the industry, know it.
58 A further demonstration of the attitude of the CFMEU to the rights of others was demonstrated
in th e Grocon Li mited case stu dy. Th ere the CFMEU organi sed industrial action on six different
sites, shutting down those sites on 30 and 31 July 2002. The action was not protected action
and was plai nly unlawful. The reason for the action was because the union did not agree that
Grocon had an entitlement to make a submission to this Royal Commission . Nor did it agree
with the content of that submission . Union officials misrepresented the content of the
submission to meeti ngs and persuaded workers to take strike action . The loss to Grocon
exceeded $500 000. Any proceedings taken to recover that loss have apparently been
bargained away as part of the EBA negotiations. The industry has reached a sorry plight when
unlawful industrial action can be taken with impunity causing loss in excess of half a million
dollars becau se the CFMEU does not ag ree with the entitlement of a contractor to express its
views to a lawfully constituted Commission established under the laws of the Commonwealth of Australia.
59 It is not on ly governments and major con tractors that are subjected to pressure from the
CFMEU and its officials . In May 2002, Canham Commercial Interiors Pty Ltd (Canham)
com menced a small office refurbishment at 370 Little Bourke Street, Melbourne. The contract
value was $7000. On 30 May 2002 , Dawson , who identified himself as a un ion official , told a
subcontractor he had to have an EBA. Dawson spoke to Canham , said he had 'seen the guys
on the site', and that they must have an EBA. He said:
If you want to work in the city, it's our playground and if you want to play in our
playground then you have to join the union.
60 A few days later Setka, a CFMEU organiser, rang Canham and asked if he had spoken to
Dawson. Setka said that if Canham 's employees wanted to work in the city 'they had to join the
union, and it did not matter how small the job was'. 103
61 Thus is the freedom of small Australian con tractors to work restricted by the CFMEU.
Queensland
62 I have previously referred to Mr Sutton 's involvement in arranging concerted action against
Thiess arou nd Australia. A not diss imilar circumstance involved Multiplex Constructions Pty
Limited. A note prepared by Mr Allen, the Managing Director of Multiplex Constructions Pty Ltd , records that in September 1999, Mr Sutton made the following demand of Mr Allen , in relation to the Maryborough Project, Queensland:
20 Final Report of the Royal Commission into the Building and Construction Industry
Multiplex must agree to ensure that all subcontractors (employed at the above project),
have union certified EBAs or industrial action will occur at Multiplex projects, nationally
You required our response by 3.30 pm (EST) 15 September 1999. 104
63 There had been a meeting seeking resolution of a dispute on 14 September 1 999 to no avail.
Mr All en noted the following facts in his letter of 15 September 1999 to Mr Sutton:
1. Maryborough is a town of approximately 16,000 people some three hours north of
Brisbane.
2. The Multiplex Project is a $1 7 million regional shopping centre, using
predominantly local tradesmen and subcontractors.
3. Also being built in Maryborough are a $10 million building and a $4 million building
being built by local contractors. These projects have no EBAs, no union delegates, and no union pressure.
4. We understand that the employees on our project have not taken industrial action
over your claim.
5. Multiplex operates under a number of principles:
We value a working relationship with your union;
We have a preference for subcontractors with EBAs as it indicates a
willingness to ensure progressive industrial relations;
We have a preference for using local subcontractors as it enables the region
to benefit from the project;
We have to operate within the law.
You appear to have singled out Multiplex and advise that you may take industrial
action on other completely unrelated Multiplex projects in support of this claim.
64 This letter reflects the attitude of dominance to which I have referred. It reflects that union
officials, here the National Secretary, threatened action nationally in relation to a localised
dispute because of the CFMEU's insistence that all subcontractors have 'union certified EBAs'.
The action threatened was unrelated to any action by the actual workers on the project. The
threatened action interfered with the freedom of Multiplex and its subcontractors to negotiate
the terms upon which they wished to work, and interfered with the freedom of the
subcontractors to agree terms of employment with their employees.
65 When the note setting out Sutton's demand was put to him, the following exchange occurred:
Q: You see, that verbal advice that is ascribed to you in the first sentence of Mr Allen's
letter to you is consistent with the approach that you have employed in the last
three years or so, isn't it, in dealing with the majors?
A: I repeat that we put to all the major builders and builders all up and down the
country that we want them to have union-certified EBAs on their sites. That is not
something that would shock them or would find any horror on their part. It is in fact
something I think every trade union in the country does.
National Perspective Part 1 2 1
Q: Does every trade union in the country go on to say 'And if you don't agree,
industrial action will occur on other sites around Australia'?
A: Every trade union in the country, and historically, needs to back any demand with
some bargaining power. If it is just a wish, Mr Commissioner, or just a hope or just a plaintive cry, nothing will happen'. 105
66 Thus, industrial relat ions in the in dustry are based upon the notion of engendering surrender by
the capacity to cause severe economic loss.
67 In Queensland, Mr Simcoe is the State Secretary of the Australian Building Construction
Employees and Builders' Labourers ' Federation (Queensland Branch) Union of Employees
(B LF Q). He attended a meeting on 21 April 1998 with Mr Frame, from Thiess, and Mr Scott,
from Kozwin Constructions Pty Ltd, a subcontractor. Kozwin Constructions had let a contract
to Quality Concrete for concreting work. Simcoe wanted all of the workers from Quality
Concrete to 'be in the union'. He indicated that 'there might be industrial trouble on the site'.
When asked what he meant by that statement, Simcoe replied, 'If you give us a cheque for
$2000, the problem wi ll go away'. He was asked whether he was speaking of membership
fees. He replied, 'I don't want anyone from Qual ity Concrete in the union. They're just scum. If
you give us the cheque, the problem will go away.'
68 Later, he made threats regarding other Thiess operations, particularly the Southbank Project.
He indicated he wou ld visit the site the next day to ask workers if they wished to work with non
union labour. He threatened to withdraw members from the site. Simcoe said that the rules of
the BLF Q 'state that we reserve our right to not work with non-union labour'. 106 If the rules do
so provide, they are indicative of an attitude that union members reserve the right to cause
disruption on projects because persons who have chosen not to join a union are working there.
69 Such an attitude is contrary to the freedom of association provisions in the Workplace Relations
Act 1996 (C'wth), and many State industrial Acts. It fails to recognise individuals' rights. It may well be that a unionist who does not wish to work with others who are not unionists may resign;
but there is no right to cause industrial disruption because somebody has a view different from
that of a unionist on the advantages of unionism.
70 The dominance of the CFM EU was also illustrated in the Homezone Home and Garden Centre
case study. There, a subcontractor wished to start subcontract works. Mr Smith, the CFMEU
job delegate, had been placed in a position to vet entry to the site. To gain entry it was
necessary to fill out a form in respect of each worker. The subcontractor had filled in
approximately 20 forms. Smith said, after sorting the forms, 'At least someone's in the union.
Only two in the union out of 20. Only two can start, the rest will have to sort yourselves out'.
The subcontractor was not permitted to start on the site until a 'better balance' between union and non-union membership was achieved.
71 In Queensland the CFMEU also seeks to regulate sectors of the industry. A labour hire
contractor, Wilson, arranged a meeting with Simcoe to try and get an EBA from the BLF 0.
Such an EBA was necessary to be able to persuade clients to use his services. Wi lson told Simcoe he had heard of the existence of a list kept by the union of labour hire companies.
Simcoe replied, 'You'd better believe there's a fucking list. You're not on it, and you're not getting on it unless you sign an EBA'. 1 O?
22 Final Report of the Royal Commission into the Building and Construction Industry
72 In similar vein , Jamie McHugh, a BLF Q organiser, told Peterson , a site manager employed by
Jezer Construction Group Pty Ltd that he was not permitted to have two labour companies on
site because they did not have an EBA with the BLF Q. Peterson responded that he did not
believe it was necessary to have an EBA because he was 'not running a complete union site'
and was 'employing both union and non -union people'. McHugh's response was that he was
'wrong, that they did have to have one and that if [Peterson] continued to use them [he] could
run into problems on site with deliveries, fences, scaffolding and this sort of thing' . McHugh
said he would talk to contractors with which Peterson was dealing, particularly concrete
contractors and tell them that the site 'would be blackballed' .108
Western A us tralia
73 In Western Australia, there is a similar attitude of dominance, power, disregard of the rights of
others, and disregard of the law. The CFMEU was in dispute w ith Bregma Pty Ltd (Bregma), a
subcontractor to Consoli dated Constructions Pty Ltd (Consolidated Constructions) . Th e
CFMEU had an EBA with Consolidated Constructions which contained a disputes settlement
procedure. Despite this, McDonald, the Assistant State Secretary of the CFMEU Western
Australi an Branch , stopped the site. He did so because he 'believed that industrial action was
necessary'. He was asked:
0: Does that mean that the disputes settlement procedure operates only when one party decides it will operate?
A: Yes, in this case, yeah, that's exactly what it meant.
0: The whole purpose of a disputes settlement procedure is to avoid industrial action and to let an umpire decide?
A: Yes.
0: Why didn't you follow it?
A: Because the person that was driving this issue was BGC, and it was an industry
issue so we took industrial action. There was a need for militant action and militant
action took place.
0: So if you reach the view that militant action is appropriate, you just disregard whatever agreement you've entered into?
A: As far as a recommendation for action, for strike action is concerned, yes I do. 109
And later:
0: What (it) really means is that you, as a union official, simply disregard the provisions of agreements that unions enter into?
A: No, I don't quite see it like that, but I do disregard any hint of a no strike clause. I do
disregard any hint of a no strike clause, yes.
0: What do you think the disputes settlement procedure means when it says that work will proceed as normal while the disputes procedure is implemented?
A: I don't want to say there hasn't been cases when that happened, but where I
participated it would be in the minority, if ever. 110
National Perspective Part 1 23
74 McDonald 's evidence was that the State Secretary, Reynolds , had never criticised him for
recommending strike action. When McDonald was asked what criteria were applied in reach ing
a decision whether or not to take strike action or apply the disputes resolution procedure, he
required time to think about that question . Ultimately his answer was, 'I think the answer to that
is there is no criteria. I think that would be the answer to it. Every dispute is on its merit.' 111
75 Thi s illustrates the pointlessness of reaching agreement with the CFMEU, for it will abide by
such agreements on ly when it suits its industrial purpose.
76 Further, McDonald expressed his goal of having every man as a 'card carrying member of the
appropriate union '. He was asked :
0: You had intention of using pressure to use all of your influence to shut down that job, unless Mr Brajkovich had his employees sign up and join the union, didn 't you?
A: I'm not sure how you'd define pressure, but it was my intention to try and close that
site down if everyone wasn't a financial member of the union, yes. 112
77 When asked if he had given thought to whether such conduct was lawfu l, he replied, 'No'. 113
McDonald held the view that every working man and woman should belong to a union, 11 4
effectively negating their right, preserved by the law, to individually decide whether they wished to join a union or not.
78 His view of an individual's right of freedom of association was summarised in the following
evidence:
0: Do you think that people have a right to choose whether or not they are members of a union?
A: I think there's areas where people should go and work if they don't want to belong
to a union, yeah.
0: And is it your view that those areas do not include the CBD of Perth?
A: Definitely
0: Why is that?
A: Hey?
0: Why is that?
A: Because that's the bastion of the trade union movement; that's where we draw the
line in the sand. 115
79 Th at line in the sand marked out the reality that in the CBD in Perth, a contractor could only
work on a project if it had a union-endorsed EBA, and a person could only work on a building
site if he or she joined the union.
80 Justice Scott in the Western Australian Supreme Court, accurately recorded McDonald's approach to undertakings given to the District Court:
[McDonald} paid scant regard to the undertaking ... its terms mattered little to him. He did not consider the undertaking to be of any particular significance and . . was not
concerned whether his conduct was in breach of that undertaking or not. 116
2 4 Final Report of the Royal Commission into the Building and Construction Industry
81 His contempt for the law was illustrated by his attitude towards strike pay which is illegal under
the Workplace Relations Act 1996 (C'wth) . He said, 'Every time there 's been a strike, I've asked
for it.' 11 7 McDonald ag reed, in aski ng for strike pay, he did not 'pay regard to the law in relation to taking a shi lling from the ruling class and paying it to the workers' .11 8
82 McDonald's attitude illustrates an archaic view of industrial relations based upon 'class
strugg le' . He plain ly had no view of modern in dustrial relations, of co-operation , of seeking to
increase productivity for mutual benefit, but rather saw ind ustrial re lations as a brutish exercise
of power. His approach was typi fied by his conduct as illustrated in the Tom's Cranes case
study. There, McDonald was dissatisfied with the way in which he perceived a Royal
Commission investigator was seeking to meet a union official to discuss certain matters
associated with Tom's Cranes. To demonstrate his unhappiness he shut down cranes
successively on the 240 St George's Terrace site, the Panorama Apartments site, the Q-Con
site and the Mount Street site. The explanation for doing so was that because a detective from the Royal Commission had been 'hassling' an ex-employee of Tom 's Cranes so that
information could be obtained fro m him, the CFMEU was going to shut down Tom's Cranes .
He made no apolog ies for his behaviour. He thought th e example set by him was appropriate
and one which he was happy to set as Assistant State Secretary, for shop or job stewards. He
said that he would continue to behave as he did on the day he shut down the four cranes
unless and until somebody were to stop him. Once the Western Australian Task Force had
been closed down, there was no one to stop him.
83 The attitude of the CFMEU in Western Australia to the righ t of companies in dispute with the
CFMEU to use the processes of the AIRC to resolve the dispute is illustrated in the Bregma Pty
Limited case study. Bregma had agreed with its workers to split their rostered day off (ROO) so
that half worked on the nominated rostered day off and took their rostered day off two weeks
later. This was convenient to Bregma's clients . The CFMEU would not agree to this
arrangement. Bregma listed the matter for hearing in the AIRC on 28 February 2002. On
27 February 2002, McDonald and McCullough, a CFMEU organiser, attended the Sheraton site
where Bregma's employees were working with others. McDona!d told the meeting that Breg ma
had the CFMEU in the AI RC the following day regarding splitting of employees' designated
RDOs, that the CFM EU's position was that RDOs should be taken on the designated day, that
the CFMEU wanted Bregma's application withdrawn from the AIRC by the end of that day, that
if Bregma failed to withdraw its application from the AI RC by the end of that day, work at the
Sheraton site would stop and the site would be shut down. McDonald also told the meeting of
about 20 employees that if the application was heard by the AIRC the followin g day, Bregma
wou ld be successful and the CFMEU would lose.
84 McDonald and McCullough then went to another site, the Motorola site. They there met with
workers on that site including Bregma workers and told them the same. Th us, McDonald
threatened to close down two sites if Bregma exercised its rig ht to have the dispute resolved by
the AIRC. Bregma withdrew its application under pressure that two sites on which it and others
were working would stop. McDonald gave the following evidence:
Q: So if you could bring pressure to bear on Bregma to have it withdraw its application
before the Industrial Relations Commission, you believed it appropriate to do that?
National Perspective Part 1 25
A: Yes.
Q: And if that pressure included the workers to go out on strike unless the application
were withdrawn, you believed that that was appropriate as well.
A: Yes.
Q: And that's what you did?
A: Yes.
Q: And you succeeded in having the application withdrawn?
A: Yes.
Q: Because of the pressure you were able to bring to bear?
A: Because I was able to put more pressure on than the builder, yes. 119
85 The attitude of the CFMEU towards industrial relations was also expressed by two organisers
of the CFMEU, Mr Graham Pallot and Mr Daron Smith. The CFMEU was pursuing one of the
Doric Group companies, seeking to force it to enter into an EBA. 120 Doric was unresponsive.
Pallot said to Wakeling, a Doric manager:
I'm going to crucify Doric if this is the sort of people you employ and also the Casino if I
don't gain rights of entry when I choose. I will put 50 to 100 people on a picket line
outside the hotel.
86 In May 2001, after a change in government and the dismantling of the Western Australian Task
Force, Daron Smith said to McGivern, the Doric Site Manager:
Now that the Labor Party has won, we have four years to level the playing field. We will
take one builder at a time and pursue them until they play with us, or they crumble. At the
moment, it's your tum.
87 The attitude of the CFMEU , and its State Secretary, Reynolds, to the ru le of law was illustrated
by the Worsley Expansion Project case study. Haslemore was the joint venture Employee Relations Manager. Disputes arose. A CFMEU organiser came on site. Haslemore asked him
why he did not fol low the disputes resolution procedure. The organiser replied, 'Stuff the
disputes procedure'. On another occasion, the organiser said to a joint venture manager:
You guys just don't understand. We rule the site and we will do what we want to do.
88 Has lemore was told by union officials on more than one occasion that:
Disrupting the work was considered to be part of the CFMEU's strategy based on the
premise that disrupting work was what the members expected and was an important
element to increasing membership.
89 Th ere were frequent strikes despite a project agreement wh ich included a disputes resolution
procedure permitting work to continue whi le matters in dispute were resolved. At a partners '
review forum attended by representatives of the joint venture, the AMWU, the CEPU and the
CFMEU , union representatives expressed concern that the AIRC had imposed a total of three 'no strike' s127 orders. Reynolds said:
26 Final Report of the Royal Commission into the Building and Construction Industry
I want you to back off from the 12 7 order
90 McDonald said, 'You should request that the other employers who are party to the 127 order
back off.' Haslemore indicated their requests were inappropriate. Reynolds threatened a
prolonged strike i{ the contractor applicants for the s127 orders failed to guarantee they would
not enforce their rights in the event of unions breaching those orders. He said, 'The unions have
decided to convene a stop work meeting of all employees on the project on
Friday 18 June 1999. If you do not respond by advising me that you wi ll back off from the
127 Orders, the whole site wi ll take strike action on Friday 18 June for a prolonged period .'
91 On 1 July 1999 Messrs McDonald, Murphy, Pa llot and McCullough, the CFM EU Assistant
Secretary and organisers shut down certain cranes on the project on the pretence of safety
issues. Kerr, a contractor representative, asked the organisers if their actions were 'Some sort
of payback for anything [the company] had done'. Pallot replied , 'Withdraw the Section
127 and we will leave you alone' .
92 The reality in Western Australia is that the CFMEU is not prepared to tolerate decisions being
made by the umpire designated by the Commonwealth Parliament under the Workplace
Relations Act 1996 (C 'wth), or agreed to in project agreements. It prefers the use of unlawful
industrial action.
Tasmania
93 In Tasmania Mr Benson, the Branch Secretary of the CFMEU, Tasmanian Divisional Branch
attended a meeting on 24 August 2000 of Master Plumbers. He told the meeting that there
were a number of larger projects coming up in Hobart involving funding from the Construction
& Building Unions Superannuation Fund (Cbus). He said that on those projects things were
going to be 'different'. He said that EBAs would be required from head contractors and
subcontractors on these sites, and that union membership was 'expected' or 'required' on these sites. 121
94 In August or September 2000 there was a meeting between Mr Killick of Fairbrother Pty Ltd
(Fairbrother), a major contractor, and Messrs Murphy and Harkins from the CEPU. The purpose
of the meeting was to tell Killick that the union was sick and tired of Tasmanian plumbers and
electricians not having EBAs. Murphy told Killick that he had spoken to his union in Melbourne
and that workers 'on the Chadstone Shopping Centre in Melbourne [another site of
Fairbrother's cl ient] would stop work until the Tasmanian employees were on an EBA.' They
advised Killick that 'they would make our life hell on the cinemas project as the roof plumber,
plumber and electrician did not have an EBA'. He said that the CEPU would organise 'a
boatload of unemployed thugs ' from Melbourne to 'sort us out', and Harkins said, if necessary,
they would 'block off the entrance to the site with the truck in the middle of a concrete pour' .122
95 When first seeking to introduce enterprise bargaining ag reements into Tasmania, Bukarica,
then the National Assistant Secretary of the Construction and General Division of the CFM EU,
and Benson , the State Branch Secretary, said that if agreement could be reached it would avoid the industrial unrest that occurred in Victoria, and would thus avoid the need for visits by
organisers from the mainland. 123 There was a plain understanding that causing loss was an
effective means of achieving industrial objectives.
National Perspective Part 1 27
The attitude of head contractors and subcontractors
96 Head contractors and subcontractors have an attitude of resigned acceptance. They have a
feeling that the industry, as it presently exists, has not chang ed in any material respects for a
long period, and that there is effectively nothing which they can do to improve the industry.
They accept the power and dominance of unions. As business people, they take a pragmatic
view that they will conduct business in the existing conditions in whatever way they can, which
is most profitable for their enterprise. While being frustrated that unions have such dominance
and have usurped aspects of control of their businesses, they accept that the highly
competitive business in which they operate means that there is no unified approach by
business, whether head contractors or subcontractors, towards resisting demands by the
uni ons . They fear being singled out by unions because of the great loss which can occur to an
individual contractor, and thus accede to industrywide arrangements. They regard it as
preferable to accept restrictive practices affecting the flexibility and productivity of their
businesses than to seek to improve productivity by arrangements which would attract the ire of
unions. The costs occasioned by unlawful industrial action are accepted because resistance or
recovery attempts would generate more industrial disputes and further costs. They see no
effecti ve mechanism to protect them from unlawful industrial action, or efficiently to enable them to recover losses from such action. As businessmen and women, they seek to minimise
loss, endeavour to bring in the current project at a profi t, and then concentrate on the next project. Th is short term focus means they have no interest in changing the existing structure
unless driven to do so . As a result, their behaviour reinforces the ills of wh ich they complai n in
the industry, namely, union power, the culture and attitudes of union officials, and the
ineffecti veness of mechanisms for resolving disputes.
97 The major head contractors, mainly Australian Constructors Association (ACA) members, who
each transact more th an $200 million of work each year, and Groco n Limited have the financial
capacity to generate change. However, each recognises the competitive circumstance that, for
major projects, there are a limited number of contractors with the capacity to tender. They also
accept that if they are in dispute with the unions , the prospect of being the selected tenderer is
diminished. Th ey know that if they take a principled stand and resist unlawful industrial action,
they will be singled out and caused further loss, and that their competitors will eagerly seize the
projects they might otherwise have won. Th is individual understanding and acceptance means
that there is no concerted approach by all the major contractors to stand together against un lawful industrial action. Their bel ief in disunity, commercial pragmatism, and the
predominance of self-interest is reinforced by the experience in 2000 in negotiation of the
bargaining round when, after some months of dispute, first Grocon, then Multi plex broke from
the group and reached agreement w ith the unions. The remaining head contractors thereafter believed they had no option but to reach similar ag reements to avoid continu ing loss. That
battle was said to have cost $65 million and, with flow on effects, $175 million to the Victorian economy.
98 This desire not to be sing led out by the unions means that they wi ll not resist unlawful industrial
action unless forced to do so, and unless each is satisfied that others will be equally obliged to
resist such action .
2 8 Final Report of the Royal Commission into the Building and Construction Industry
99 It was demonstrated in South Australia in 1994 that if major contractors stood together and
resisted inappropriate or unlawful demands, in that in stance compulsory unionism on major
CBD sites, 124 they could succeed . However, such a show of unity is ra re because of a short
term pragmatic view of profitability.
1 00 Most subcontractors are in a different position . Most are smal l businesses with 94 per cent of
contractors in the industry employing fewer than five people. Many are poorly capitalised and
depend upon the cash flow from continuous work to continue. They operate in a highly
competitive low profit margin sector, and know that they have no prospect whatsoever of
resisting continuous union pressure. Th ey know that if they do not accede to union demands,
they will not be selected by the head contractor for fear of there being disruption on the project.
They also know that there are many competitors ready to take their place. They are pressured
by unions to accede to demands on the one hand, and by head contractors also to accede to
those demands to avoid disruption to the head contractor's project on the other. They are
reliant on the head contractor for cash flow and do not have the resou rces to withstand
disruption to that flow. The interests of the head contractors and the unions thus, in a curious
way, coincide to put irresistible pressure on the subcontractors, who provide between 90 per
cent and 95 per cent of the labour to bui ld projects, to concede to the unions' demands. They,
as do the head contractors, also accept that neither the Austra li an Industrial Relations
Commission, nor the courts, can give them adequate timely relief to prevent them from
suffering significant losses, or to recover those losses. If they do take loss recovery action
against unions they know that in future, their projects will be disrupted.
101 It is of importance to note that of the 692 800 people engaged in the industry, 248 100, or 36
per cent, are subcontractors or 'own account workers '. Less than 25 per cent of the total
workforce belong to a union. These figures are indicative of an industry where more than three
quarters of the workforce do not wish to be involved with unions, and more than one third have
an attitude of independence and self reliance . Much of the workforce thus exemplifies the small
business culture.
102 To begin to understand the attitude of head contractors and contractors, it is necessary to have
an overall understanding of the nature of a modern building or construction project. Most head
contractors are requ ired by their contract with the client, be it a government or private cl ient, to
assume the financial risk of project based industrial relations. Further, their contract is normally
a fixed price contract requiring project delivery by a specified date. Th e provisions permitting
extensions of time are limited as are the provisions addressing variation in price. Costs and ti me
attributable to site specific industrial relations risk are usually not within those provisions. Thus
the head contractor bears that risk. Being a fixed price contract there are usually liquidated
damages provisions providing for significant sums to be payable for each day of late delivery. In
construction of buildings or facilities for commercial enterprises or operations, the loss payable
by way of liquidated damages relates to the loss which the client may suffer in consequence of
late delivery.
103 The organisation of a major construction work is a matter of great complexity. Most major
contractors, with the exception of Grocon, do not have a substantial workforce which engages
in the construction process. The head contractor is essentially a manager who engages a
series of subcontractors to perform various packages making up the total works. Those
National Perspective Part 1 29
packages commence with demolition or excavation, and conclude with the finishing trades.
There is a close sequencing and interrelationship between all of the trades engaged on a
project. A measure of the complexity of the programming task, and th e interrelationship of one
trade with another, is demonstrated by the fact that on a major project there may be at least
1 00 and perhaps 200 subcontractors engaged. Not all are on site at the one time but one
subcontractor must integrate its work with the subcontractor who precedes it, and many other
subcontractors who may be working in close proximity.
1 04 Through the sequenci ng of the works, there can be found at least one critical path. That means
that if there is delay to an activity on that path , the total construction time for the project wi ll be
extended. Some activities are sub-critical but may become critical during a contract if there are
delays associated with particular tasks .
1 05 On any significant building project, a most important aspect is cranage. All of the materials and
equipment necessary to construct a project must be lifted into position. Stoppages or
interference with the cranage operations will necessarily impact adversely on all tasks . This is
well understood by all industry participants and explain s why the CFMEU is especi al ly keen to
control the operators of cranes, and to ensure, where possible, that a union -nominated
representative operates those cranes. It enables the CFMEU to effectively control progress on
the site. In Western Australia, permission is required from the CFMEU before a crane can be
erected an d it nominates who wirl drive the cran e. In Queensland permission is req uired from
the BLF Q pri or to the erection of a crane. That head contractors have devolved thi s critical
function to the control of the unions is a measure of the extent to which man agement has succumbed to uni on pressure.
106 Due to the close interrelationship of sequential trades, and th e great number of them, the
capacity to cause disruption , delay and attendant costs relating to standing charges and
liquidated damages is immense. There needs to be a co-operat ive and flexible approach to
enable the project to be constructed on time and with in budget. That co-operati ve approach is
required from the subcontractors and thei r workforces. Thus it is the task of the head
contractor to endeavour to co-ordinate the subcontractors and to adjust the construction
process to accommodate unforeseen events or circumstances that occur. In addition, as many
construction projects, or stages of them, are subject to weather uncertainty, whi le provision for
wet weather is anticipated in the overall construction time, the period when it occurs, and its
effect on the construction process can not be foreseen. This introduces a further requirement for flexibility.
1 07 All of these matters are well understood by parti cipants in th e industry, including head
contractors, subcontractors, constructi on workers , specialist tradesmen , and the unions.
1 08 While the construction process involves complexity from a head contractor's perspective,
subcontractors have a similarly complex task. The construction process is broken down into
smaller packages wh ich means that the specialist contractors may be on site on a project only
for a limited time, or for a series of short periods of ti me. Others may be there for longer. To
endeavour to maintain continuity of a subcontracting business, subcontractors must bid for
many jobs. Th ey endeavour to sequence their work on various projects on which they may be engaged at the one time to accommodate the head contractor's construction schedule. Delay
30 Final Report of the Royal Commission into the Building and Construction Industry
or disruption on a particu lar project may th row out their scheduli ng of work on many other
projects. On the other hand, disruption or stoppage on a particular job may enable them to
transfer their workforce or part of it to another project. Thus great flexibil ity is req uired in the
management and operation of the subcontracting business, and from the subcontractor's
workforce. It is a notable ci rcumstance that in the bui lding and construction in dustry, 94 per
cent of subcontractors are small , having five employees or less. This potentially gives them the
flexibility to deal with their employees in a manner which can accommodate their requirements
to work on differing sites in changing circumstances. However, if conditions of employment are
imposed upon the subcontractor's business by inflexible pattern agreements, all that flexib ility
is lost, and the wishes of employees cannot be accommodated .
109 Head contractors endeavour to pass risk down the contractual chain. They impose upon the
subcontractor liquidated damages for its fa il ure to complete its subcontract package in
accordance with the construction programme, either as initially determined or as varied . The
extent of allocation of risk may vary, but in essence, subcontractors carry a sign ificant risk of
damages for non-performance on time. This introduces a further requ irement upon them for
flexibility of performance.
110 It is against this structure of pre-planni ng, dependent interrelationships, and flexible
requirements that contractors and subcontractors confront the unions' desire for control of
major projects, rigidity and uniform ity of wage and conditi ons outcomes, and the recognised
potential of unions through industrial action, either lawful or unlawful, to cause them loss . It is
against th is background that unions sought pattern enterprise bargain ing agreements with
commonality of wages and conditions, fixed hours of work, fixed RDOs and limited flexibility. As
will be obvious, the more rigid the employment structures, the greater potential to impact upon
productivity on a given project, or in the case of subcontractors who provide most of the
labour, on many projects.
111 Head contractors and subcontractors recognise the real risk of loss. They also recognise that
even if the loss be caused by unlawful industrial conduct, the reality is, at present, it is
irrecoverable.
112 The potential for loss from standing charges and liquidated damages is read ily assessed. Head
contractors and subcontractors know the potential loss suffered from a delay. They can assess
the cost of demands made by unions, whether lawful or unlawfu l. They take a commercial
decision whether to concede the demands or not, based on economic criteria.
113 Grocon described the characteri stics of the build ing and constructi on industry, and attendant
risks in the fo llowing terms:
The nature of the construction workplace features commercial, structural and physical
characteristics which distinguish it from most other industries, and which in combination
perhaps contribute to some of its problems.
⢠Commercial risk: By its very nature, each construction project represents a substantial economic commitment for the client, and an urgent requirement for the
investment to begin contributing return within a specifically defined (and usually
very tight) time frame. That commercial risk is inevitably passed on through the
contracts from the client to the principal contractor, and then to each
National Perspective Part 1 3 i
contractor/subcontractor in turn with the consequence that considerable liability
resides with businesses which can ill afford the responsibility. This simply translates
into an environment in which it is sometimes more affordable to concede union
demands, rather than run the risk of facing liquidated damages. The 'affordability'
of giving in to the unions is further enhanced on occasions if the cost of concession can be assured of flowing on to the rest of the industry (thus ensuring no long-term
loss of competitive advantage). Such cost is even further defrayed if
implementation of the concession can be deferred to future contracts (and thus
included in future project costs).
⢠Subcontracting: By its very nature, the construction process requires that much
of the work be subcontracted out to appropriate specialist businesses. Grocon is unique among Australia's major builders, in that we directly employ our own
personnel concerned with the structural erection aspect of the process. Even so,
we must still utilise subcontractors in the various services (plumbing and electrical)
etc, and in the fit-out and finishing stages of our projects. The incidence of
subcontracting is, to our understanding, a particular aspect of this industry which
largely distinguishes it from most others, and it can certainly raise issues of debate
as regards the 'loyalty' of workers to the enterprise versus loyalty to the union.
However, we think the incidence of subcontracting does not itself increase the volume of job turnover in the industry, or result in a 'hire and fire' regime as is
sometimes implied in popular media reports. In fact, work continuity and job
security can be - and frequently is - very high within those subcontractors who are
successful in winning a volume of work on successive projects through which they
can rotate their workforce. And no successful builder or subcontractor engages in
hire and fire as a deliberate bus1ness strategy. Skilled and experienced workers are
a valuable resource and not to be used in such a fashion. In fact, this method of
employment provides more certainty than would be the case if workforces were
assembled and disassembled on a project by project basis.
Grocon believes that our Industrial relations systems presently provide no practical
protection against unlawful industrial action by trade unions. This conduct is not policed.
It is, in our opinion, this absence of immediate and certain retribution for industrial
misconduct which, at least in part, leads to a construction industry in which
confrontation, not co-operation, is accepted in many cases as being normal.
In addition, access to the refuge of 'protected industrial action' during the agreement
bargaining period has been used by the construction unions so as to create an
advantage that we do not think was intended.
To address these issues, we believe the Workplace Relations Act should be revised so as
to bring greater fairness and equity to the bargaining process, to require genuine
bargaining, and to provide for timely and effective recourse to legal restraint in the case of unlawful action. Th ere should be some time limit on the protected action. It should not be
allowed to drag on.
32 Final Report of the Royal Commission into the Building and Construction Industry
In addition, it should be a requirement of the law that an organisation found guilty of
unlawful industrial action should be liable to be penalised, notwithstanding that the action
may have ceased. As things presently stand, the unions have found that they can with
impunity engage in unlawful industrial action until such time as an employer, in frustration
- and having exhausted the preliminary consultative processes of the Disputes
Procedure- seeks orders under s127a. This can see the particular site or project exposed to industrial disruption for some time while the processes of notification and
listing for hearing unfold. And at the hearing of the application, the unions will frequently
pursue the strategy of arguing that the action - even if it was unlawful - has ceased, or
some acceptable solution has emerged, or is accessible to the parties. The AIRC
proceeds to endorse a resolution of the issue, and deems the matter successfully
settled. But in fact the employer has experienced the considerable cost of the period of
unlawful industrial action, and is exposed to the potential for future industrial action if the
whole costly and time-consuming process is repeated. 125
114 I agree entirely with that analysis .
115 A not dissimilar approach was found in the submission of Multiplex Constructions Pty Ltd
addressing the Queensland Statement of Intent, that being an unregistered industrywide
agreement. Adherents to the Statement of Intent are required to agree for themselves , and their
subcontractors, particular wage structures and conditions. It was entered into in the hope of
industrial stability. The Multiplex submission stated:
Is there an alternative?
It is submitted that there is no workable alternative available to major contractors other
than agreeing with the major building unions the wage structure on major projects.
This conclusion must be set against a background where there is no workable economic
recourse available to employers to protect themselves against wild cat and unlawful
industrial action by the militant unions [who dominate] the construction industry.
Conclusion
Regardless of what the reasonable opinions may be among the management of major
contractors, including Multiplex, its [sic] is not the business of contractors to deliver
political or philosophical outcomes on industrial relations. In light of the substantial risks
involved in contracting and the disportionately [sic] low margins, contractors necessarily
focus on delivering certainty and stability in industrial relations to manage that species of
risk.
If governments want a certain political or philosophical result, they can legislate to
achieve that. Governments have enacted the current industrial legislative framework
which, in the building and construction industry, has delivered to the industry pattern
bargaining which is very like the old award system except for the following:
⢠Wages are higher.
⢠Unions no longer have to get the1r demands tested in the appropriate
industrial relations tribunals.
National Perspective Part 1 33
⢠Employers have no real choice but to capitulate to union pattern demands.
⢠Unions maintain membership through the EBA system, not by workers exercising any freedom of choice.
The statement of intent is a way in which employers get something out of the system -relative industrial stability. 126
116 Mr Bickerdike, a Director of Multiplex Queensland, made the foll owing observations:
... neither the union nor its members, carry any potentia/liability for the damage caused
by what is often unlawful industrial action.
On the other hand, the contractor, and potentially all subcontractors, are subject to both
liquidated damages and the expenditure of unproductive preliminaries.
Although unions are, as I understand it, liable at common law for damages, it is not
practical to enforce that right for damages for the following reasons:
⢠Most contractors, and certainly Multiplex, avoid formal disputes [that is,
disputes conciliated and arbitrated in an industrial tribunal] because they are
time-consuming, costly and rarely result in positive outcomes.
⢠It would be extremely damaging to any kind of relationship between a
contractor and a union to be engaged in ongoing civil proceedings seeking damages.
The unions would predictably see this kind of action as highly provocative and that would
throw into jeopardy any semblance of certainty of industrial relations in all of Multiplex's
operations in Queensland. Accordingly, civil action is not a realistic commewal option.
Whatever view an outsider may take, if any contractor does not have a cooperative
relationship with the relevant building unions, that contractor will not be in business long. 72 7
117 In the Multiplex Constructions (Queens land) Pty Ltd submission, the position of head
contractors was summarised in the following terms:
In summary, the head contractor's only available course is to engage in CONTROLLED
CAPITULATION (original emphasis). 128
118 In Tasmania, a major builder, Fairbrother, required its subcontractors to have uni on-endorsed
EBAs. Mr Royce Fairb rother explained the reason for this decision. He said he had come to the
decision only to use subcontractors wi th union-endorsed EBAs because a lot of pressure had been put on his company by the unions. He had concluded it was not worth his while dealing
with companies that had not signed EBAs with the union because of the threat of industrial
disruption. The ri sk of disrupti on was in Tasmania and also on the mainland. Thu s, anyone
wantin g to work on Fairbrother sites in Tasmania would have to sign an EBA with the CFMEU
or the CEPU as one of the parties. The agreement was an endeavour to minimise the potential for damage across the whole Fairbrother business in Tasmania and elsewhere arising from industrial action causing loss by the un ions . 129
34 Final Report of the Royal Commission into the Building and Construction Industry
119 Baulderstone also referred to the realities in the building and construction industry. In its
submission concerning the National Gallery of Victoria Redevelopment - Phase 3, it wrote:
It must be remembered that BH operates in the real world, and in a competitive one. As
Dempsey [Baulderstone's then Chief Executive] said in answer to Counsel Assisting .. . :
'Mr Tracey, the issue between subcontractors and their employees is really one for
them, but we are trying to get projects built. We operate in an industry where we
have to get the jobs finished, so we operate in a way that attempts to - certainly
allows us to complete the projects, but also comply with the law, and we don't set
out to break the law, but we understand the rea lities of working in our industry
0: What are those realities?
A: That the unions have enormous influence and control and that unless you find a way to work with them , then you won 't finish your projects.
This is not to be fatalistic about inappropriate behaviour by other persons or
organisations, but it is to recognise the reality that, at base, it is the law that defines the
norms by which commercial and industrial parties must conduct themselves. A company
such as BH must obey the law, but beyond that its responsibilities are to its shareholders
and other stakeholders . If there is a lawful course of action that would be to the
advantage of those persons, BH would normally follow it. If it does not do so, a
competitor will. If BH had not resolved the Shop Steward imbroglio on the NGV project,
presumably there were other constructors which could have taken its place. 130
120 Thi s was the common explanation for the so-called 'commercial solution ' to industrial
problems, including the response to unlawful industrial action. No contractor wanted to be
sing led out. Each feared the damage uni ons could cause. Each recognised competitive
pressure. Each recognised there was no effective preventative or loss recovery mechanism .
And so each gave in on th e best terms available.
121 Such attitudes reinforce union dominance in the industry. It results in freedom of association
and freedom of bargaining being oppressed. It means unlawful industrial action is rewarded.
Governments
122 The attitude of governments has been one of intermittent interest. Th e deregistration of the BLF
in the I 980s resulted simply in those controlli ng the deregistered organisation continuing to
operate through State organisations. Some moved to other federal organisations . The culture
continued in those bodies . In the five years between 1990 and 1995, New South Wales
showed some interest with the Gyles Royal Commission , a recommendation of deregistration,
an agreement with the unions which avoided th at, the establishment of a Task Force and its
abolition. Western Australia showed some slight interest in 1994 with the establishmen t of a
Task Force but, within seven years, it had been abolished resulting in the reappearance of all
the restrictive practices which existed in the 1980s and early 1 990s. Victoria showed some
interest with the establishment of the Inquiry into the Victorian Building and Construction
Industry between 1992 and 1994 but it reported on party lines and little came of it.
National Perspective Part 1 35
123 The Commonwealth showed some interest with an Industry Commission Report on
Construction Costs of Major Projects in 1991, the establishment of the Construction Industry
Development Agency (C IDA) in 1992, the establishment of the National Building and
Construction Committee in 1 997, the release in 1 999 of the Building and Construction
Industries Action Agendas, and a Productivity Commission Report in 1 999 on Work
Arrangements on Large Capital City Projects.
124 Each of these bodies, to a greater or lesser extent, considered the problems in the industry and
plans for its improvement and reform . Each of the Commonwealth and each State and Territory
during the 1 990s, established Codes of Practice - but, with one notable exception, no one
adheres to them and no one enforces them.
125 This melancholy history of a decade of intermittent interest and activity has had the perverse
effect that as each flurry of activity to reform the industry, stamp out unlawfulness and increase
productivity, has faded to nothing, the un ions have taken strength from their ability to resist
these endeavours. The failure of governments to put in place appropriate structural
mechanisms to permit the industry to operate fairly and efficiently has been greatly assisted by
the unwillingness of major contractors to resist pressure and unlawful action. State reforms,
while producing some short term improvements, are rendered ineffective by the capacity of
unions to impose industrial and commercial pressure on major contractors' operations in other
States which in turn results in those contractors requiring subcontractors to accede to unions ' demands.
126 The failure of governments to put in place the structural framework to allow the growth of a
more productive industry in which the rights of individuals and businesses are respected and
protected, has been compounded by the absence of any entity charged with, and interested in ,
enforcing the law. The State pol ice forces throughout Australia play no part on construction
sites . The Office of the Employment Advocate is ill -equipped to do so and , prior to the
establishment of the Interim Task Force in October 2002, there was nobody else to do so.
127 Discussion Paper 7 sets out a history of recent industrial relations events in the Australian
bui lding and construction industry. It details the history of governments' interventions since the
early 1 980s, and in particular, from 1 990 to date. It is found in volume 4 of this report.
128 I will not attempt to summarise it but it is necessary reading to understand the background to
the present state of the industry. A number of matters emerge:
⢠Many of the persons involved in the industry in the early 1 980s at the time of the
deregistration of the BLF remain as prominent officials of the CFMEU . They include Mr John Cummins, Mr Kevi n Reynolds and Mr John Setka, amongst others.
⢠The attitudes disclosed by the evidence in this Royal Commission are similar to those the subject of prior Commissions, inquiries and reports. The culture has not changed.
⢠In 1985, when Mr Gall agher, General Secretary of the BLF was being tried on corruption
charges, the BLF sought by industrial action, to prevent the trials. Mr Brian Boyd, then a BLF organiser, described the action taken:
The first phase of the industrial campaign to stop the consequences of the Royal
Commission bribes allegations going to Court occurred from the latter part of 1980
36 Final Report of the Royal Commission into the Building and Construction Industry
to December 1984. The second phase was during the actual County Court trial
February to June 1985, when various activities were deliberately encouraged by
Gallagher in an attempt to have the trial aborted. The general idea at this point was
to create an adverse atmosphere and generate a level of media coverage that
would have the prospect of a 'fair trial' declared to have been prejudiced.
Now the objective of the third phase is to 'convince' the powers that be it is not
worth their while tore-prosecute Gallagher 731
It was Mr Brian Boyd, now Secretary of the Victorian Trades Hall Council, who organised
the demonstrations and protests against this Royal Commission and the demonstrations
in support of Mr Kingham . Th e same tactics continue.
⢠In July 1990, when the Gyles Royal Commission was announced, the National Secretary
of the BWIU branded it 'A conspiracy against militant unionism in general, an d the BWIU
in particular'.132 He later complained that 'From day one of the Royal Commission, the
union called upon Commissioner Gyles to investigate corruption and illegal behaviour in
relation to tax avoidance, "cash in hand" payments, under-payments of wages and
breaches of safety and award regulations. But Gyles gave little attention to these issues '. 133
The present Secretary of the Construction and General Division of the CFMEU ,
Mr Sutton, made the same demands on this Royal Commission and makes the same complaint.
⢠Commonwealth Governments and various Stafe Governments, of both po litical
persuasions , have been concerned with seeking methods to control industrial relations
and increase productivity in the industry. Governments of both political persuasions have failed in that en deavour.
⢠Since at least 1991 , governments, Royal Commissions, the Prod uctivity Commission
and various inquiries have been concerned about the exploitation of safety disputes,
inclement weather, restrictive work practices, industrial relations problems, 'last on/first
off ', overtime, management, pay for industrial action, an d union membership. None has
solved those problems.
⢠All governments have recognised that matters just referred to adversely affect productivity.
⢠From at least 1992 , the CFMEU has been fostering pattern bargaining. Its strategy was
to target the major contractors who in turn, were to encourag e subcontractors working on their sites to enter into similar enterprise ag reements , with unions attempting to have
the wages and conditions binding subcontractors at particular major projects applied at
all sites at which the subcontractor works. That still occurs.
⢠Since th e late 1980s, governments have been seeking to use codes of conduct as a method of encouraging standards of conduct in the industry. Every endeavour at a State
and Federal level has failed .
National Perspective Part 1 3 7
⢠Two Task Forces and the Office of the Employment Advocate have been established in
an endeavour to moderate unlawful and inappropriate conduct. Due to pressure from
unions, both Task Forces were soon abolished, and the Office of the Employment
Advocate neutralised.
⢠Since the Federal Labor Government introduced legislation in I 993 seeking to foster
bargaining at the enterprise level, and introduce flexibility into industry structures,
Governments of both persuasions, federally and in the States, have done likewise. The
unions have successfully resisted these endeavours principally by pressuring contractors
and subcontractors to enter into pattern agreements, with consequential pressure to
defeat freedom of association concepts.
⢠The process of industrywide regulation has been assisted by avoiding the provisions of
Commonwealth legislation by entering into unregistered industry agreements, in
particular, the Victorian Building Industry Agreement (VB IA), and the Queensland
Statement of Intent. These facilitate and reinforce pattern bargaining.
⢠In seeking to ensure industrial disruption does not delay facilities for internationally
prominent events, the New South Wales Government, and more recently, the Victorian Government, reached an accommodation with the unions. The accommodation involved
payment of wages and conditions superior to the norm. They also involved project
agreements between governments, Labor Councils, employers, unions and employees.
⢠There has never been true enterprise bargaining in projects in the CBDs of major capital
cities or major regional centres. Th e productivity gains from flexibility anticipated more
than a decade ago have not been achieved because of union resistance to enterprise
bargaining.
129 The reali ty is that, while the level of unlawful and inappropriate practices and conduct in the
building and construction industry may have fluctuated to some extent for short periods, all
endeavours of government to introduce proper standards of industrial conduct and respect for
basic freedoms and rights into the building and construction industry have failed.
130 The Tasman ian Government contended that unlawful or otherwise inappropriate industrial or
workplace practices or conduct, 'are not features of the building and construction industry in
this State' .134 I have found that contention is unsustainable. I heard evidence of widespread
unlawful or otherwise inappropriate conduct in the industry in Tasmania. The evidence
suggests the situation in that State is worsening.
131 In Queensland, the Minister for Public Works and Minister for Housing in January 2000 sought
to persuade a contractor who did not wish to do so , to enter into an enterprise bargaining
agreement, telling him, 'It is compulsory to sign if your registration to tender on State
Government projects is to continue' .135 His belief was that union-endorsed 'EBAs were a fact
of industrial life'. The Minister had intended to make it a condition of contract for Government work, that the contractor have an EBA with a union. He was dissuaded from that course upon
being advised such a provision would contravene the Trade Practices Act 1974 (C'wth) . The Minister said:
38 Final Report of the Royal Commission into the Building and Construction Industry
Contractors who have a record of failing to complete contracts on time, for whatever
reason, are at risk of failing to win further government contracts. Sometimes, the reasons
for late completion may be out of the control of the contractor, in which case, I would
expect due allowance to be made. However, if the remedy for the reason for late
completion is within the control of the contractor and it refuses or otherwise fails to avail
itself of the solution, it is my belief that it is perfectly reasonable for that contractor to expect that further contracts will not be offered.136
132 It was th e Minister's view that industrial disputation is one reason for late completion, enterprise
agreements with the relevant un ions are a 'remedy' for or a 'solution' to in dustrial disputation,
and if the contractor fails to avai l itself of that remedy or solution it could not reasonably expect
further Queensland Government work. In the Rockhampton case study, it was plain , indeed it
was admitted by the BLF 0 and an organiser that subcontractors were not permitted to work
without an enterprise bargaining agreement with the BLF 0. Such a position was un lawful as
was admitted in undertakings given by the union to the ACCC. Yet that approach had the
support of the Minister.
133 As I concluded:
A sovereign State Government, and its Ministers, are, of course, entitled to act in such
manner as the applicable laws allow, and to legislate within power to change applicable
laws. The executive government similarly, may act in such manner, and adopt and
enforce such policies within the law as it decides. One can understand and accept the
interest of a State as a client in monitoring projects to ensure their being built on time and
within budget. However, to propose that a contractor should surrender to unlawful
conduct by a third party and submit to the third party's demands in order to be able to
achieve performance on time and within budget under threat that non-performance due
to such unlawful conduct will result in deprivation of the right to tender for or be awarded
government work, does not accord with the usual policy positions adopted by
governments. If governments do not protect those who act within the law, or if
governments reward those who breach the law, the rule of law is diminished.
134 In Western Australia, the present Government abolished a Task Force and replaced it with a
body which has not proven effecti ve . Since that event in early 2001 , practices which had not
been prominent have re-emerged . They include 'no ticket no start' practices, 'no pattern EBA
no start' practices, threats of industrial action, enteri ng premises irrespective of right, re
emergence of intimidatory, coercive and threaten in g behaviour in pursuit of industrial demands,
and effective compulsory unionism on CBD sites . I agree with the view of the Executive Director
of the MBA WA that the statement by the Premier that 'no ticket no start ' signs on building sites
were merely a form of advertising 137 of a view sent a powerful and unfortunate message that
there was no true freedom of association on building sites in the Perth CBD.
135 In Victoria, Able Demolitions was involved in four case studies considered by me. In the Holland
Estate case study, I concluded:
Able was involved in four projects considered by me. They are the National Gallery of
Victoria, the Port Melbourne Flats, Latrobe Regional Hospital and Holland Estate. In all
four studies, the only difficulties arising in the relationship between Able and th e State
National Perspective Part 1 39
flowed from Able's relationship with the CFMEU. In one case study, the State of Victona
accepted that it had acted inappropriately In that and two of the other three instances
the evidence establishes that Victoria departed from normal contractual processes and
outcomes and departed from independent assessments of the superiority of Able's
tender, because of the State's concern that the performance of Able might be affected by
acts, which would be unlawful, of the CFMEU.
Contractors that do not have good relations with the CFMEU are disadvantaged in
tender and contractual processes and outcomes within the State of Victoria. Those that
do have good relations with the CFMEU are correspondingly advantaged. This gives the
CFMEU enormous power. Contractors wishtng to contract with the State of Victoria are
obliged in their own commercial interest to accede to demands or reqwrements of the
CFMEU. That necessarily regulates the conditions of employment of the contractor's
employees. It diminishes or negates competitive contracting. It introduces into the
contracting process the influence of a third party which has no place 1n that process. It
increases cost, and time, for both the letting of and performance of the contract.
It is, of course, a matter for the State of Victoria to decide how it conducts its contractual
affairs. It is entitled as a sovereign State to manage its affairs within the law as its
Parliament and Executive determines.
The position adopted by Victona was that it is entitled to act in its own commercial
interest. It has a legitimate concern to ensure its contracts are delivered on time and on
budget. If a contractor cannot ensure such delivery, it should not be selected. One task
of a contractor is to manage industrial relations. If it cannot do this adequately it should be down-graded 1n the tender process. That was what had occurred with Able.
The fallacy in this position is plain. Industrial relations should concern an employer and its
employees. They should not involve a union with which the contractor has no contractual
relationship and of which the contractor's employees are not members. It is not the fault
of a contractor that a union, here the CFMEU, wants to have the contractor's employees as members and wants to have an EBA with the contractor. It is not the fault or the
responsibility of a contractor that a union may act unlawfully because the contractor and
its employees resist the union's demands. The company and its employees are lawfully
entitled to resist such demands. To disadvantage the contractor because it resists the
demands of a third party union is to disadvantage a contractor that acts lawfully and to
advantage a union that acts unlawfully That IS not a usual policy outcome.
136 The Commonwealth seeks to uphold the principles embedded in the Workplace Relations Act
1996 (C'wth), including freedom of association and bargaining at the enterprise level by
application of the Natio nal Code of Conduct. It insisted on that Code applying to the Lavarack
Barracks Development in Queensland. 138 Th iess was the contractor. The CFMEU recognised
that 'rigorous enforcement of the Federal Government's Code of Conduct' was an emerging
difficulty for it. It organised stoppages on Thiess sites in New South Wales, Victoria and
Queensland . The senior officers of the CFMEU around Australia agreed that if the matter was not resolved to the union's satisfaction, workers on Thiess mine sites wou ld take industrial
action as well. The difficulty for Th iess was intense. It was a signatory to the Statement of Intent
40 Final Report of the Royal Commission into the Building and Construction Industry
which obliged it, and its contractors, to pay certain benefits. The Code of Conduct did not
permit payment of such benefits. The solution was a project agreement provid ing for such
payments, but the Commonwealth would not agree to a project agreement unless a benefit to
it could be shown. The solution achieved was that instead of Thiess or its subcontractors
agreein g to pay the benefits, Thiess gave an assurance that it would 'use its best endeavours'
to ensure that the benefits were paid. In fact, they were paid. I have found that Thiess breached
the Code and Implementation Guidelines by a method suggested by office rs of the
Commonwealth familiar with the Code of Conduct. The matter was not investigated by the
Code Monitoring Group, or the Office of the Employment Advocate. The mechanisms of the
Commonwealth Government thus failed to ensure adherence to proper principles enunciated
in the Code of Conduct. There is no point in having a Code of Conduct unless it is enforced .
Indeed, there has never been any sanction imposed upon any party dealing with the
Commonwealth for breach of the National Code of Conduct.
137 It will be apparent that I regard the responses of government to unlawful and inappropriate
conduct as inadequate. If the culture in the building and construction industry is to change, as
in my view it must if the productivity benefits from bargaining at the enterprise level are to be
realised, and the freedoms encapsulated in the Workplace Relations Act 1996 (C'wth) are to be
upheld, there needs to be an independent properly resourced entity which wi ll vigorously
uphold the law. I propose such a body, provisionally entitled the Australian Building and
Construction Commission, in volume 11 - Reform- Achieving Cultural Change.
The future
138 The industry in the future need not be like the industry of the past or the present. However, if
there is to be change in the culture of the industry so that lawlessness is quashed, individual
righ ts are respected, and the great productivity potential which the industry has is to be
unlocked, there will need to be a long term and steely determination on the part of government
to effect change . There will also need to be some leadership shown from within the industry.
139 Government will need to clarify the industrial relations law affecting the industry so that its
participants are fully aware of their obligations, responsibilities and rights . There must be a
strong, well-funded independent entity charged with ensuring that obligations and
responsibilities are enforced, and rights upheld. There wil l need to be an understanding th at
those who, by unlawful conduct, cause loss to others will be the subject of penalties for so
doing, and will be held accountable to compensate for that loss. To achieve th is, there must be
a quick and simple method of attribution of liability to those causing loss, and speedy
mechanisms for its recovery.
140 If the rights of individual employees are to be respected , there will need to be the introduction
of industrial democracy in the workplace. Employees and their employers will need to be given
the opportunity to accommodate their respective interests and wishes by flexible agreements
made at the workplace level. Only in this way can the wishes and aspirations of individual
workers be accommodated, and the improvements in productivity yield ing mutual benefits to
employees and employers unlocked. As the study by Tasman Economics demonstrates, the
benefits to the Australian economy are significant indeed.
National Perspective Part 1 4 I
141 However, establishing frameworks within which the industry can operate more efficiently, more
fairly and more productively, and in which the rights of individuals are respected and enforced,
will not in itself be enough.
142 Leadership will be requ ired from within the business community operating in the industry to
realise the newly available benefits. While th e recommendations proposed in this report will, if
adopted, remove any excuse which business may have for surrendering to unlawful industrial
action and allowing loss caused in consequence to go unrecovered, there remains the
necessity for business leaders at the head contractor and subcontractor level to resolve to
change the culture within the industry and to require adherence to industrial and civil laws at all
levels within the industry. There will need to be a readjustment of the short term project driven
profitability focus, and an acknowledgement that the achieving of long term productivity gains
will flow from the introduction of flexibility. There will need to be a determination both as
individuals and as a group, that it is both right, and in their commercial interests, that the law be
upheld. To achieve cultural change explicit and frank arrangements must be made in the
workplace, 'cheque book industrial relations' must be abolished, and agreements once made
must be adhered to and enforced . The industry should each three years or at some agreed
period, revisit its operations and profitability and fairly distribute the productivity gains which will
flow if the reforms proposed are adopted and the culture in the industry changes. Thereafter,
with agreements made, the industry should settle for a further three years undisturbed by
industrial action and with the flexibility to attract further investment and profitability.
143 The archaic notion that industrial relations in the industry are to be determined by a battle
between monetary might and the industrial capacity to cause great damage must be replaced
by an approach by all participants in the industry that a co-operative approach to industrial
relations practices and conduct can yield great benefit to all participants.
144 The role of unions must be respected. Those who wish to join unions must be entitled to do so
without restriction. Within the limits of industrial democracy at the workplace level, unions must be entitled to rep resent their members who seek their assistance. They must act within the law,
and be held responsible if they do not. They will need to recognise that agreements once made
must be adhered to, and that orders of tribunals and courts must be respected, acknowledged
and implemented.
145 The problems which presently face the industry, and the lawlessness within it, are deep seated
and of long standing. This has occurred because neither governments nor contractors have
had the will to stamp out lawlessness. There has been no strong entity to monitor conduct and
practices, and enforce the law.
146 The workplace practices to be established by enterprise bargaining at the workplace level
should remain unregulated. That will allow the wishes of employees and the businesses by which they are employed to each be accommodated to the greatest extent possible. It should
produce the flexibi lity to allow enterprises and productivity to grow.
14 7 However, the conduct within the industry both affecting the making of agreements and
industrial behaviour thereafter, does need supervision by a body capable of ensuring that
proper standards of behaviour and practices are met and that the agreements, once made, are
adhered to. That should be the task of the Australian Building and Construction Commission.
42 Final Report of the Royal Commission into the Building and Construction Industry
Notes to A National Perspective
Some instances of the types of conduct set out below, drawn from the case studies in the Hearings Volumes (Volumes 13-21 ), are provided.
Eastlands Cinema Project case study (Tas).
Kenoss Contractors Pty Ltd case study (ACT).
Kenoss Contractors Pty Ltd case study (ACT) .
A J Bignell Pty Ltd case study (NSW); Eastlands Cinema Project case study (Tas); Hobart Private Hospital Redevelopment Project case study (Tas) .
The Nambour Hospital Dispute case study (Old}.
Lavarack Barracks case study (Old).
PaneiCraft Coolrooms (NSW) Pty Ltd case study (NSW); Neale Jones Civil Contracting Pty Ltd case study (NSW).
A J Bignell Ply Ltd case study (NSW).
10
National Gallery of Victoria case study (Vic); Townsville case study (Ol d}; No 1 The Esplanade, Glenelg case
study (SA); Timbercraft Pty Ltd case study (SA). 11 Peri Australia Pty Ltd case study (Old); Advanced Electrical Pty Ltd case study (Tas) .
12
Matthews Contracting Pty Ltd case study (NSW); Klesteel Pty Ltd trading as Bassett Demolitions case study (NSW).
13
J K Williams Contracting Ply Ltd case study (NSW); PaneiCraft Coolrooms (NSW) Ply Ltd case study (NSW); Lockrey Holdings Pty Ltd case study (NSW).
14
Mobile crane dispute 1997-1998 case study (NSW) .
15
Bosform Pty Ltd case study (Old}. 16 Many pattern EBAs provide for the payment of such an allowance, ·with no corresponding increase in
productivity. Some examples taken from the case studies are: Ace Contractors Pty Ltd case study (NSW);
Masonry Contractors Association- Nevada Contractors Pty Ltd case study (NSW) . 17 Abigroup Contractors Pty Ltd case study (Old}; Barclay Mowlem Construction Limited case study (Old);
Watpac Australia Ply Ltd case study (Old}; MarGra Pty Ltd case study (Old); Royal Hobart Hospital Stage 2
Development case study (Tas) . 18 No. 1 The Esplanade, Glenelg case study (SA).
19
Peri Australia Pty Ltd case study (Old).
20
Neale Jones Civil Contracting Pty Ltd case study (NSW). 21 Bovis Lend Lease Pty Ltd case study (NSW). 22
Grocon Limited case study (Vic). 23 Monarch Group Pty Ltd case study (Vic). 24
Ingleside Bricklaying case study (NSW); Christies People Pty Ltd case study (NSW); Labour Hire in
Queensland case study (Old). 25 Alkene Asbestos Removal Pty Ltd case study (NSW). 26
Gillespie's Cranes Nominees Pty Ltd case study (NSW); Bitz Excavations Pty Ltd case study (NSW). 27 Jim Morrissey Bricklaying Pty Ltd case study (NSW); Jim Godfrey Earthmoving Pty Ltd case study (NSW);
Grindley Construction case study (NSW) . 28 Betaform Constructions Pty Ltd case study (NSW). 29
Jim Morrissey Bricklaying Pty Ltd case study (NSW). 30 Worsley Expansion Project case study 0/VA). 31
The Nambour Hospital Dispute case study (Old}; Kenoss Contractors Pty Ltd case study (ACT).
National Perspective Part 1 43
32 Network Project Developments Pty Ltd case study (NSW). 33 Neale Jones Civil Contracting Pty Ltd case study (NSW); Bitz Excavations Ply Ltd case study (NSW).
34 ln gles_ide Bric klaying case study (NSW) .
35 Neale Jones Civil Contracting Pty Ltd case study (NSW); Alkene Asbestos Removal Pty Ltd case study (NSW).
36 Fineline Painting Pty Ltd case study (N SW); Kenoss Contractors Pty Ltd case study (ACT). 37 Abigroup case study (Old) ; Townsvi lle case study (Old ); Kenoss Contractors Pty Ltd case study (ACT) .
38 MarGra Pty Ltd case study (Old). 39 Cranes case study (Vic) ; Bosform Pty Ltd case study (O ld) ; John Holland case study (Old). 4 ° Florea! Forum case study (WA); The Western Australian Cricket Association Demolition Project case study
(WA).
41
Doric Group Holdings case study Pty Ltd (WA) .
42
Florea! Forum case study (WA); 240 StGeorge's Terrace Perth case study (WA) .
43 240 St George's Terrace Perth case study (WA). 44 Woodman Point Wastewater Treatment Plant case study (WA) .
45
Everwilling Cranes & Platforms Pty Ltd case study (NSW); Jim Godfrey Earthmoving Pty Ltd case study
(NSW).
46 Wilson Mobile Cranes Pty Ltd case study (NSW) . 47 CFMEU Subcontractor Audits case study (Vic); Royal Hobart Hospital Stage 2 Redevelopment case study (Tas) .
48
National Gallery of Victoria case study (Vic); Barclay Mowlem Pty Ltd case study (Old); The Sun Metals
Dispute case study (Old); Chadwick Construction Technology Pty Ltd case study (SA) . 49 Payments to the Construction, Forestry, Mining and Energy Union (WA). 50 Ideal Interior Linings Pty Ltd case study (Old). 51
CFMEU Subcontractor Audits case study (Vic) .
52 Zlatar Partitions Pty Ltd case study (N SW); Anzac Day case study (Vic); CFMEU Subcontractor Audits case study (Vic); Cranes case study (Vic); Fastform Systems Pty Ltd case study (Vic); Grocon Limited case study (Vic); Herscheii -Stent Pty Ltd case study (Vic); lntreepit Pty Ltd case study (Vic); Kessaris and Dawson case
study (Vic); Monarch Group Pty Ltd case study (Vic); National Gal lery of Victoria case study (Vic); Sa1zeriya case study (Vic) ; Shaun Hughes case study (Vic); The Age Print Centre case study (Vic); The Federation
Square case study (Vic); The Victorian State Hockey and Netball Centre case study (Vic); Walter
Constructi on Group Pty Ltd case study (Vic); Westfield Design and Construction Pty Ltd case study (Vic); Woolworths case study (Vic) .
53
Betaform Constructions Ply Ltd case study (NSW); Bovis Lend Lease Australia Pty Ltd case study (NSW) ;
Anzac Day case study (Vic); Fastform Systems Pty Ltd case study (Vic); Herscheii-Stent Pty Ltd case study
(Vic); lntreepit Pty Ltd case study (Vic); Kessaris and Dawson case study (Vic); National Gallery of V1ctoria
case study (Vic); Nu -Line Aluminium Windows case study (Vic); Saizeriya case study (Vic) ; Shaun Hughes
case study (Vic); Wal ter Construction Group Pty Ltd case study (Vic); Westfield Design and Construction Pty
Ltd (Vic); Woolworths case study (Vic). 54 Betaform Constructions Pty Ltd case study (NSW); Union Matters case study (NSW); Shaun Hughes case
study (Vic); Donations to the Guide Dogs Association case study {Old) . 55 Payments to the Construction, Forestry, Mining and Energy Union case study (WA). 56
Payments to the Construction, Forestry, Mining and Energy Union case study (WA). 57 Crestway Constructions Ply Ltd case study (NSW) ; Walter Construction Group Pty Ltd case study (Vic). 58
The Events of 21 April 1998 in Townsville case study (Old). 59 Norske Skog Boyer Paper Mill case study (Tas) .
44 Final Report of the Royal Commission into the Building and Construction Industry
60 Townsvil le case study (Old); The Woolstore Apartments Redevelopment Project case study (Tas).
61 Salmon & Son Pty Ltd case study (NSW).
62 PaneiCraft Coolrooms (NSW) Pty Ltd case study (NSW); Saxona Pty Ltd trading as Campbelltown
Cool rooms case study (N SW); Mirvac Constructions Pty Ltd case study (NSW); Cranes case study (Vic);
Shaun Hughes case study (Vic) ; The Age Pnnt Centre case study (Vic); National Gallery of Victoria case
study (Vic); The Victorian State Netball and Hockey Centre case study (Vic); Homezone Home and Garden
Centre case study (Old).
63 Watpac Australia Pty Ltd case study (Old). 64 Hackett Laboratory Services Pty Ltd case study (NSW) . 65 Dependable Roofing Scissor Lift Incident case study (WA). 66 Salmon & Son Pty Ltd case study (NSW); Bovis Lend Lease Pty Ltd case study (NSW); Anzac Day case
study (Vic); Cranes case study (Vic) ; Fastform Systems Pty Ltd case study (Vic); The Age Print Centre case
study (Vic); Th e Victori an State Netball and Hockey Centre case study (Vic); Woolworths case study (Vic);
Abigroup case study (Old); Lavarack Barracks case study (Old); Watpac Australia Pty Ltd case study (Old) ;
The Sun Metals dispute case study (Old); The Nambour Hospital Dispute case study (Old) .
67 Lavarack Barracks case study (Old). 68 New Era Balustrading Pty Ltd case study (NSW); Blue Circle Southern Cement Ltd case study (NSW); Geelong Code of Practice case study (Vic); Nu-Line Aluminium Windows Pty Ltd case study (Vic); The Age
Print Centre case study (Vic); Woolworths case study (Vic); Westfield Design and Construction Pty Ltd case
study (Vic); Walter Construction Group case study (Vic); Homezone Home and Garden Centre case study (Old); Joe Battaglia case study (Old); Farl ey Concreting Pty Ltd case study (Old); Labour Hire case study
(Old); John Holland case study (Old); MarGra Pty Ltd case study (Old); Multiplex Constructions (Old) Pty Ltd
case study (Old); Peri Australia Pty Ltd case study (Old); Townsville case study (Old); Casuarina Shopping
Centre case study (NT).
69
Westfield Carousel Shopping Centre case study (WA).
70 The Events of 21 April 1998 in Townsville case study (Old). 71 Westfield Carousel Shopping Centre case study (WA) .
72
OH&S case study (Tas).
73
Bitz Excavations Pty Ltd case study (NSW); The Age Print Centre case study (Vic) .
7 ' Alkene Asbestos Removal Pty Ltd case study (NSW).
75
The Nambour Hospital Dispute case study (Old) .
76 Ingleside Bricklaying case study (NSW); Grindley Construction Pty Ltd case study (NSW). 77 Betaform Constructions Pty Ltd case study (NSW).
78 Sebastian Builders & Developers Pty Ltd case study (NSW); Citylink case study (Vic); Tiwi Campus case study (NT); Mitchell Street case study (NT).
79
Mobile Crane Dispute 1997 - 1998 case study (NSW) .
80 The Age Print Centre case study (Vic); The Victorian State Netball and Hockey Centre case study (Vic). 81 Leightons Contractors Pty Ltd case study (Old).
82
The Nambour Hospital Dispute case study (Old).
83
The Nambour Hospital Dispute case study (Old) .
84
The Nambour Hospital Dispute case study (Old).
85 National Gallery of Victoria case study (Vic); Holland Estate case study (Vic); LaTrobe Regional Hospital Demolition Project case study (Vic) . 86 Port Melbourne Flats case study (Vic). 87
Saizeriya case study (Vic).
National Perspective Part 1 45
88 Saizeriya case study (Vic) .
89 Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Australia [2001 ] FCA 77 4, 22 June 2001, at 19.
90 Video containing footage of the Sun Metals Dispute, Exhibit 1 040. 91 Deed between the New South Wales Government and the Construction, Forestry, Mining and Energy Union, Bui lding Un ions Divisional Branch and the Building Workers Industrial Union of Austra lia, New South Wales
Branch, dated 16 March 1994, exhibit 568, document 002 0467.0323 0002 at 0003.
92 A copy of the Code of Conduct is annexed to the Deed . See exhibit 568, document 002.0467.0323.0002 at 0014.
93 Exhi bit 596, document 050.0996.01 68.0015. 94 Exhibit 596, document 050.0996.0168.0016. 95 Multiplex Constructi ons (NSW) Pty Ltd case study (NSW) . 96 Hackett Laboratory Services Pty Ltd case study (NSW) . 97
Zadro Constructions Pty Ltd case study (NSW).
98 Christies People Pty Ltd case study (NSW). 99 Focus Pro perty Servi ces Pty Ltd case study (NSW) . 100 Ingleside Bricklaying case study (NSW).
101
Bovis Lend Lease Pty Ltd case study (NSW). 102 Grindley Construction Pty Ltd case study (N SW)/ 1
03 Kessaris and Dawson case study (Vic).
104 Exhibit 702, document 022 0236.0375.0001.
105 Sutton , T9064/13-25.
106 The Events of 21 April1998 in Townsville case study (Old). 107 Labour Hi re in Queensland case study (Old). 108
Labour Hire in Queensland case study (Old). 10 9 McDonald, T 4119/35-4120/ 3.
110 McDonald, T4121/ 19-27. 111 McDonald , T 4122/30-35. 112
McDonald , T4356/3-7. 113 McDonald, T 4356/ 16-20. 114
McDonald, T4358/41 -42. 115 McDonald , T4357/3-13. 116
Su preme Court File, exhibit 851, document 017.0052.0191 .0203 at 0217; Zaknich v McDonald [2000]
WASC 151 per Scott J at paragraph 50. 117 McDonald, T5334/9-1 0. 118
McDonald, T5334/3-5. 11 9 McDonald, T4097/31-44.
120 Doric Group Holdings Pty Ltd case study 0/VA). 121 Pattern Agreements to which the CEPU is a Party case study (Tas). 122
Eastlands Cinema Project case study (Tas). 123 Pattern Agreements to w hich the CFMEU is a Party case study (Tas). 124
Exhibit 1341, parag raph 148-155.
46 Final Report of the Royal Commission into the Building and Construction Industry
125 Grocon Pty Ltd Submission to the Royal Commission into the Building and Construction Industry dated 22 July 2002, exhibit 830, page 26-27 and 30, document 048.0949.0311.0094.
126 Response by Phillips Fox on behalf of Multiplex Constructions Pty Ltd dated 20 December 2002 , to Submissions of Counsel Assisting the Royal Commission on whether the Queensland Construction Sector Statement of Intent breaches the Trade Practices Act 1974 (C'wth), dated 9 December 2002, page 3-4. 127
Bickerdike Statement, exhibit 399, paragraphs 15.1 - 15.5, document 068.0269.0210.0016. 128 Multiplex Construction (Old) Pty Ltd Submission to the Royal Commissio n into the Building and Construction Industry dated 11 April 2002, exhibit 400, page 12, document 068.0269.0210.0003. 129
Pattern Agreements to which the CFMEU is a Party case study (Tas).
130 Response by Mr Jessup QC and Mr Santamaria on behalf of Baulderstone Pty Ltd dated 23 April 2002, to the Submissions of Counsel Assisting the Commission regard ing the National Gallery of Victoria Redevelopment Project- Phase 3 dated 5 April 2002, paragraphs 6-7. 131
Boyd, B, (199 1) Inside the BLF: A Union Self-destructs, page 234 , cited in a History of Recent Industrial Relations Even ts in the Building and Construction Industry, Discussion Paper 7, Royal Commission into the Building and Construction Industry.
132 McDonald, T and A, (1998) Intimate Union. Sharing a Revolutionary Life, Pluto Press, page 315, cited in a History of Recent Industrial Relations Events in the Building and Construction Industry, Discussion Paper 7, Royal Commission into the Building and Construction Industry. 133
McDonald, T and A, (1998) Intimate Union: Sharing a Revolutionary Life , Pluto Press, page 320, cited in a History of Recent Industrial Relations Events in the Building and Construction Industry, Discussion Paper 7, Royal Commission into the Building and Construction Industry. 134
Submission by the Tasmanian Government to the Bui lding and Construction Industry Royal Commission
dated 21 February 2002, exhibit 179, document 016.0409 0260.0001. 135 Rockhampton case study (Old). 136 Schwarten Statement, exhibit 1009, paragraph 15, document 019.0139.0154.0001. 137
Mclean Statement, exhibit 315, paragraph 95, document 016.0873.0470.0001. 13 8 Lavarack Barracks case study (Old).
National Perspective Part 1 4 7
48 Final Report of the Royal Commission into the Building and Construction Industry
2 Structure of the Industry
Introduction
The building and construction industry is critical to welfare and prosperity in Australia. In 2001 -02
it directly accounted for 5.5 per cent of Australia 's gross domestic product1 and 7.5 per cent of
employment. 2 Indirectly, it has a much greater impact. CSIRO Built Environment noted that:
The Built Environment is the nation's largest asset. It is where all Australians live, where
95% work and where over 90% of the nation's GOP is generated. The technologies available for its design, planning, construction and operation are fundamental to the
productivity and competitiveness of the economy, the quality of life of our citizens and the ecological sustainability of the continent. 3
2 Similarly, the National Building and Construction (Nat BACC) 4 argued that:
The building and construction industry is a vital element of the Australian economy and
has a significant impact on the efficiency and productivity of other industries. Its outputs
are critical for all of us whether it be via the provision of physical infrastructure that
underpins the economy or through the built environment which more directly influences
the quality of our lives. 5
3 The importance of an efficient building and construction industry is obvious in the development
of infrastructure facilities , such as electricity grids, gas pipelines, telecommunication networks,
ports, roads and railways . Usually, the cost of building these facilities is large compared with the
ongoing cost of operation. This makes the cost of construction even more critical for these
important services. For example, the price of electricity has a signi fi cant effect on nearly every
individual and business in Australia. The cost of constructing electricity infrastructure has a
significant impact on that price. Similarly, the cost of constructing transport facilities such as
ports, roads and railways will affect Australians generally and particularly those looking to
export their products overseas. Again, it is clear that the cost of building office blocks, shops
and factories is relevant to nearly all Australian businesses.
4 These observations are reinforced by the work of this Commission. It investigated many major
projects with significant levels of investment in key sectors of Australia's economy. As shown in
box 1 , building and construction projects involve millions of dollars across all States and
Territories and affect many sectors of the economy.
National Perspective Part 1 49
Box 1 Examples of major projects
Sydney Olympics 2000 Main Stadium ($463 million)
Stadium Australia was the largest, most technologically advanced stadium ever built. 6
The Stadium has a seating capacity of 11 0 000, an international Olympic standard track
and hig h quality lighting for te levision coverage . There were numerous major building
projects associated with its construction. Construction ran from August 1996 until March 1999.7
MS East Motorway ($750 million)
This New South Wales Government project made a substantial contribution to Sydney's
road infrastructure. It involved building a ten kilometre expressway, and construction
began in December 1998. Tunnels were built under Arncliffe and Bardwell Park and
much of the existing two-lane carriageway was duplicated .8
Tallawarra Power Station ($250 million)
Located in New South Wales, this government project required the construction of a
new 400 megawatt combined cycle gas fired turbine power plant and related facilities .
The site area is 600 hectares, and the project began in October 1999.9
Docklands - Victoria Harbour Precinct ($1500 million)
This 1 0 year development, located in the Docklands area of Melbourne, has a site area
of 30.2 hectares. Construction will include 2100 residential apartments, 160 000 square
metres of office space, 20 000 square metres of retail, restaurants and cafes, 15 000
sq uare metres of community facilities and 6.6 hectares of public space.w
UQ and CSIRO Joint Building Project St Lucia ($100 million)
This federally funded project is on the site of the former CSIRO Cunningham Laboratory
in Queensland. It will include University of Queensland 's Institute of Molecular
Bioscience, CSIRO Tropical Agriculture and other divisions, Australian Genome
Research Facility, Queensland Agriculture Biotechnology Centre and Wesley Research
Institute. Construction began in December 2000 and the facility will house 850 staff. 11
Australian Glass Manufacturers Company ($65 million)
Located in South Australia, the project comprised construction of a new glass furnace
and upgrade to a bottle manufacturing and packaging plant. The project ran from August 1999 to November 1999.12
50 Final Report of the Royal Commission into tile Building and Construction Industry
Narrows Bridge ($42 million)
The Narrows Bridge in South Perth was widened to accommodate two dedicated bus
lanes, additional traffic lanes and a dual use path across the Swan River. The project ran
from June 1999 to November 2000 and was part of the State Government's $1.3 billion Transform WA Transport Package. 13
The Australian Trucking Association ($30 million)
Located in the ACT, this building includes a new four-storey office building with two
levels of basement parking and plant room on the roof. The project was to run from July 2001 until September 2002. 14
Benefits from improving productivity
5 There are clear benefits from improving the productivity of bu ilding and construction. The
Commission engaged Tasman Economics to estimate the impact on the Australian economy of
improving productivity in the building and construction industry.15 A full copy of the Tasman
report is included at annexure 1 in Volume 4, National Perspective Part 2, of thi s report. That
work found that since high levels of productivity growth in the mid-1970's, the rate of growth in
productivity in bu ilding and construction has been considerably less than the national average for the market sector.
6 In its first scenario Tasman modelled the benefits of increasing the rate of productivity growth in
building and construction to match the average for the market sector over the last five years. It
estimated that between 2003 and 2010 the accumulated gain in real gross domestic product
would be about $12 billion. All industries would benefit from an increase in output as a result of
the reduction in the cost of building and construction . In 2010 five industries - transport,
equipment n.e.c. 16 , motor vehicles and parts, electronic equipment, metals n.e.c. and ferrous
metals - were projected to have output more than two per cent higher than if the current rates
of productivity growth in the buil ding and construction industry were maintained. Building and
construction industry output was estimated to expand by one per cent. Exports were predicted
to grow by 1.6 per cent and imports to decline by 0.2 per cent.
7 Th e second scenario illustrated the benefits from wage rises accompanied by productivity
gains. A productivity increase of 7.6 per cent would be required to maintain the building and
construction industry's competitiveness if average wages for the entire industry increased by
12 per cent over the three year period 2003 to 2005. The results carry clear benefits for all
groups. Th e estimates suggest that from 2003 to 201 0:
⢠workers benefit from the 12 per cent pay rise;
⢠the building industry benefits from output growth of about 0.6 per cent;
⢠Australia benefits from an accumulated increase in real gross domestic product of about
$11.5 billion;
National Perspective Part 1 51
⢠exports would grow and imports fa ll ; and
⢠the output of all industries would grow with particular benefits to manufacturing and
processing industries like motor vehicles and parts, transport eq uipment and metals. 17
8 Dr Peter Crowley, who reviewed the Tasman work, made the following comments.
The results of the analysis confirm the direct and indirect economic importance of the
building and construction sector. An 1ncrease in labour productivity has a substantial and
beneficial impact on the international competitiveness of, and incentives to invest in,
most sectors of the economy The effect is most pronounced in the more capital intensive sectors, as would be expected given the high content of building and
construction in capital expenditure. An increase in labour costs, without a commensurate
increase in productivity, raises capital costs and therefore reduces future investment in Australia relative to the rest of the world. 18
A national focus
9 I have considered many individual case stu dies from all States and Territories, drawn from
those sectors of the industry under the Terms of Reference. Those case studies revealed an
industry in which the rule of law has been eroded. Its erosion has been accompanied by an
uneasy all iance between major contractors and unions. That alliance is based on a mixture of
self interest and commercial pragmatism .
1 0 There is no one characteristic that sets the building and construction industry apart from all
other industries. Building and construction is project based with projects varying from short to
long term. This is true of the information technology industry. Building and construction workers
move between employers relatively frequently. The same can be said for hospitality workers.
The large number of small contractors in bui lding and construction is a characteristic of the
agricu ltural industry. The work is dangerous, as is work in mining and much of manufacturing.
Together, however, ail these and other characteristics do distinguish building and construction
from other industries.
11 The work is project based. Each 'product' is constructed in a different location under different
circumstances. The 'product' is discrete in nature, location, time and cost. While the processes
used in bu ilding or construction may be repetitive in concept each production process is un ique.
12 As the work is project based the workforce on the site is not constant throughout the project.
Each project involves differen t workers with differi ng skills for differing but overlapping periods
of time . Trades intermesh with and are dependent on the preceding trade.
13 This work structu re requires flexibility in work arrangements. Businesses are looking for
alternative ways of managing the workforce. In the building and construction industry, the
largest companies employ very few tradespeople on site. They rely on contractors that have a
small number of employees or persons who work as individual subcontractors .
14 Continuity of employment is, in the main, not assured and usually depends on the success of
ve ry small businesses operating in a highly competitive environment. Workers face uncertainty
about the avai labi lity of future work.
52 Final Report of the Royal Commission into the Building and Construction Industry
15 The head contractor of the project has no direct relationship with most of the workers on the
proJect. Nevertheless the head contractor requires workers to work in sequence, in
co-operation and in close proximity to others who have different employers with no prior or
continuing association. This increases the risk of accidents. The head contractor thus has no
direct control flowing from an employment relationship with those building the project.
16 The mobilisation and co-ordination of labour, plant and materials is an organisational task of
great complexity. That task continues throughout the whole building project. Disruption can
impose large costs on the parties involved. As a result building and construction is frequently a risky industry. Plant, capital and labour are mobile and the cost of disruptions is high .
17 Overall, this has resulted in the following key characteristics:
(a) clients only select head contractors with a reputation for delivering on time and on
budget;
(b) head contractors are responsible for most of the project based risk , including industrial
relations risk;
(c) head contractors have a short term, project based focus on profitability and
performance;
(d) subcontractors are dependent on head contractors for continuity of work ;
(e) while having specialist trade skills subcontractors often lack broader business
management skills;
(0 the level of bargaining power of subcontractors, who employ the bulk of the workforce, is
limited;
(g) head contractors dictate terms and conditions they have agreed with the unions and if
favourable terms and conditions are secured on one site the unions quickly incorporate
these benefits in they demands on other sites;
(h) the level of unionisation is high on major projects;
(i) workers feel insecure about their prospects for long term employment and the safety of
their workplace; and
U) the cost of industrial unrest is high, so industrial action or the threat of it is highly effective
in securing demands.
18 Such an environment can lead to an industry where all participants seek short term commercial
expediency at the expense of the industry's long term performance.
Si ze and scope of the industry
1 9 Building and construction is a large and diverse industry. Projects are located across the
country in urban, rural and remote areas. The building and construction in dustry, as defined by
my Terms of Reference, encompasses:
(a) multi-unit and high rise residential developments;
National Perspective Part 1 53
(b) non-residential buildings, such as office blocks, shopping centres , retail premises,
ed ucational institutions, and hospitals; and
(c)- engineering construction work.
20 The Terms of Reference exclude the building of si ngle dwelling houses unless they are part of a
multi-dwelling complex.
21 Total building and construction industry activity in Au stralia was valued at $59 682 million in
200 1-02. This includ ed site preparation, but not land cost and landscaping . The Commission
has estimated the value of bui lding and construction activity covered by the Terms of
Reference. 19 In total, about 68 per cent of the total activity in the bui lding and construction
in dustry was covered by my Terms of Reference (chart 1 ). This equated to $40 71 1 million. The
estimates for each State and Territory are presented in chart 2 and table 1.
22 The States with the largest building and construction ind ustry were New South Wales (35 per
cent of the national total), Victoria (23 per cent) and Queensland (22 per cent). Togethe r, th ese
three accounted for over 80 per cent of the building and construction activity covered by my Terms of Reference (chart 2).
Chart 1
Value of work done in the building and construction industry covered by the
Commission's Terms of Reference, 2001-02 ($ 'million)
Engineering construction 20085
Alterations and additions to other residential building 706
Total non-residential building 13168
Source: ABS 2002 (Building Activity, June Quarter 2002: Australia, Cat. no. 8752.0) and ABS 2002
(Engineering Construction Activity, June Quarter 2002: Australia, Cat. no_ 8762.0)
54 Final Report of the Royal Commission into the Building and Construction Industry
Chart 2
Val ue of work done in the building and construction industry in each State and
Territory covered by the Commission's Terms of Reference, 2001-02 ($'million)
SA 2421
Source: ABS 2002 (Building Activity, June Quarter 2002: Australia, Cat. no. 8752.0) and ABS 2002 (Engineering Construction Activity, June Quarter 2002: Australia, Cat. no. 8762.0)
Ta ble 1
Value of work done by industry sector under the Commission's Terms of Reference
fo r each State and Territory, 2001-02 ($'million)
Industry NSW Vic Old SA WA Tas NT ACT
New other 3037.4 1786.5 1150.4 193.9 394.2 12.8 50.0 127.3
residential
bu ilding
Alterations and 257 .1 247.0 91.3 33.0 48.7 11.0 3.9 13.5
additions to
other residential
building
Total non- 4353.2 3963.3 2400.1 774.4 1038.3 168.5 183.8 286.1
residential
building
Engineering 5601.9 3390.3 4631.9 141 9.4 3149.2 461.7 1230.7 199.9 construction
Total 13249.6 9387.1 8273.7 2420.7 4630.4 654.0 1468.4 626.8
Source : ABS 2002 (Building Activity, June Quarter 2002: Au stral ia, Cat. no. 8752 .0) and ABS 2002 (Engineering Construction Activity, June Quarter 2002: Australia, Cat. no . 8762.0)
Total
6752.5
705 .6
13167.7
20084.9
40710.7
Na tional Perspective Part 1 55
23 Of the three main sectors of building and construction covered by my Terms of Reference, the
largest is engineering construction, which, in 2001-02, accounted for 49 per cent of the activity
under review by the Commission. Engineering construction refers to bui lding infrastructure
faci lities such as roads , railways, ports, pipelines and water storage and supply. It inclu des
recreatio nal facilities such as golf cou rs es, swimming pools, parks and stadiums, the
construction of production, storage and distribution faci lities for oil , gas, coal and other
minerals , and other heavy industry construction such as chemical plants, blast furnaces, steel
mills, ovens and industrial processing plants.
24 In the engineering constru ction sector, roads , high ways and subdivisions accounted for 26 per
cent of the value of work done in 2001 -02 . Electricity generation, transmission and distribu ti on
and pipelines made up a further 18 per cent and 18 per cent was attributed to heavy industry.
Telecommunications infrastructure comprised 17 per cent of engineering construction activity
across Australia. Togeth er, these fou r sectors accounted for nearly 80 per cent of th e total
value of engineering construction activity (chart 3) .
25 The proportion of engineering construction activity during 2001 -02 in the Northern Territory,
Tasmania and Western Australia was unusually hi gh, accounting for 84, 71 and 68 per cent of
building and construction activity in these jurisdictions respectively. This was due to major
heavy industry projects in the Northern Territory and Western Australia and , in the case of
Tasman ia, construction for electricity transmission infrastructure.
Chart 3
Value of engineering construction work done, 2001-02 ($ 'million)
Telecommunications 3473
Recreation and other 1389
Water storage and supply, sewerage and drainage 1330
Roads, highways and subdivisions 5199
Bridges, railways and harbours 1513
Electricity generation, transmission etc. and pipelines 3676
Source: ABS 2002 (Engineering Construction Activity, June Quarter 2002 : Australia, Cat. no. 8762.0)
56 Final Report of the Royal Commission into the Building and Construction Industry
26 The second largest area of build ing and construction activity is non-residential building. In
2001 -02 it accounted for 32 per cent of the activity under review by th e Commission. The
areas with the highest levels of activity were shops (20 per cent of non-residential bui lding
activity), offices (18 per cent) and educational facilities (14 per cent). Together, these three
sectors made up about half of the value of non-residential bu ilding activity (chart 4).
27 Both Victoria and the ACT were heavi ly re liant on non-residential bu ilding activity.
Chart 4
Value of non-residential building work done, 2001-02 ($'million)
Entertainment and recreational 900
Health 1354
Religious 132
Educational 2032
Other business premises 1650
Hotels etc 478
Offices 2673
Factories 791
Source: ABS 2002 (Building Activity, June Quarter 2002: Austral ia, Cat. no. 8752.0)
28 The third of the main sectors covered by my Terms of Reference, other residential bui ldin g,
includes the construction of, and alterations and additions to, blocks of flats , home units,
attached townhouses and terrace houses. In 2001-02 this sector accounted for 18 per cent of the activity under my Te rms of Reference.
Growth in building and construction
29 The level of bu ild ing and construction activity is cyclical. It declines when economic activity is
low and rises when the rest of the economy is growing quickly .
. . . the industry is more exposed than many others to cyclical economic factors, both local
and national .. . 20
30 Chart 5 illustrates the volatility in the industry from I 97 4-75 to 2001 -02. This chart uses the
original chain volume measure of the val ue of building work done. Thi s measure adj usts the
figures to take out the effects of price changes over time and , therefore, it is the best way of comparing how vo lumes of production have changed. Because of the way the chai n volume
National Perspective Part 1 57
measures are calculated they cannot be used to estimate changes in the total level of activity
under the Term s of Reference. Instead , chart 5 presents separate information on the key
industry sectors.
Chart 5
Value of building work done, original chain volume measures ($ 'million)
50000 -- New other residential building Total building
39078
40000 r------------------------------------------------------------·-----
Non-residential building Engineering construction
30000
20000
10000
0
24425
19736
13097
10717
- 6719 U')
Firms in the industry
33 The diversity in the building and construction industry makes it difficult to accurately generalise
about the characteristics of a typical business. It is still possible to draw some insights from the
Australian Bureau of Statistics (ABS) Construction Industry Surveys. The fourth and most
recent survey was for 1996-97. All four surveys found the construction industry was comprised
mostly of small firms with fewer than 20 employees. They contributed most of the industry's
output and accounted for 99 per cent of the total number of enterprises. Very small firms in the
construction industry, employing fewer than five people, accounted for 94 per cent of all
businesses in the industry in 1996-97, and over two-thirds of all employees. In contrast, less
than one per cent of businesses employed 20 or more people.
34 The number of small businesses in the building and construction industry appears to be
increasing and the number of large businesses falling (table 2). As the ABS made changes to its
survey for the 1996-97 collection, the numbers in table 2 are indicative only and do not provide
conclusive evidence of this change.
Table 2
Private sector construction establishments: number operating ('000)
Number of Employees 1984-85 1988-89 1996-97
Less than 5 91.6 82.5 182.0
Between 5 and 19 7.9 11.9 11 .1
20 or more 1.3 2.3 1.2
Total 100.8 96.6 194.3
Source : ABS 1999, 1991, and 1987 (1996-97 , 1988-89 and 1984-85, Private Sector Construction Industry; Australia, Cat. No. 8772.0)
35 Master Builders Australia Inc (MBA Inc) research under the National Skills Initiative stated that:
Many of the smaller businesses are family run (often a husband and wife partnership
whether incorporated or not), through which the husband carries out his particular
trade. 22
36 Table 3 further illustrates the current domination of the industry by small businesses. Those
employing less than fi ve people have 69 per cent of the workforce who earn 39 per cent of
wages and salaries. They account for nearly half of the building and construction industry's
turnover and generate 7 4 per cent of profits.
37 Less than one per cent of businesses employ more than 20 people. They employ 14 per cent
of the workforce who earn 32 per cent of wages and salaries. They are responsible for 28 per
cent of turnover and 14 per cent of profit. Despite the number of small firms, the large firms in
the industry clearly play a significant role. These firms contribute a disproportionate share of
income, turnover and profit.
National Perspective Part 1 59
Table 3
Size and characteristics of building and construction firms, 1996-97
Selected indicators Employment: Employment: Employment:
less than 5 5 to 19 20 or more
(per cent) (per cent) (per cent)
Operating businesses 93.7 5.7 0.6
Employment 68.6 17.7 13.6
Wages and salaries 39.4 28.2 32.4
Turnover 48.3 23.7 28.0
Total income 48.1 23.6 28.3
Total operating expenses 45.2 24.9 29.9
Operating profit 74.4 11 .3 14.3
Industry gross product 53.5 22.1 24.4
Source: ABS 1999 (Private Sector Construction Industry, 1996-97 Australia, Cat. No. 8772 .0)
38 Most of the largest contractors {those with an annual turnover in excess of $200 million) belong
to the Australian Constructors Association (ACA). The ACA website notes that 'ACA member
companies have a combined annual revenue in excess of $A 15b and collectively employ over
49,000 people in their Australian and international operations' 23 The 2002 Annual Report
stated 'Member companies account for around 40% of total construction activity in
Australia'. 24 While the large contractors subcontract much of this work to smaller businesses,
these figures illustrate that large contractors control a substantial part of the industry's output
and cash flow. The shape of the industry structure is that of a flattened pyramid, with a handful
of very large contractors and a few {1200) large contractors (more than 20 employees) at the
top, and many small subcontractors forming the base.
39 The subcontractors follow a similar structure. Within each of the 14 specialist trade areas the
ABS data show there are many small firms and a few large ones. Fo r example, in site
preparation services there are 637 4 firms with fewer than five employees (employing 11 499
people) and 60 firms with more than 20 employees (employing 2934 people). This pattern is
repeated in the other trades 2 5
60 Final Report of the Royal Commission into the Building and Construction Industry
40 The average level of profitability in the bu ilding and construction industry is low, particularly in
non-residential bui lding and non-building construction (for example the construction of
infrastructure). The percentage of businesses in the building construction industry that made a
profit was slightly higher than the average for all other industries (chart 6). However, at 4.6 per
cent, the average profit margin in the industry was much less than the national average of
9.3 per cent (chart 7) . This falls to 0.7 per cent for non-residential building construction and
4.3 per cent for non-building construction. It is as high as 16 per cent for other residential
build ing construction and 15.5 per cent for construction trade service 2 6
Chart 6
Business profitability in the building and construction industry 2000-01
80
72.7 ⢠Building and Construction D All industries
70
60
50
40
30
23.3
20
10
0
Made a profit Broke even Made a loss
Source : ABS 2002 (Summary of Industry Performance 2000-2001 , May 2002: Australia, Cat no. 8142 .0.55.002)
Na tional Perspective Part 1 61
Chart 7
Profit margins by industry 2000-01
30
25 22.3 .----
19.6
20 .----
0> .!:! c:
15
"'
13.8
,..----
a.
9
10
,..----
7
6. 3 ,..----
5
- 4.6 4.2 4. 1 5.1
0 I nn lei
(J) (J) A c:
"' "'
UJ UJ (!)
c: c 0. 0 u u
c (J) "' (.) (!) (!) (!) c "§ 0. :;::; _g _g (.) c: (.) (.) (.) :;, :0 u (.) 0 2' 2' 2' 2' t5
,..----
"' "' (.) ·.:: 2' 1i) (!) ::> UJ u ill .S L
41 It is possible to look at the structure and characteristics of the bui lding and construction
industry from several different perspecti ves. For example, the Commission has observed
regional differences in the culture of the industry between urban, rural and rem ote area projects.
42 There are differences between sectors of the industry - residential building, non-residential
build ing and engineering construction. For example engineering construction tends to be
characterised by large projects that are more capital intensive than building work generally. The
MBA Inc made the fo llowing comments about the sectors:
In the commercial and industrial construction sector; work is usually performed on both
an independent contractor and/or employee basis. Overall, there is a medium level of
unionisation. It increases to almost 100% on CBD, metropolitan and major regional
projects. The industry is flexible, extremely competitive and accepts very high levels of
commercial risk in return for low rewards compared with other industries.
62 Final Report of the Royal Commission into the Build ing and Construction Industry
The size of firms in this sector varies from small through to multinational. The location of
work is mainly urban, although there are also projects undertaken in regional and remote areas ...
The civil and engineering construction sector is structured similarly to the commercial
and industrial construction sector; except that there is less union involvement both in
terms of level of membership and union militancy and thus a significantly lower level of disruption.
Projects typically have very large dollar values and very high mechanisation-to-labour
ratios. This is its fundamental difference from traditional commercial and industrial building.
Employment in this sector tends to be more continuous. It is characterised by a small
group of specialised contractors and subcontractors which engage and transfer their
employees from project to project (so that high mobility is required) until there is no more
work available. 27
43 The Queensland Government observed:
the multi-unit/high rise residential, and non-residential sectors are more likely to have:
⢠large principal contracting companies;
⢠many trades brought together on one site;
⢠higher rates of workers classified as employees [compared with the housing
sector], with most employees employed by sub-contractors and independent
contractors, as opposed to head contractors;
⢠more coordination and principal contractor presence;
⢠prominent union presence and high unionisation rates;
⢠long working hours and regular overtime;
⢠greater levels of technology and plant; and
⢠an impact on public safety.
In contrast to the building sector; the civil and engineering sector exhibits the following
unique characteristics:
⢠head contractors usually directly employ a greater number of employees (up to
65 per cent) than the building sector (approximately 5-10 per cent);
⢠a greater number of employees are engaged on a permanent basis; and
⢠a greater degree of industrial stability. ..
However; a trend is emerging where the contractual employment arrangements in the
residential housing sector are increasingly being adopted in the non-residential building
and civil and engineering sectors. 28
National Perspective Part 1 63
44 I agree with these observations.
45 Different types of firms operate within each sector of the industry. The former Department of
Industry Science and Resources' (ISR) paper, Building for Growth: An Analysis of the Australian
Building and Construction lndustries, 29 divided these firms into three key categories:
(a) the supply network- consisting of the traditional construction trades;
(b) the project based firms - consisting of designers, engineers, project managers, builders
and contractors; and
(c) the property sector - which includes firms, individuals and organisations that develop,
commission, own, manage and lease buildings and other infrastructure.
46 To understand the interrelationships between these groups of firms, the ISR paper outlines a
cluster framework. The framework, as shown in chart 8, identifies components of the industry
as:
(a) the reg ulatory framework;
(b) supply networks;
(c) project-based firms;
(d) property sector; and
(e) technical support infrastructure.
47 Each component is linked by information and knowledge flows.
64 Final Report of the Royal Commission into the Building and Construction Industry
Chart 8
Building and construction industry cluster map
I
REGULATORY FRAMEWORK
ACTIVITIES: technical, economic, environmental and social regulation
ACTORS: Commonwealth, State, Territory and Local Government,
Australian Building Codes Board, Standards Australia,
builders licensing authorities, fi rms, industry and professional associations
!
SUPPLY NETWORKS PROJECT BASED PROPERTY SECTOR
ACTIVITIES: Materials, FIRMS ACTIVITIES:
components, equipment ACTIVITIES: Design, Commissioning and
manufacture and engineering, integration, using constru cted
services assembly/construction products and
construction services
ACTORS: ACTORS:
Building materials and Consultants, designers, ACTORS:
product manufacturers, engineers, project Finance sector,
construction trades managers, constructors, real estate,
(electrical, plumbing and specialist contractors build ing owners
carpentry), wholesalers and subcontractors and managers
and retailers
l l
TECHNICAL SUPPORT INFRASTRUCTURE
ACTIVITIES: long term technical development and support
l
A.CTORS: Commonwealth, State, Territory and Local Government, education sector,
research and development institutions, industry and professional associations
The cluster framework utilised in this report is based on a framework developed by the Australian Expert Group in Industry Studies (AEGIS) - a research centre of University of Western Sydney. AEG IS undertook a number of
studies on the building and construction industry on behalf of the Depart ment of Industry, Science and Resources.
Source: Industry Science and Resources 1999, Building for Growth: An analysis of the Austra lian Building and
Construction Industries, p. 10
National Perspective Part 1 65
48 The cluster map model illustrates the complexity of the industry and the way various groups of
firms are interrelated. Factors that affect firms in one group or sector will often flow on to affect
other groups. This shows the importance of industrial harmony on project sites, as any type of
industrial dispute may affect all parti ci pants in the model.
49 In the category Project-Based Firms there is usually an hierarchical relationship between the
various parties to a project (chart 9) .
Chart 9 Stylised representation of project relationships
Client a
I
Consultantsb
Architecture
Engineering
Accounting
Head Contractorb
Contruction Manager
Crane Crew
Cleaners
Safety Officer
Materials Suppliers
Legal
Finance
Subcontractors b Plumbing
Painting
Electrical
Lifts
Excavation
Fire Protection
Concreting
Carpentry
Door Installation
Roofing
Plastering
Formwork
Glazing
Air Conditioning
Suspended Ceilings
Tiling
a A consultant may represent the client when it lacks the technical and organisational expertise to
coordinate a large building project. b The list of occupants and tasks is given as an example and is not intended to be exhaustive.
!
Source: Adapted from Productivity Commission 1999, Work Arrangements on Large Capital City Building
Projects, Labour Market Research Report , Auslnfo, Canberra, p . 14
66 Final Report of the Royal Commission into the Building and Construction Industry
50 The hierarchical structure has implications for the way influences on firms at one level in the
chain can flow up or down the chain and affect others. The implications of these
interrelationships between firms are discussed later in this volume.
The building and construction process
51 It is generally agreed that all large building and construction projects have three common
characteristics, reflected in the discussion by the Productivity Commission paper in its report
on Work Arrangements on Large Capital City Building Projects30 and the submission presented to this Commission by MBA Inc. These characteristics are:
(a) each project is managed on an individual basis;
(b) each project draws together a wide range of skills; and
(c) the specific skills needed vary during the life of the project.
52 These characteristics must be managed. An integral part of managing the building and
construction process is the adoption of a suitable risk management strategy, incorporated into
contractual arrangements. This involves identifying the risks associated with building and
construction delivery processes and determining which parties to building and construction contracts should bear those risks .
Risks associated with large building and construction projects
53 Risk management issues are not unique to the building an.d construction industry. They are an
integral part of Australian management practices. The Joint Australian/New Zealand Standard for Risk Management defines risk management as :
... the term applied to a logical and systematic method of establishing the context,
identifying, analysing, evaluating, treating, monitoring and communicating risks
assoc18.ted with any activity, function or process in a way that will enable organisations to
minimise losses and maximise opportunities. 31
54 The entire building and construction process contains inherent risks. Builders and
subcontractors are responsible for delivering a project on time and within budget. Larger
projects involve greater risks; major contractors and subcontractors look to minimise risk to
reduce potentially large financial losses.
55 As noted by Crittall, 32 these risks, illustrated in table 4, may be categorised as falling:
(a) within the control of the owner;
(b) under the control of the builder; or
(c) outside the control of either party.
56 The incentive and effects of the way risk is managed in this industry, and whether risks are
being inappropriately passed on to smaller subcontractors , is a key issue that is discussed later
in this volume and then in the volumes on reform.
National Perspective Part 1 67
Table 4
Major categories of risk associated with building and construction projects
Items within the control of the owner
Timely and
instructions approvals
Access to site
Design changes
Payment methods
Use of consultants
Preparation of sufficient contract documentation
Quality workmanship
Financial accountability
Items under the control of the builder or head contractor
Ti mely letting of subcontracts
Programming of works and
materials ordering and storage
Site-specific industrial
disturbances
Site safety
Contract administration
Supervision
Quality workmanship
Financial accountability
Items outside the control of either party (costs usually shared between parties)
Acts of God - weather
National and industry-wide
strikes and stoppages (if the
disruption is site-specific, the
contractor must accept the risk
and the consequences of that risk)
Political interference - laws
Latent conditions which nobody could anticipate
Source: Based on Crittall, J. 1997 (online), 'Industrial Relations Risk in the Construction Industry- A Contractual Perspective' , a paper presented at the Eleventh Annual Conference of the AssoCiation of Industrial Relations Academics of Australia and New Zealand, Brisbane, p. 433 [accessed 20 January 2003], http://www.mngt.waikato.ac.nz/depts/SMUAiraanz/old/conferce/pdf/crittal.pdf
Contracts in the building and construction industry
57 In a submission to the Royal Commission the Australian Industry Group (AIG) provided the
following description of the contractual process in the bwlding and construction industry.
The size, nature, location and complexity of major construction projects results in a
complex chain of contractual relationships.
Management of a construction project is delegated to a head contractor. Specialist work is then let to subcontractors. However, due to 1ssues such as scale and complexity, a
significant number of major construction projects have additional layers of contractual
relationships. Typically the head contractor divides a construction project into packages
of work. These packages are let to major subcontractors, who then in turn subcontract specialist work within each of the packages.
Major construction projects involve a complex sequence of Interdependent tasks that require different types of specialist workers. The level and types of specialist skills used vary over the life of the project. 33
68 Final Report of the Royal Commission into the Building and Construction Industry
58 The major types of building and construction contracts, set out in table 5, can be differentiated by:
(a) management structure;
(b) liability and risk sharing;
(c) design management;
(d) tendering procedures; and
(e) determination of contract pri ce.
Table 5
Major types of contracts in the building and construction industry
Contract Type
Traditional Tender
Design and Construct
Competitive Negotiation
Cost Plu s Contract
Contract Qualities
A project design team is appointed by the client.
Fixed cost tenders sought from builders.
Site handed over to successful tenderer.
Client's agent ad mini sters contract.
Construction work generally sub-let by the builder to specialist
subcontractors.
Bu ilder undertakes to del iver project for a fixed cost (usually), to
meet a performance specification produced by or on behalf of the
client.
Builder responsible for both design and construction elements of
the project.
Client appoints a team of consultants to prepare a design up to
preliminary drawings.
Tenders called from builders for the cost of preliminaries,
completion time, and a percentage for margins and off-site
overheads.
Successful tenderer then joins the consultancy team to prepare
final design documentation and erect the building. Often
subcontractors are also used.
Client selects builder on the basi s of a tendered fee to be paid in
excess of costs incurred .
Strategic Alliance Contracting Arrangement between contractors and client, which entails
difference between quoted and actual costs being shared
between both parties.
'No dispute' clause.
Source: Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Auslnfo, Canberra, p. 13.
National Perspective Part 1 69
59 Of the above, 'Trad itional Tendering ' is the most widely used type of contract in the industry. Typically it involves the client appointing an architect to do the project design and
documentation prior to any contract being entered into with the head contractor. The head
contractor provides the management services necessary to plan, co-ordinate and build the
works within agreed time and budget, as required by the contract documents. The head
contractor then engages subcontractors to undertake the building and construction work.
Some of these wil l employ their workforce. Many engage smaller sub-subcontractors.
Transferring delay costs
60 Under forms of contract where claims for variations and extensions are allowed, clients may
carry a significant share of the cost risk of industrial relations problems. Cost increases for
delays due to industrial disputes are typically claimed from clients under these contracts .
However, in the building and construction industry widespread use of Traditional Tendering ,
which is a fixed price contract, means that this risk is transferred to head contractors an d
subcontractors. Contracts usually impose sanctions on builders for delays in completing the
project, including delays due to industrial action. In turn, head contractors pass on similar
obligations to subcontractors. In the Commission's hearings Mr Gary May, Deputy Director
General of the Queensland Department of Public Works noted that from his observation the
main contractor is responsible for industrial relations on building projects. 34 There was a large
body of evidence given by head contractors in other states supporting that observation. For
example the evidence given by Mr Brian Seidler, the Executive Director of the Master Builders
Association of New South Wales, discussed the commercial exposure of head contractors to industrial action35
61 Similarly, the Department of Empl oyment and Workplace Relations noted that:
Fixed price building contracts have become the most common form of contract for large
capital city building projects since the early 1990s. These contracts impose client
determined penalties to reflect the costs of delays (liquidated damages) and are used to
transfer most of the risks associated with a project from the client to the head contractor
A portion of the risk is passed down the contractual chain to each subcontractor, again
through fixed price contracts. The contractual system thus provides a strong incentive for
both head contractors and subcontractors to complete their work on time and within
budget. 36
62 Th e AIG described the position thus:
Head contractors are not usually the direct employers of the vast majority of labour on a
construction project. Head contractors are responsible for the project overall and they
typically have a direct contractual relationship with major subcontractors undertaking
packages of work. The subcontractors, in turn, have a contractual relationship with sub subcontractors who perform the bulk of the work on a project. This means that the head
contractor, who assumes the majority of the risk, has no direct contractual relationship
with the sub-subcontractors whose behaviour can significantly impact on that risk. 37
70 Final Report of the Royal Commission into the Building and Construction Industry
63 The Building Industry Specialist Contractors Organisation (Tasmania) argued that from a
subcontractor's point of view :
There must be a fair distribution of the risk associated with industrial action or dispute
when it occurs during the course of a contract. The present system that leads
subcontractors to absorb the majority of risk is detrimental to the long term interests of the industry and the community. 38
National Perspective Part 1 71
Notes to Structure of the Industry
ABS 2002 (Australian System of National Accounts, 2001-02, Nov 2002, Cat. no. 5204. 0).
ABS 2002 (Labour Force: Australia, Aug 2002, Cat. no. 6203.0).
Commonwealth Scientifi c and Industrial Research Organisation (CSIRO) (online), Built Environ ment
[accessed 23 December 2002], http://www.csiro.au/index.asp?type-sector&id-Built%20Environment&xml-sector&style-sectorAustralian
Context
NatBACC was establ ished by the Commonwealth Government in 1997 to foster a partnership between the Government and the building and construction industry and to advise on the development of an action agenda for the industry. The committee included representatives from major industry, commercial and
professional groups in the building and construction industry.
National Bui lding and Construction Committee 1999, A Report for Government by the National Building and Construction Committee, Canberra, p. 1 .
Sports Venue Technology (on li ne), Stadium Australia - Sydney [accessed 17 December 2002], http://www.sportsvenue-technology.com/projects/stadium australia
Cordell Construction Building Information Service Pty Limited , Database, information purchased by the Commission, project 282813.
Cordell Construction Building Information Service Ply Limited, Database, information purchased by Commission , project 277424.
Cordell Construction Building Information Service Ply Limited, Database, information purchased by Commission, project 225869. 1 ° Cordell Construction Building Information Service Ply Lim ited, Database, information purchased by
Commission, projects 374482, 374483, 374485, 374486, 374944 , 377876, 382334, 382336, 386288, 392516,394260,394602,394701,394861,3000800,3003604,3004147. 11 Cordell Construction Building Information Service Pty Limited, Database, information purchased by
Commission, project 4151306. 12 Cordell Construction Bui ld ing Information Service Pty Limited , Database, information purchased by Commission, project 541549. 13
Cordell Construction Building Information Service Pty Limited, Database, information purchased by Commission, project 665961. 14 Cordell Construction Building Information Service Pty Limited , Database, information purchased by
Commission, project 2147036. 15 The Tasman Economics work was released in fu ll in discussion paper 17.
16
Not elsewhere classified (see annexure 1 in volume 4 for a full list of the industry categories included in the model). 17 See an nexure 1 in volume 4 for more detail on the benefits to various industnes. 18
See annexu re 1 in volume 4. 19 Th is excludes single dwelling and alterati ons and additions to single dwellings. In 2000-01 83 per cent of
alterati ons and additions were attributed to single dwellings, and hence are outside the scope of the Commission's Terms of Reference. Over the past five years the amount of alterations and additions attributable to single dwelling ranged between 80 and 90 per cent. 2
° Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase One , 15 May, exhibit 494, paragraph 32, document 005.0151.0052.0002. 21 Australian Procurement and Construction Council 2002 (onli ne), Construct Australia- Forecasts of
Construction Industry Activity, Australia and all States and Territories, January 2002, p. 4 [accessed 7 January 2003], http://www.apcc.qov.au/apcc/docs/ForecastsofConstructionDec2001 .pdf. Billion refers to 1 000 million.
72 Final Report of the Royal Commission into the Building and Construction Industry
22
Master Builders Australia Inc (MBA Inc) 2001 , Submission to the Royal Commission into the Building and
Construction Industry, 11 December, exhibit 6, paragraph 29, document 064.0681.0226.0003. 23 Australian Constructors Association (ACA) (online) , About ACA [accessed 12 December 2002], http:/ /www.constructors.eom.au/pages/splash shortcut 02 .htm 24
Australian Constructors Association (ACA) 2002 (online) , Annual Report 2002, p. 24 [accessed
8 January 2003], http:/ /www.constructors.com.au/downloads/ ACA 2002 Annual Report.pdf. 25 ABS 1999 (Private Sector Construction Industry, 1996-97: Australia, Cat. no. 8772.0).
26
ABS 1999 (Private Sector Construction Industry, 1996-97: Australia, Cat. no . 8772 .0) .
27
Master Builders Australia Inc (MBA Inc) 2001, Submission to the Royal Commission into the Building and
Construction Industry, 11 December, exhibit 6, paragraphs 34- 35, 42-44, document 064.0681.0226.0003 . 28 Queensland Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 4 July, exhibit 821, paragraphs 22-24, document 001 .0001 .0529.0002.
29
Industry Science and Resources (ISR) 1999, Building for Growth: An Analysis of the Australian Building and Construction Industries, Australian Government Publishing Service, Canberra.
30 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Auslnfo , Canberra.
31
Standards Association of Australia 1999, Risk Management- Joint Standards Australia/Standards New
Zealand, AS/ NZS 4360:1999, Strathfield , NSW, p. 1. 32 Crittall, J . 1997 (online), 'I ndustrial Relations Risk in the Construction Industry- A Contractual Perspective ', a paper presented at the Eleventh Annual Conference of the Association of Industrial Relations Academics
of Australia and New Zealand, Brisbane, p. 433 [accessed 20 January 2003], http://www. mngt. waikato .a c. nz/depts/SM U Ai raanz/old/conferce/pdf/ crittal. pdf 33 Australian Industry Group (AI G) 2001, Submission to the Royal Commission into the Building and Construction Industry, 12 November, exhibit 17, paragraph 4.1 , document 100.0964.0072.0001.
34 May, T1 156/47-48.
35 Seidler, T7 4 70/1 0-32.
36 Commonwealth Government 2002, Submission to the Royal Commission 1nto the Building and Construction Industry: Phase One , 15 May, exhibit 494, document 005.0151.0052 .0002 at 0011 . 37 Australian Industry Group (AIG) 2002, Submission to the Royal Commission into the Building and Construction Industry in response to discussion papers 1-5, 30 June, exhibit 778, document
041 .0313.0689.0001 at 0007 .
38 Building Industry Specialist Contractors Organisation (Tasmania) 2002, Submission to the Royal Commission into the Building and Construction Industry in reference to discussion paper 3, 24 June, exhibit
773, document 017 .0101 .0834.0003 at 0005.
National Perspective Part 1 73
7 4 Final Report of the Royal Commission into the Building and Construction Industry
3 Profile of Participants
The building and construction industry is made up of a number of key participants. Cl ients and
the providers of capital, including governments, have a key role to play. In addition to being a
provider of capital, governments have a po licy and regulatory role in the industry. Other key
participants are the employer and industry associations, head contractors, subcontractors and
workers. Unions play a major role in the industry.
Providers of capital and clients
2 Capital providers and clients in the building and construction industry can be categorised as
either public (government) or private sector. Capital providers finance projects whi le the c lients
are the owners of the project and are responsible for servicing the finance used to fund the
project. Usually the government takes on the roles of both financier and client.
3 Both capital providers and clients have simi lar views on their involvement in projects, seeking to
distance themselves from day to day management, including the management of industrial
relations. As AIG noted:
... project owners of major construction projects display the following common views:
⢠A requirement for certainty of project cost;
⢠A recognition that labour costs significantly impact upon overall project costs, and
constitute a high risk in cost management;
⢠A desire to maximise return on investment and net present value of a project, by
completion of the project on time and within budget;
⢠Where a project is constructed on an existing operational site, a desire to
quarantine operations from construction and to prevent the construction impacting
upon their operational workforce and employee relations structures. 1
4 Most clients in the building industry, whether in the private or government sector, do not want
to be directly involved in the industrial relations issues that may arise on site. It may on ly be
during major disputes that clients, often reluctantly, become aware of the industrial issues that
exist on their project. This aversion to involvement often extends to government clients. 2 The
implications of the approach taken by clients are discussed in the later volumes on reform.
National Perspective Part 1 7 5
5 All capital providers are in a position to influence the development and implementation of policy,
reg ulati ons and legislation pertaining to the industry. Governments , through codes of practice
for _ project procurement, have attempted to set requirements that impact on work
arrangements existing in the building and construction industry.
Private developers and financiers
6 Private developers play a significant role in the building and construction industry. They engage
in all kinds of construction activity: fro m residential and non-residential building to engineering
construction.
7 Overall, in 2001-02 the private sector accounted for 7 4 per cent of building and construction
activity and 63 per cent of the activity subject to my Terms of Reference .3 Private sector work
in the bu ild ing and engineering construction sectors is illustrated in charts I 0, II and 12. Chart
I 0 il lu strates the size of public and private sector activity under my Terms of Reference.
Chart 10
Value of building and construction done for the public and private sectors under the
Commission's Terms of Reference, 2001-02 ($'million)
12000
⢠Pnvate Sector D Public Sector
10000
8000
6000
4000
2000
0
6051
251
New other residen tial bu ilding
677
29
Alterations and additions to other residential building
9571
Total non-residential bu ildi ng
Engineering construction
Source: ABS 2002 (Bu ild in g Activity, June Quarter 2002: Australia, Cat. no . 8752 .0) and ABS 2002 (Engineering Construction Activity, June Quarter 2002 : Australia, Cat. no. 8762.0)
7 6 Final Report of the Royal Commission into the Building and Construction Industry
Chart 11
Value of non-residential building done for the public and private sectors,
2001-02 ($'million)
⢠Private Sector 0 Public Sector
2500
2000
1500
1000
500
0
() (f) (f) (f) (f) (f) Cll (f) £ OJ Q_ Q) Q) (f) Q) c :::l 0 "§ () Q) (f) 0 0 Cll "' 6 (f) £ it= £: E Q) c a; (J) t5 0 3 I 0 "' () Qj Q) e! I lL .Do_ .:::l a: E () (D 1:J c e! w ·ro .r: 6 t Q) c w Source: ABS 2002 (Building Activity, June Quarter 2002: Australia, Cat. no. 8752.0) (f)
:::l 0
Q) c
a; ()
(f)
:;:,
National Perspective Part 1 7 7
Chart 12 Value of engineering construction work done for the public and private
sectors, 2001-02 ($'million)
4000
35 14
3500
3000
2500
2000
1500
1000
500
0
"'"' >-c
.en - :J -8 "' rou 0 c a: ro
⢠Private Sector D Public Sector
"' c 0 u
·c: :J
E E 0
u
Q)
3504
Source: ABS 2002 (Engineering Construction Activity, June Quarter 2002: Australia , Cat. no. 8762.0)
Qj .c
0
u
c
ro c
0
"' u
Q) a:
8 Many large infrastructure projects are now financed by private capital rather than direct
government expenditure.4 Private capital is generated from both domestic investors and
overseas investors. 5 The level of investment in major projects is substantial , sometimes
extend ing to billions of dollars,6 as is illustrated by the projects outlined previously in box 1.
9 Financing arrangements vary depending upon the size of the project and the parties involved.
Examples include 100 per cent financing, syndication and trust arrangements, or 'seed' money
being provided . According to the Australian Industry Group, the factors developers take into
consideration in deciding whether or not to invest include:
(a) political stability;
(b) availability of skill ed labour; and
(c) mechanisms to manage risk associated with construction ?
1 0 As capital providers, private developers and financiers are in a position to set requirements th at
impact on contract conditions between clients and head contractors.
7 8 Final Report of the Royal Commission into the Building and Construction Industry
Comm ercial interests
11 The typical private sector client is a development company seeking to undertake a building
project. The developer will approach a financer with a project proposal. The financier will
conduct a feas ibility study. Only about one in every 20 projects is approved by a financier.
Australian building and construction projects must demonstrate competitive cost and
investment returns to attract capital from private developers and financiers.
12 Projects will usually be put to tender on the basis that the contract will require the project to be
finished at a fixed time for a fixed price 8 Financiers will often take an active role in the selection
of the head contractor, as they must feel comfortable with whoever is chosen to undertake the project. 9
13 The client and its financier generally perform a ri sk assessment process, design ed to ensure
that the project risks are transferred to the head contractor. Their concern is to have the project
delivered on time and within budget. The risk assessment takes into account the tendering
contractor's previous 'track record' for delivering similar projects on time, within budget and
with minimal disruption. Consideration is given to the financial capacity of the contractor to
meet liq uidated damages, in the event that the project is not delivered on time. 10
14 The codes of practice for the building and construction industry apply on ly to govern ment
projects. The private sector is, however, encouraged to adopt the codes on a voluntary basis.
Superannuation funds
15 The Australian superannuation industry comprises over 240 000 funds . Ninety-nine per cent
are small , with less than five members. As at June 2002, about $519 400 million was invested
in superannuation funds in Australia.11 In Australia superannuation funds are a major source of
investment funding, including for the bui lding and construction industry. Major superannuation
funds include: Cbus, AMP and AXA.
16 Many of Australia's superannuation funds invest in building and construction, particularly the
building and construction industry funds, such as Cbus. Superannuation funds can be involved
in providing capital as an owner, developer, a joint venturer or a consortium.
Types of funds
17 The superannuation legislation recognises types of superannuation funds. In many cases ,
legislation imposes different requirements on different categories of funds.
18 Employer funds are run by organisati ons and are on ly open to people who work for th at
organisation. Although such funds are established by employers, the employers are not
permitted to control the money or make investments for the fund or use th e funds in any way
connected with their business.12
19 Industry funds are available for people who work in a particular industry, and are oft en linked
to a union. Increasingly, industry funds are expanding their membership base so that people
from any industry can be a member. Industry funds in Australia tend to operate on a state by
state basis, with the exception of the national superannuation scheme Cbus.
National Perspective Part 1 79
20 Master funds operate under a si ngle trust deed, even though the contributors do not share an
industry or the same employer. Master funds are offered by banks, trustee companies, life
in surance companies and similar institutions.
Investment powers
21 A trustee is vested with a legal responsibility to run the superannuation fund in the best interest
of its members. A trustee may be a person or a company. If the fund is large, the trustee is
usually a company with a Board of Directors representing the interests of both employees and
employers. The trustee must act in accordance with the relevant superannuation legislation
and the requirements of the trust deed - a legal document which establishes the ru les for
operating the superannuation fund. 13
22 The trustee of a fund is conferred with a general power of investment. Under the
superannuation fund's trust deed, the trustee is generally granted the power to enter into any
type of commercial undertaking and has the option to invest the funds, on behalf the members,
in building and construction projects. The trustee must set investment objectives having regard
to the whole of the circumstances of the Fund .
23 While trustees may provide members with a choice of investment strategies within a given
fund, legislation does not allow members to direct trustees to pursue individual investments.
24 Trustees' fiduciary obligations are codified in the Superannuation Industry (Supervision) Act
1993 (C'wth) . The object of the Superannuation Industry (Supervision) Act 1993 (C'wth) is to
make provision for the prudent management and supervision of superannu ation funds. The
provisions relating to trustees ' obligations are contained in Part 12 of the Superannuation
Industry (Supervision) Act 1993 (C'wth), which imposes special duties on the trustees and
investment managers of superannuation entities.
25 Section 109 of the Superannuation Industry (Supervision) Act 1993 (C 'wth) requires that all
investments of superannuation funds be made on an arm's-length basis. This section
endeavours to ensure that members' benefits are not reduced or put at risk.
Commercial interests
26 Superannuation funds are required to be maintained solely for the 'core' purpose of providing
retirement and death benefits to members.14 The main concern of superannuation funds is the
best interests of the members. While permitted to make investments to maximise returns to
members, the prime responsibility of the fund trustee is the prudent management of
superannuation savings.15
27 Industry funds will often invest in the in dustry to which its members belong, in order to
contribute to the development of that industry. Cbus, the dominant superannuation fund in the
building and construction industry, invests a proportion of its portfolio in building and
construction projects. At 30 June 2002 Cbus had invested over $781 million in property and
$283 million in infrastructure. 16 Its investments in the building and construction industry are
spread across much of Australia , and include developments in the Barossa Valley South
Australia, the City Square in Melbourne, airports in Victoria and Tasmania , and buildings in
Western Australia. 17
80 Final Report of the Royal Commission into the Building and Construction Industry
Public sector
28 All levels of government, Commonwealth, State, Territory and local are involved in the building
and construction industry. Government projects include educational, health and miscellaneous
buildings, such as law courts, homes for the aged, orphanages, gaols, barracks, public toilets,
and ambulance, fire and police stations. Government engineering construction projects include
telecommunications infrastructure, roads and highways, railways , bridges, electricity
generation and transmission, pipelines, and water storage, supply, sewerage and drainage.
29 Overal l, the public sector accounts for 26 per cent of building and construction activity and 37
per cent of the activity subject to the Commission 's Terms of Reference. 18 Nearly all of the work
undertaken for the public sector is under the Commission's Terms of Reference because
government has very little involvement in the construction of single dwellings. Government
work in the building and engineering construction sectors was illustrated earlier in charts 1 0, 11
and 12 above.
30 While the government workforce undertakes a lot of building and construction work (work done
by the public sector), Governments also contract out work (work done by the private sector for
the public sector). The importance of these two categories of work for engineering construction
projects is illustrated in chart 13.
Chart 13
Value of engineering construction work done, chain volume measures, 2001-02 ($'million}
15000
-- By the private sector for the pu b lic sector 12000
10055
9000
8451
6621
6000
5966
3000
2282
0
r- (J) N
OJ OJ q>
0 ro o; OJ ro
Total by the public sector - Total for the public sector
12546
7916
4630
8
m (J)
0
6
8 N
7184
N 9
8 N
Source: ABS 2002 (Table 1: Val ue of work done , Chai n Volume Measures, En gineering Construction Activity, June Quarter 2002: Australia, Cat. no. 8762. 0)
Note: This data is based upon chain volu me measures. Chain volu me measures are not additive for most periods; the component measures do not sum to a total in the same way as the corresponding
current pri ce components do.
National Perspective Part 1 81
31 The Commonwealth budget papers provide information on capital expenditure. However, this
includes much more th an just building and construction industry works; and building and
construction projects often come under other industry expenditure categories . For example,
there is a considerable amount of building and construction work incorporated in the defence
budget. It is therefore to be expected that in many of the reported categories in
Commonwealth budgets there is a mixture of building and construction wi th other expenditure.
32 The 2002-03 Commonwealth Budget incorporated considerable expenditure on building and construction. Road construction is a major component of this work. Tab le 6 provides
projections of Commonwealth expenditure on road construction and maintenance.
Table 6
Major components of the Commonwealth Budget Road Transport sub-function
2001-02 2002-03 2003-04 2004-05 2005-06 $m $m $m $m $m
National Highway and Roads of 1093 981 929 1245 1050
National lmportance(a)
Road Safety Black Spot Programme 49 45 45 45 45
Roads to Recovery 418 202 302 252 0
Other 41 99 40 32 32
Total (b) 1602 1327 1316 1573 112 7
Source: Commonwealth of Australia 2002, 2002-2003 Budget; CanPrint Communications Pty Limited pp. 6- 51 .
(a) Largely Specific Purpose Payment funding to States and Territories but with a small additional
component for land transport research.
(b) See Outcome 1 of Transport and Regional Services 2002-03 Portfolio Budget Statement.
33 The work of the Joi nt Standing Committee on public works provides information on the nature of large Commonwealth bui lding and construction projects. Parliament, or the Governor
General if Parl iament is not sitting, can refer to the Committee projects valu ed at more than
$6 million. The Committee reviewed about $200.3 mi llion of public works projects in 2002. In 2001 it reviewed over $559.4 million of projects .19
34 It is not possible to estimate annual Commonwealth expenditure from the Committee reports because these projects usually span several years and the Committee does not report on the
commencement or progress of the projects.
82 Final Report of the Royal Commission into the Building and Construction Industry
35 Much of the public sector expenditure on building and construction projects is initiated by State
and Territory governments. State Governments are major clients of the building and
construction industry. According to the Austra lian Procurement and Construction Council they
commission 25 to 30 per cent of non-residential building, 35 to 40 per cent of engineering
construction and a small amount of residential building 2 0 Some examples of the level of State
and Territory expenditure in building and construction are in box 2. This demand is generated
by direct government investment, and, increasingly, through joint arrangements between the public and private sector.
Box 2 Examples of State and Territory expenditure on building and
construction
The New South Wales Government's annual capital works and maintenance program is
approximately $6.5 billion. Expenditure on asset acquisitions and maintenance for the
2001-02 financial year included:
Infrastructure
⢠roads $1570 million;
⢠electricity $1050 million;
⢠other transport $930 million;
⢠water $260 million; and
⢠environment protection $400 mi llion.
Buildings
⢠health $730 million;
⢠education $550 millim; and
⢠housing $390 million .21
For 2001-02 the Western Australian Government's planned Capital Works Program
totalled $3.3 billion. 22
In 2000-01 the gross fixed capital expenditure for the Tasmanian Government sector
was $280 million. The expenditure was on:
⢠other dwellings $16.8 million;
⢠other construction $138.3 million;
⢠equipment other than Transport $78.1 million; and
⢠transport Equipment $46.9 million. 23
In 2001 $224 million was spent by the Northern Territory Government on new fixed
assets .24
National Perspective Part 1 83
36 The government as a client faces simi lar issues to all other clients. The difference between
government and private clients is their long term , continuous involvement in the industry, and
the potential for their objectives as a client to conflict with broader government objectives.
Governments, as do private clients, have a desire to maximise their return on investment by
completing projects on time and within budget. The community is entitled to expect that the
public sector wil l conduct its business activities with efficiency, expertise, economy, fairn ess,
and impartial ity and with high standards of probity and accountability.
37 A government client is accountable for ensuring that each construction project for which it is a
capital provider:
(a) is delivered within its budget;
(b) is completed on time;
(c) meets the end users' objecti ves;
(d) is managed appropriately from the outset to completion; and
(e) complies with government requirements for probity and accountability.
38 Government clients face issues of risk management similar to the private sector. A govern ment
must be able to identify and manage risks, monitor and measure the performance of
contracted parties, manage the transition from the planning role to the contracting role, and maintain responsibility for any changes to the scope of work. It if does not manage risks
effectively the government could find itself responsible for cost overruns.
39 Governments have the right to choose with whom th ey do business and to determine and
communicate the standards of performance and behaviour they expect from all industry
participants. Codes of practice are a key mechanism that all governments have used to
manage their involvement in the building and construction industry.
40 Often the public sector uses pre-qualification processes for projects over a certain monetary
value. The pre-qualification process requires consideration of factors including value for money,
previous performance in meeting budget and completion deadlines, and adherence to the
relevant code of practice. This is a way in which government can encourage bu il ders,
subcontractors and workers (whether individually or as a collective) to observe the rel evant
code of practice.
National Construction Code
41 Th e National Code of Practice for the Construction Industry (the National Construction Co de)
was introduced on 22 September 1997 to promote best practice in the building and
construction industry. The National Construction Code was jointly developed by the
Commonwealth, States and Territories, and was written by the Australian Procurement and
Construction Council , the national body for policy advice on procurement and construction
industry matters.
42 The National Construction Code is the central code within the industry. It has been adopted by
the Commonwealth Government, and the Governments of South Australia, Tasmania, the
Australian Capital Territory and the Northern Territory. It has been endorsed by the Victorian
84 Final Report of the Royal Commission into the Building and Construction Industry
Government. Although the New South Wales, Queensland and Western Australian Codes do
not adopt the National Code, they complement it and bu il d upon it. No governmen t has
proclaimed a Code inconsistent with the National Code, although there are variations to suit the
priorities and circumstances relevant to particular jurisdictions, as the National Code contemplated. 25
43 The National Construction Code applies to the construction industry which is defined to
include:
all organised activities concerned with demolition, building, landscaping, maintenance,
civil engineering, process engineering, mining and heavy engineering. 26
44 The Code only applies to parties doing business with the Federal Government, or a State or
Territory Government that has adopted the Code, not to the industry as a whole. Construction
companies not performing government work, and employer and employee associations are
not obliged to comply with the Code.
45 The Australian Procurement and Constructi on Council argued that adoption of the Code
' ... expresses a comm itment to deal on ly with organisati ons and personnel in the con struction
industry whose standards and be haviour conform with pri nciples expressed in the Code. In
particular, coercion in any form is prohibited '.27
46 The National Code of Practice expresses the principles which governments agree should
underpin the future development of the bui lding and construction industry in Australia. Those
principles are:
1. Clients have the right to choose with whom they do business and to determine and
communicate the standards of performance and behavior they expect from all
industry participants. 28
2. Business relationships must be built upon the essential qualities of trust, co
operation, equity and honesty These qualities must be reflected at all links in the
contract chain . 29
3. Principles of ethical behavior must be adhered to by all parties, at all times, and at
all levels. Tendering processes must be conducted with commitment, honesty and fairness. Anti-competitive behavior or any other practice which denies other
participants legitimate business opportunities are unacceptable. These practices
are inconsistent with the establishment and maintenance of ethical business
practices which must underlie good working relationships between a client and a
service provider and between service providers. 30
4. A positive commitment to best practice is required of all industry participants. This
commitment will be demonstrated by evidence of continuous improvement; excellent business practices and relationships; effective organisational systems
and standards; exceptional people management policies and practices; and,
superior, time, cost and quality outcomes. 31
5. Industry participants are encouraged to adopt a broad-based agenda to improve productivity through the development of workplace and management practices
National Perspective Part 1 85
that are flexible and responsive to the business demands of the enterprise and its
clients' requirements. An Enterprise with this focus will achieve a workplace culture
that is recognized for value, quality, innovation and competitiveness and will be a
preferred partner for clients ' projects. 32
6. OHS & R [Occupational Health Safety & Rehabilitation] obligations must be actively
addressed by all industry participants. Unequivocal commitment to OHS&R
management must be demonstrated in systems that address responsibilities,
policies, procedures and performance standards to be met by all parties involved in
a project and are directly linked to quality OHS&R outcomes. 33
7. .. .industrial relations principles embodied in this Code are to apply to the
construction projects. 34
8. . .. the highest ethical standards must be observed throughout the contract chain.
This specifically includes ensuring the timely progress of the processing,
management and finalisation of claims, payments, retentions and securities due
under the contract for all parties. 35
47 To aid in the implementation of and to supplement the National Construction Code, the
Commonwealth Government issued implementation guidelines in February 1998 and industry
guidelines (based on the implementation guidelines) in March 1998. The guidelines detail
processes that the Government established to monitor and report on the Code. Th e guidelines
are Commonwealth Government guidelines, and do not represent an ag reed position of all
governments. They are more detailed than the Code.
48 The National Construction Code allows the Commonwealth Government to require those
wishing to deal with it to demonstrate compliance with the terms and standards of the Code.
Failure to demonstrate such compliance could resu lt in the deprivation of the right to deal with
government with disadvantageous commercial consequences.
49 The effectiveness of the Code and the possible ways of improving its effectiveness are
discussed in Volume 7, Reform National Issues Part 1, of this report .
State Codes
50 The State and Territory codes of practice are referred to in Volumes 12, State and Territory
Overviews , and Volume 7, Reform -National Issues Part 1, of this report. Briefly, Codes of
Practice for the building and construction industry have been introduced in the States and
Northern Territory, consistent with the principles establ ished in the National Code. Individual
governments tai lor their codes to suit the priorities and circumstances relevant to particular
jurisdictions. The National Code provides the minimum level of compliance.
51 New South Wales - The current code for New South Wales is the Code of Practice for the
Construction Industry (1996) , which reflected the earlier 1992 code for the State. The 1992
code was introduced to use th e State's purchasing power to promote fundamental reforms in the New South Wales building industry. In November 2000 the Minister for Public Works and
Services announced a review of the New South Wales Code to ensu re that its objectives
remained appropriate in the prevai ling environment. A draft of a new code was released in
86 Final Report of the Royal Commission into the Building and Construction Industry
April 2002. The proposed code retains a strong focus on enterprise agreements and project
agreements in the industry. A breach of the code may result in sanctions being applied.
52 Victoria - The Victorian Code of Practice for the Building and Construction Industry (1 999)
describes minimum standards of acceptable practice for the building and construction industry
in its dealings with Government. The Victorian Code endorses the National Code. The Victorian
Code applies to all parties involved in 'public construction' as defined in s3 of the Project
Development and Construction Management Act 1994 (Vic). It must be observed by all parties
involved in such work. The Victorian Code prescribes the conditions which must be observed
by government agencies and statutory corporations in their dealings with the industry.36
53 Queensland - The code for Queensland is the Code of Practice for the Building and
Construction Industry (2000) . The code came into operation in August 2000. It applies to all
government building, construction , maintenance and material supply contracts, consultants,
commissions and government funded projects and sites . The code sets out specific principles
and standards of behaviour that underpin best practice and promotes a shift in industry cu lture
away from the adversarial approach towards a co-operative model. 37 A breach of the code
may result in preclusion from tendering from work for a specified period of time .
54 Western Australia - The code for Western Australia is the Code of Practice for the Bu ilding
and Construction Industry in Western Australia (2002), introduced after a review of the previous
code. The Western Australian Government has stated that it hopes that industry support for
the new code 'wi ll lead to higher safety standards, greater productivity and aims for the
promotion of a cu lture of best practice' .38 While the new code does not contain specific
compliance provisions, there is a Code Monitoring Committee which can receive complaints
concern in g alleged breaches of the code excluding industrial relations matters and matters
being dealt with before the courts or by other formal dispute resolution processes. The
committee has no statutory powers to determine matters and is not a disputes settlement
body. It reports on matters for the benefit of the Minister for Consumer and Employment Protection 3 9
55 South Australia - The code of Practice for the South Australian Building and Construction
Industry came into operation in July 1 995. The Code establishes principles to achieve value for
money for all South Australians by working with the building and construction industry to
improve the way in which business is conducted. There is no specific industrial relations
component in the code. Any sanctions for breaches of the code are applied by the appropriate
Minister.
56 Tasmania - The National Construction Code applies to the building and construction industry
in Tasmani a. Tasmania adopted the National Code in December 1998. Any party wishi ng to do
business with th e Tasman ian Government or work on State Government projects is required to
comply with the National Code40 The Tasmanian annexure to the code adds specific details
relating to Tasmanian circumstances and provides a brief statement of Tasmanian Government
compliance and sanctions methods. The Tasmanian Government submitted that by adopting
the National Code it has committed to deal only with organisations and personnel in the
construction industry whose standards and behaviour conform to the principles expressed in
the code 41
National Perspective Part 1 8 7
57 Australian Capital Territory - The Australian Capital Territory government has adopted the
National Code of Practice for the Construction Industry.
58 Northern Territory - The Northern Te rritory has the Northern Territory Procurement Code
(2000) . The Procurement Code is an adaptation of the National Code. The amendments reflect Northern Territory circumstances and have a broader application to procurement in all
industries 42 The code sets a minimum standard of conduct for business in the Territory and
encourages the adoption of good business practices 43 Compliance with the code is a
condition for tendering for government construction projects. The Northern Territo ry Code
contains compliance provisions that specify sanctions for non-compliance with the code.
Other roles of governments
59 Governments, in addition to the role of client, have policy and regulatory roles .
Policy roles of governments
60 Governments have a long-term interest in maintaining a viab le and internationally competitive
construction industry. Each government seeks to create an environment in which there is the
opportunity for the construction industry to be innovative, efficient and profitable while
demonstrating continuous improvement of core skills and competencies 4 4
61 The construction industry has a critical influence on Australian lifestyle, creating work sites,
recreation places, schools, hospitals and vital economic and social infrastructure such as roads, water and electricity supply and telecommunications. Productivity in allied Australian
industries is heavily reliant on the performance of the building and construction industry.
Included are wholesale and retail trade industries, component, fitting and furnishing
manufacturers and suppliers and commercial and horne finance lending and investment
services. Architectural and engineering professional service industries are also closely
linked to the construction industry. 45
62 The construction industry in Australia must be efficient and competitive if it is to fu lfil its potential
to contribute towards national economic growth.
63 Governments' interest in policy issues relating to building and construction is illustrated by the
large number of reviews relating to the industry, and the amount of government funded
research into building and construction.
Comm onwealth
64 There have been a number of Commonwealth reviews, research programs and policy initiatives
in the building and construction industry including the following:
⢠Industry Commission, Construction Costs of Major Projects, 1991;
⢠Construction Industry Development Agency, 1991 to 1995;
⢠Productivity Commission, Work Arrangements on Large Capital City Building Projects,
1999; and
88 Final Report of the Royal Commission into the Building and Construction Industry
⢠National Building and Construction Industry Council and the Commonwealth Building and
Construction Industries Action Agenda, launched in 1999 and sti ll being implemented.
35 A discussion paper produced by the Commission on these reviews is at annexure 2 in Volume
4, National Perspective Part 2, of this report. Commonwealth initiatives to implement policy
related to the building and construction industry have been continuous (chart 14).
Chart 14
Policy actions by the Commonwealth
r
I
I
I
I
L
1991-95
Construction Industry Development Agency (CIDA)
Established to implement the industry reform agenda and develop a consistent set of standards for
the selection of service providers to allow clients to use their market position to demand change.
' 1995-97
Australian Construction Industry Council (ACIC)
The ACIC comprised industry, union and government representatives and
succeeded CIDA in its Construction Industry Reform Strategy
+
1997-99
National Building and Construction Committee (NatBACC)
Responsible for the development of the Building and Construction Action Agenda4 6
1
1999-present
Australian Construction Industry Forum (ACIF)
A peak body representing the interests of the industry, implementing the Action Agendas47
National Perspective Part 1 89
66 NatBACC comprised representatives from major industry, commercial and professional groups
in the building and construction industry. The focus of the Action Agendas was to identify and
address impediments to growth in the industry. NatBACC produced a series of resea rch
reports.
67 The Action Agendas, were designed to create a more value focussed market place in five key
areas:
⢠creating a more informed marketplace;
⢠maximising global business opportunities;
⢠fostering technological innovation;
⢠creating economically and ecologically sustainable environments; and
⢠creating a best practice regulatory environment. 48
68 The Government accepted the recommended Action Agendas put forward by NatBACC and
they are being implemented. To assist with implementation of the Action Agendas, the
Australian Construction Industry Forum (ACIF) was established. The Government has
committed $3.6 million for the Action Agenda initiatives.
69 The Commonwealth has undertaken initiatives with State Governments and industry to review
other issues related to the building and construction industry, such as training. These reviews
are discussed in other volumes.
State and Territory
70 The States and Territories have demonstrated an interest in policy development in the bu ilding
and construction industry. The Royal Commission into Productivity in the Building and
Construction Industry in New South Wales (the Gyles Royal Commission) and the Victorian
Economic Development Committee were major reviews conducted at the State level. The
Gyles Royal Commission was established in 1991 to review productivity in the building industry
in New South Wales. It produced a final report in 1992. It focussed primarily on illegal activities
within the industry and industrial relations issues, which it saw as the main impediments to
efficiency and productivity. The main recommendations were:
⢠investigation and prosecution (civil and criminal) through the Building Industry Task Force;
⢠the Building Workers' Industrial Union (BWIU) be reformed or deregistered;
⢠the Government, as a client, take the lead in reform; and
⢠a Ministry of Construction be established.
71 Commissioner Gyles recommended the adoption of two principal strategies, namely, the
re-establishment of the rule of law in the building industry, and the use of the State's purchasi ng
power to influence change within the industry49
72 In response to the level of criminal activity and industrial disputation, a Building Industry Task
Force was established during the life of the Gyles Royal Commission. The Bui lding Industry
Task Force was assigned responsibility for investigating criminal and civil matters identified in
the final report; and for starting legal proceedings where it believed there was sufficient
90 Final Report of the Royal Commission into the Building and Construction Industry
evidence . Special attention was to be given to practices, such as collusive tendering , 'no ticket
no start', payment for lost time, second ary boycotts, intimidation and abuse of safety
legislation. It was to co-ordinate civil proceedings on behalf of Government, an d liaise with the
New South Wales ·Crime Commission and Commonwealth Trade Practices Commission
regarding organised and sophisti cated crimes and anticompetitive practi ces in the New South
Wales building and construction industry50
73 Consistent with Commissioner Gyles' recommendation that the New South Wales
Government, as a client , take a lead role, the Construction Agencies Steering Committee was
established to co-ordinate and facilitate the overhaul of government standards and policies,
and to develop consistent building, consultant and contractual policies to be implemented by
government agencies 51 As a result of a joint effort by construction agencies through the
Construction Policy Steering Committee, the New South Wales Government published the
Code of Practice for the Construction Indu stry, and associated Code of Tendering, as the
principal means of utilising the State's purchas ing power to promote reforms in the industry. 52
74 In 1992, pursuant to the Parliamentary Committees Act 1968 (Vic), the Economic Development
Committee (EDC) was constituted to inquire into the Victorian building and construction
industry. The EDC produced six reports for Parliament on the corruption of the tendering
process, evidentiary powers of parliamentary committees, code of tendering , security of
payments and a final report, including a report on union assets.
75 There have been reviews considering reform arrangements for providing security of payments
by State Governments in New South Wales in 1996 and 2002, and in Queensland and Western
Australia in 200 1. State and Territory Governments have undertaken numerous other initiatives
to improve work place health and safety in the building and construction industry, and develop
Codes of Practice, training and design initiatives.
Regulatory roles of governments
76 Governments use reg ul ation to implement their policies. The regulatory framework re levant to
the Commission 's Terms of Reference is discussed in chapter 4. This is not the only fo rm of
regulation relevant to the industry.
77 The key instruments include legislation , su bordinate legislation (such as regulations) and
government codes of practice.
78 Local governments for example affect the building and construction industry by pl anning and
building local by-laws and regulations. They have sig nificant powers to control assemblies and
processions. Th is is through the conferral of power to control public places and traffic and to
make by-laws in respect of those matters. 53 This tier of regulation has implications for the
approach to industrial disputes as local authorities may impose penalties for contraven tions of
such local regulations .
79 A sig nificant issue is whether there is conflict arising from the ro les of government as client,
policy maker and regulator.
National Perspective Part 1 91
Industry associations
80 The building and construction industry has numerous industry associations. Some have
national coverage and others small sub-sectoral coverage. Some are peak bodies. These are
listed in box 3.
Box 3 Employer and industry organisations and associations
Air Conditioning and Mechanical Contractors' Association of Australia Limited
Air Conditioning and Refrigeration Equipment Manufacturers Association Australia Inc
Asbestos Removal Contractors' Association
Association of Consulting Architects - Australia
Association of Consulting Engineers Australia
Association of Consulting Structural Engineers of NSW
Australasian Concrete Paving Association
Australian Asphalt Pavement Association
Australian Building Services Association
Australian Bu siness Limited
Australian Chamber of Commerce and Industry (including State and Territory branches)
Australian Contractors Association
Australian Council of Building Design Professions Ltd
Australian Elevator Association Ltd
Australian Employers Federation, The
Australian Industry Group
Australian Institute of Building, The
Australian Institute of Building Surveyors, The
Australian Institute of Quantity Surveyors, The
Australian Pi peline Industry Association Inc
Australian Shop and Office Fitting Industry Association
Australian Stabilisation Industry Association
Australian Stainless Steel Development Association
Australian Steel In stitute, The
Australian Underground Construction and Tunnelling Association
92 Final Report of the Royal Commission into the Building and Construction Industry
Building and Construction Council NSW Inc
Building Designers .Association of Australia Ltd. (including State and Territory branches)
Building Industry Specialist Contractors Organisation of Australia (including State and Territory branches)
Building Science Forum of Australia NSW Division
Business Council of Australia
Business SA
Cement and Concrete Association of Austral ia
Cement Industry Federation
Ceramic Industry Association of Australia
Chamber of Commerce and Industry Western Australia
Civil Contractors Federation
Clay Brick and Paver Association of New South Wales
Concrete Institute of Australia
Concrete Masonry Association of Australia
Concrete Pipe Association of Australasia
Construction Industry Engineering Services Group Ltd
Confederation of A.C.T. Industry
Crane Industry Council of Australia (Inc in NSW; including State associations)
Crushed Stone and Sand Association of NSW
Demolitions Contractors Association of Victoria
Electrical Contractors Association of Western Australia Incorporated
Electrical Contractors Industry Association Tasmania
Electricity Association of New South Wales
Employers' Federation of New South Wales
Eng ineering Employers Association of SA
Federation of Australian Concrete Pumping Associations (including State and Territory
branches)
National Perspective Part 1 93
Federation of Watt and Ceiling Industries of Australia and New Zealand (including State
and Territory branches)
Fire Contractors' Federation
Glass and Glazing Association of South Australia Inc
Hardware Association of Queensland
Hardware Federation of Australia
Housing Industry Association Limited (i ncluding State and Territory branches)
Landscape Industries Association of Australia Inc
Master Builders Australia Inc (including State and Territory branches)
Master Painters Australia Ltd
Master Plasterers' Association of Western Australia Union of Employers
Master Platers, Tilers & Shingters Association of New South Wales Inc
Master Plumbers' and Mechanical Services Association of Australia, The
Master Plumbers Australia Limited (including State and Territory branches)
Master Stonemasons Association Victoria Inc
Master Tile Layers Association of SA Inc
National Electrical and Communications Association (including State and Territory
branches)
National Precast Concrete Association Austra lia Inc
Process Engineers and Constructors Association Inc
Property Council of Australia
Royal Australian Institute of Architects, The
Southern Gold Coast Chamber of Commerce, The
Structural Steel Fabricators' Association, The
Surface Coatings Association Australia Inc.
Victorian Congress of Employer Associations
94 Final Report of the Royal Commission into the Building and Construction Industry
81 These groups form part of the technical support infrastructure of the industry through the
provision of policy advice and business services. Theoretically they provide a collective voice for
smaller firms such as subcontractors. In practice, the extent of subcontractors' involvement
depend s on the consultation mechanisms used within the employer and industry
organ isations . Overall , the divers ity of these groups provides a challenge for the industry to
present cohesive input into policy debates. It is difficult to identify any one organisation that
represents a particular group within the industry as there is overlap in types of businesses
represented by many of the organisations . A financial analysis of the principal employer associations is inclu ded at attachment 1.
82 Employer associations play a formal role in industrial relations when registered under the
Workplace Relations Act 1996 (C'wth). Reg istration brings with it certain rights and obligations.
Registration of associations is regulated under Part IX of the Act. Upon registration under s1 92, an organisation:
(a) is a body corporate;
(b) has perpetual succession;
(c) has power to purchase, take on lease, hold, sell, lease, mortgage, exchange and
otherwise own, possess and deal with any real or personal property;
(d) shall have a common seal; and
(e) may sue or be sued in its registered name.
83 Part X of the Workplace Relations Act 1996 (C'wth) deals with the cancellation of reg istration of
registered organisations.
84 In the building and construction industry the following employer organisations are registered
under the Workplace Relations Act 1996 (C'wth):
(a) Australian Industry Group;
(b) Civil Contractors Federation;
(c) Master Builders Association of South Australia Inc;
(d) Master Builders Association of New South Wales Inc;
(e) Master Builders Association of Tasmania Inc;
(n Master Builders Association of Victoria;
(g) Master Builders Construction and Housing Association of the Australian Capital Territory;
and
(h) National Electrical and Communications Association.
85 Employer associati ons and trade unions whi ch operate in the building and construction
industry may be registered under State workplace relations law. These associations are
separate legal entities from those registered under the Workplace Relations Act 1996 (C'wth).
Each State workplace relations law specifies the rights and responsibilities of those
associations.
National Perspective Part 1 95
86 The major general associations, covering more than one trade or sector include:
(a) Australian Constructors Association (ACA)-members include a significant number of
large national head contractors;
(b) Master Builders of Australia Inc. (MBA lnc)-members of the national body are the State
and Territory Master Bui lders Associations. Members of the State and Territory
associations include large employers across the commercial sector, and small employe rs
and subcontractors involved in all sectors of the industry;
(c) Civi l Contractors Federation (CCF)-members comprise contractors working on civil eng ineering projects;
(d) Housing Industry Association Lim ited (H IA)-members include residential build ers,
developers and commercial bui lders, manufacturers and suppliers, contractors, build ing
consu ltants and professional service providers. It offers membership to financ ial institutions, government agencies and students; and
(e) Australian Industry Group (AIG)-members include employers of various industry sectors,
including build ing and construction, with significant involvement in engineering construction .
Australian Constructors Association
87 The ACA was established in 1 994, following the dissolution of the Australian Federation of
Constructors Contractors. It is an association of 15 of the largest head contractors in Australi a.
Members must be construction companies that operate in two or more Australian states and
have an annual turnover in excess of $200 million 5 4 They operate in the residential and
non-residential building markets, engineering construction, process engineering, contract
mining, engineering design, infrastructure development and maintenance, oil and gas
operations and maintenance, telecommunications services and environmental industries 55
88 ACA is incorporated as a company limited by guarantee. ACA is not a reg istered industrial
association and , therefore, does not represent its members in negotiations on workp lace
arrangements. It has an agreement that the AIG provides industrial relations advice on
occasion . AIG organised a working group of ACA members' in dustri al relations managers to
make contributions to the AIG submissions to the Royal Commission 5 6
89 The ACA mission states that members are ' .. . dedicated to making the construction industry
safer, more efficient, more competitive and better able to contribute to the development of
Australia' 5 7 Its objectives are:
(a) To require the highest standards of skill, integrity and responsibility of member
companies.
(b) To represent the interests of major contractors to government and other decision
makers.
(c) To enhance and promote the status of construction contractors and the industry
they serve.
(d) To faCilitate the exchange of information and. encourage furth er research. 58
96 Final Report of the Royal Commission into the Building and Construction Industry
90 The ACA has a Code of Ethics that its members agree to abide by:
(a) Honesty and integrity - Association members shall undertake all business dealings
with honesty and integrity;
(b) Fair and Healthy Competition - The Association shall promote fair and healthy
competition between members and throughout the industry;
(c) Confidentiality and Intellectual Property - Association members will respect
intellectual property rights and maintain confidentiality in their dealings with each
other and with clients, consultants, sub-contractors and suppliers;
(d) Tendering Practices - Association members wiJ/ not engage in practices such as
collusion, hidden commissions, unsuccessful tender fees or any other secret arrangement;
(e) Principles of Best Practice - Members shall adopt best practice principles and
strive for increased productivity and enhanced skills through education and training;
(f) Relationship Contracting - Members shall promote relationship contracting
principles and practices with clients to reduce contractual disputation and add
value for the benefit of all parties;
(g) Payment Practice - Members shall conduct relationships with consultants, sub
contractors and suppliers in an ethical manner, and meet all financial obligations for
payments;
(h) Health and Safety - Members shall provide a safe and healthy workplace for all
employees;
(i) The Community and Environment - Association members shall meet their
obligations to the community arising from construction activity and to protect the
physical environment;
OJ Laws and Regulations - Members shall abide by all laws and regulations affecting
the industry and shall promote improvements to such laws, regulations and
subordinate legislation. 59
91 The Chief Executive of each member company is a Director on the ACA Board.
Australian Industry Group
92 The Australian Industry Group is an independent industry and employer representative body,
which has over 10 000 member companies throughout Australia . Its members belong to the
manufacturing, construction, engineering and service industries60 AIG has relationships with
owners of projects, head contractors and subcontractors within the building and construction
industry. AIG's involvement in building and construction is mainly within the engineering
construction sector, but it has some members in building.
National Perspective Part 1 9 7
93 AIG is represented on three building and construction industry fund Boards.
(a) The Director of Queensland AIG, Mr David Whiting, is a Director and Secretary of Allied
Unions Superannuation Trust (Queensland) Pty Ltd.
(b) The AIG's former Director, Mr Derek Buckiand, represents AIG as a Director of Australian
Construction Industry Redundancy Trust Fund Pty Ltd.
(c) The Director of Victoria AI G, Mr Paul Fen nelly, is a Director of Co iNVEST Li mited 61
94 The services provided to members include:
(a) strategic planning, design, development, negotiation and implementation of employee
relations structures;
(b) advice and representation to clients, contractors and subcontractors;
(c) occupational health and safety and environment services;
(d) train ing and ski ll s development services;
(e) ri sk identification and management strategies 6 2
95 The AIG provides management and advisory services to the ACA.
Master Builders Australia Inc
96 The MBA Inc is the peak national body for the Master Builders Associations in various states
and territories . The State and Territory Master Builders Associations have over 23 000
members, rangi ng from large multinational and national contractors to small 'husband and
wife' subcontracting businesses. 63 Contractors and subcontractors are not members of MBA
Inc, but are members of State or Territory Master Buil ders Associations 64
97 In I 994 MBA Inc adopted a Nat ional Code of Practice (the MBA Code) now in its second
ed ition . Organisations must comply with the MBA Code as a condition of membership. The
principles of the MBA Code are ' ... independent endeavour and freedom of association ,
enterprise and competition for the benefit of Australia 's economy and quality of life ' 6 5
98 State and Territory Master Builders Associations members work in all sectors of the building
and construction industry. 66
99 MBA Inc objectives include:
1. protect and advance the interests and status of builders, contractors,
subcontractors, suppliers, project and construction managers and other persons
engaged in any capacity in the industry (which is defined to mean the ''Australian
building construction, civil engineering and housing industry);
2. set the highest standards of skill, integrity and responsibility associated with
Membership and maintain and enhance the reputation for skill, integrity and
responsibility of members of Association Members;
98 Final Report of the Royal Commission into the Building and Construction Industry
3. provide an authoritative and representative voice for builders, contractors,
subcontractors, suppliers, project and construction managers and other persons
engaged in the Industry on matters of common interest;
4. establish codes of ethical conduct for builders, contractors, subcontractors,
suppliers, project and construction managers and other persons engaged in the
Industry and use every effort to ensure the observance of such codes by Members. 57
Features and services
100 The MBA website lists 'features and services' provided to members. These include the following:
(a) Techn ical building codes and standards
⢠MBA Inc is a member of some 7 4 industry, technical , regulatory and standards
setting committees, convened by either Standards Australia or the Australian Building Codes Board.
⢠It provides members with information on Australian standards, local authority
requirements , building act requirements, advice on legislation and regulations ,
requirements of the building licensing authorities and trade practices legislation.
(b) Workplace relations
⢠MBA Inc seeks to offer its members a: full range of workplace relations services. It
often appears in AIRC proceedings in relation to the award .
⢠MBA Inc provides telephone advice on new events and specific local industrial
conditions. It may become involved in negotiations with unions, on -site audits,
advocacy and preparation of documents.
⢠MBA Inc lobbies government and is a member of the National Labour Consultative Council.
⢠State and Territory associations offer members advice and representation for:
industrial disputes; award conditions; employment legislation, including workers
compensation, annual and long service leave and discrimination; enterprise
agreements; unfair dismissals; apprenticeships; site allowance claims; redundancy;
and superannuation.
(c) Training and employment
⢠MBA Inc offers education and training packages on: occupational health and
safety; supervisory and management skills; industrial relations; negotiations and
mediation; technical sem inars; use and administration of contracts; and application
of the partnering concept on construction projects.
(d) Apprenticeship services
National Perspective Part 1 99
⢠All members of the industry can employ apprentices indentured to MBA Inc group
training companies. Bui lders and subcontractors can employ apprentices from one
week up to full indenture term without normal administrative overheads.
(e) Legal Services
⢠MBA Inc has written and published a comprehensive set of contracts and
subcontracts used widely in the building and construction industry. Th ese are for
small building works through to major commercial and civil engineering
construction projects. MBA Inc jointly publi shes contracts with the Royal Australian
Institute of Architects, Standards Australia and the Property Council of Australia.
⢠It is a member of Standards Australia Contracts Committees and the Joint Contracts Committee.
⢠MBA Inc publishes 'Advice Notes' and 'Practice Notes' for contracts interpretation,
use and administration .
(0 Superannuation
⢠MBA Inc holds di rectorships on the superannuation fund, Cbus.
(g) International Division
⢠MBA Inc International Division provides programs including a trade mission
program and a business matchin g program , which sets up business appointments
for Australian fi rms with potential overseas partners.
⢠It has a diagnostic program for firms considering exporting, or who have had tro uble entering export markets. It conducts export forums featuring key speakers.
Housing Industry Association
I 01 HIA has approximately 30 000 member businesses. It is the peak national industry association
for businesses in the residential building, renovation and development industry (single,
detached and multidensity). HIA members employ almost 300 000 people, or 3.5 per cent of
the total nati onal workforce. Sales revenue from HIA members totals approximately $33 billion ,
or 4.4 per cent of Australia's gross domestic product. 68
I 02 HIA, as a matter of policy, has not sought to be registered as an industrial association under
Federal or State law. Th is pol icy was adopted so that its members would not automatically be
bou nd as parties to any federal awards 69
I 03 Wh ile HIA is fundamentally an association for the housing industry, it has some experience in
the commercial bui lding area. HIA has supported and assisted many members who have had difficulty working on union-controlled building sites?O
Civil Contractors Federation
104 CC F is a national body with a national office and State and Territory branches, together with
19 regional divisions across Australia 71 CCF is the major representative body of civil
engineering contractors. In 2001 civil engineering contractors throughout Australia were
l 00 Final Report of the Royal Commission into the Building and Construction Industry
involved in construction and maintenance work worth approximately $13 000 million. Most of this work involved public infrastructuren
105 CCF represents about 1250 members and 450 associate members. Its members employ more
than 40 000 people.l3
106 Industrial relations matters are handled by both national and state offices. The national office has responsibility for overseeing al l relevant federal award matters, such as award variations in respect of wages and conditions, award simplification, and safety net adjustments 7 4
107 Membership of CCF requires adherence to a code of ethics. It is a condition of membersh ip
that members comply with the following objectives:
(a) Members will not engage in any activities designed to cause injustice or oppression
in the fair and proper execution of such civil construction works as they may
undertake.
(b) Members will endeavour th rough honest and forthright dealings to secure, maintain
and improve favourable trade relations with all public authorities, manufacturers,
suppliers and distributors of goods materials and/or services either within Australia or abroad.
(c) Members will at all times maintain and enhance the reputation for skill, integrity and
responsibility of the members of th e Federation and to ensure the highest
standards of skill, integrity and responsibility expected of members of the Federation.
(d) Members will make all reasonable efforts to maintain and improve relations
between members and their employees with a view to the avoidance of industrial
unrest and strikes, and to take all such s teps as may be considered desirable in the
settlement of strikes and industrial disputation by their employees.
(e) Members will endeavour to secure amongst members all the advantages of unity of
action in any lawful manner whatsoever.
m Members will recognise and behave in accordance with the Federation's code of ethical behaviour for contractors. 75
Nati onal Electrical and Communications Association
1 08 NECA is a national employer organisation registered under the Workplace Relations Act 1996
(C'wth) . It has about 5500 members, all of whom operate as electrical or communications
contractors, with chapters in each State and Territory. 76
109 The objects of the NECA as stated in its rules include:
(a) To conserve and further the legitimate interests of its members.
(d) To prevent and/or settle disputes between members or between the Organisation
and any employee or body of employees by conciliation and/or other lawful means.
National Perspective Part 1 0
(lj To undertake, defend or intervene in any proceedings in any Court or Commission
of law or arbitration which in the opinion of the Organisation affects or may affect the rights or interests of its members or persons eligible to be members or any of
them. 77
Air Conditioning and Mechanical Contractors' Association
11 0 AMCA members are specialist ai r conditioning and mechanical services contractors who do
not work in the residential building sector. They generally tender to and work for builders78 and
employ plumbers for on-site construction work.
111 At the national level AMCA is a federation of state organisations. Each of the state
organisations is a separately incorporated body, either established as a company limited by
guarantee under the Corporations Law, or alternatively, an incorporated association.
11 2 The objects of its members include:
1. Engage competent highly trained specialists to evaluate the technical reqwrements
of specifications and the technical merits of works and to deliver to the clien t, a project which is correctly engineered, completed on time, within budget and with
minimisation of life cycle costs.
2. Meet all contractual and legal obligations including compliance with releva nt
legislation, Australian Standards and Codes of Practice. This in particular in cludes
those wh ich apply to environmental and health and safety issues.
3. Implement and maintain correct business and management practices, together
with adequate asset backing, to ensure financial accountability and financial
stability
4. Implement the appropriate standards of quality assurance.
5. Encourage education, training and advancement of employees including
apprentices, tradesperson, engineers and administration staff to ensure a
competent and multi-skilled workforce within equal opportunity guidelines. 79
Head contractors
113 The head contractor is responsible for delivering the project on time and within budget,
managing the construction work and co-ordinating the work of the subcontractors supplying
specialist services. Usually, the client will have direct contact only with the head contractor. The
reason for this is the nature of contractual relationships, and fear of attracting liability if the cl ient
intermeddles with subcontractors. As AIG submitted:
Head contractors are not usually the direct employers of the vast majority of labour on a
construction project. Head contractors are responsible for the project overall and th ey typically have a direct contractual relationship with major subcontractors undertaking
packages of work. The subcontractors, in turn, have a contractual relationship with sub
subcontractors who perform the bulk of the work on a project. 80
1 02 Final Report of the Royal Commission into the Building and Construction Industry
114 The Victorian Auditor-General's Office made the following observation in relation to VicRoads:
... VicRoads maintained that its contractual relationships are with the prime contractors. It
explained that it has no contra ctual obligations with sub-contractors who enter into quite
separate and distinct contractual arrangements with the prime contractor. VicRoads also
considers that any direct involvement by it with sub-contractors could result in an
exposure to potential legal action against it by prime contractors in the event of contractual disputes. 81
115 This is a commonly held view.
116 The tight profit margins in the industry have led head contractors to seek avenues to redu ce
risks wherever possible. Head contractors are usually reimbursed if a clie nt causes costs to
rise, for example, by varying the design . Cost increases not attributable to either party are
so metim es shared. For example, del ays caused by inclement weather and industrywide strikes
typically entitle head contractors to time extensions and thus exemption from liquidated
damages . In such cases, some of the costs of extending the project are still borne by the head
contractor. In contrast, head contractors are usually liable for most delay costs when it is
caused by a site-specific dispute. Such a cost is generally sought to be passed down the line
to any relevant subcontractor.
117 The MBA Inc opening submission to the Commission contended that: 'achieving ind ustrial
relations harmony so as to minimise their commercial risks is uppermost in the minds of head
contractors' 8 2
118 Outlin ed in attachment 2 is a descri ption of the 15 head contractors that are ACA mem bers.
Th is does not include all head contractors but it illustrates the type of companies , and their
activities, operating in the building and construction industry.
Subcontractors
119 Subcontracting in the building and construction industry involves any of the following
arrangements:
(a) subcontracting businesses th at employ workers under award and agreement wages and
conditions or sub-subcontract others when needed;
(b) self-employed individual subcontractors who seek work individually (in dependent
subcontractors); or
(c) self-employed individual subcontractors who seek work through employment agencies .
120 Self-employed contracting in the industry takes several forms. Some individuals contract their
labour with tools of the trade to builders and building subcontractors. Other contractors are
supplied by manufacturers with materials such as doors and tiles. A less common arrangement
involves workers who also supply plant and equipment.
121 One iss ue addressed by the Commission is the distinction between employees and
contractors and the implications of this distinction for the rights of workers, the obligations of
employers and the collection of government revenu e. These issues are discussed in the later
vo lumes on national issues reforms.
National Perspective Part 1 I 03
122 Over the past 20 years there has been a steady emergence of non-traditional working
arrangements, including temporary workers such as casual and part-time employees and
subcontractors, and labour hire companies.83 The construction industry is characterised by a
large number of businesses that rely on outsourced work. While the level of subcontracting
appears to be increasing in many industries the use of subcontractors in building and
construction is very high. The Construction, Forestry, Mining and Energy Union (CFME U)
stated:
ABS research indicates that the construction industry experiences a higher degree of
contracting and subcontracting than most other industries. In the case of sub
contracting, the recent White Paper on the construction industry in NSW (July 1998)
estimated that sub-contractors now delivered between 75% and 85% of the product of
the industry. The White Paper suggested that:
⢠up to 20 specialist skilled sub-contractors are employed on a residential housing
project; and
⢠up to 200 specialist sub-contractors may be involved on a major construction site.
Th1s indicates that work is organ1sed into small, often ISolated packages. The growth of sub
contracting has been associated with shorter contract cycles and specialisation. It has been
noted that sub-contractors often lack the necessary business management skills. 84
The nature of the subcontracting sector
123 On large capital city projects there is usually a complex chain of contracts between the cl ient,
head contractors and subcontractors. Management of construction work is performed by the
head contractor. However, most of the construction work is sub-let to subcontractors, who employ aroun d 90 per cent of the workers on site 8 5 Subcontractors may employ workers
under awards or agreement wages and conditions, or independent subcontractors may seek
work individually or through employment agencies 86
124 Subcontractors tend to be small businesses. The building and construction industry has the
fourth largest number of businesses and second lowest number of employees in each
business. 87 In 1999-2000 construction businesses with employees employed an average of
4.6 people88 If businesses with no employees (that is, sole traders) are included, the average
is only 2.5. Of the 194 300 businesses in 1996-97, most were in construction trade servi ces
(158 000 or 81 per cent) with average employment of 2.3 people 89
125 Many subcontractors provide construction trade services, which include specialist trades th at
cover:
(a) site preparation , for example, demolition, earthmoving, land clearing and trench digging;
(b) bui lding structure servi ces , for example, concreting , bricklaying , roofing and structural
steel erection;
(c) installation trade servi ces , for example, plumbing, electri cal, air-conditioning and heating,
and fire and security systems; and
l 04 Final Report of the Royal Commission into the Building and Construction Industry
(d) building completion services, for example, plastering, carpentry, tiling and carpeting,
painting and decorating, and glazing.
126 Table 7 illustrates the average size and economic characteristics of these businesses.
Table 7
Construction trade services
Units Site Building Installation Building Other Totals
preparation structure trade competition construction
services services services services services
Average employment No. 2.7 2.3 2.9 1.8 2.4 2.3
Average wages $ '000 48 .9 30.4 58.2 14.7 27.6 30.8
and salaries
Averag e turnover $'000 270.2 157.5 260.7 94.6 156.4 159.9
Average income $ '000 274.3 158.9 263.5 96.0 155.2 161 .6
Average operating $'000 251.7 134.8 235.9 71 .9 131.7 136.7
expenses
Average profit $'000 23.5 24.0 27 .9 23.7 23.7 24.8
Average net worth $ '000 46.6 13.8 33.5 19.7 15.4 22.9
Average gross product $'000 111 A 64.1 98.7 41.2 58.9 64.1
Source: ABS 1999 (Private Sector Construction Industry: Australia, 1996-97, Cat. no. 8772 .0)
127 Within each of the five areas of construction trade services the ABS data show there are many
small firms and a few large ones. For example, in site preparation services there are 6400 firms
with fewer than five employees (employing 11 600 people) and 1 00 firms with more than 20
employees (employing 2900 people). This pattern is repeated in the other trades. 90
128 Because of the number of firms and the pressure exerted by head contractors the
subcontracting sector is highly competitive .
. . . throughout all levels of the industry, contractors and sub-contractors operate on very
small profit margins. This originates at the top level, where head contractors tender on
the basis of small profit margins or, often, at cost ... . As a result, for a head contractor to
ensure profit at the end of a project, considerable pressure is often applied by the head
contractor with the aim of reducing the castings provided by tendering sub-contractors.
This same process is then replicated down the cha1n of sub-sub-contractors. 91
Level of subcontracting
129 The buildi ng and constructi on industry has currently more owner managers and own account
workers than any other industry (charts 15 and 16). There were 341 000 owner managers in
National Perspective Part 1 1 05
bu ilding and construction in November 2001 9 2 This comprised both incorporated and
unincorporated enterprises. In particular, the number of unincorporated businesses with owner
managers was 234 000; more than any other industry. These numbers included housing
developments where there were a large number of unincorporated businesses.
Chart 15
Number of owner managers of enterprises, November 2001 ('000)
350
300
250
200 175 1-----------1
150
100
50
0
Ol c
:.c
""
Ol c
c
:2
> Q_ Q. :::J
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Owner managers of unincorporated
- c
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Source: ABS 2002 (Forms of Employment: Australia, Sept 2002, Cat. no. 6359.0)
130 The Australian Bureau of Statistics defines an own account worker as:
c
0
'-' :::J D w
'-' 2: ill c
c :::J E E 0 '-' D c "' £ Cll Q) I
A person who operates his or her own unincorporated economic enterprise or engages
independently in a profession or trade, and hires no employees (this category was formerly entitled self employed). 93
131 Based on ABS statistics on own account workers, in August 2002, 30 per cent of the
workforce in the building and construction industry were independent contractors, compared with ten per cent of the workforce nationally94
1 06 Final Report of the Royal Commission into the Building and Construction Industry
Chart 16
Number of labour force classified as own account workers, August 2002 ('000)
250
206.5
200 1------ - ---
150
100
50
0
Ol c
E
Ol c
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Source: ABS 2002 (Labour Force: Australia, Aug 2002 , Cat. no. 6203.0)
c Q)
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132 The number of own account workers in the construction in dustry increased by 75 900 between
May 1985 and May 2002. ABS reports show that this is a much higher rise, both in percentage and
absolute terms, than for any other industry.95 From May 1985 to May 2002 the number of
independent contractors in the building and construction industry grew by 60 per cent, compared
wi th 23 per cent growth nationally across all industries% The nu mber of own account workers rose
significantly from May 2000 as is shown in chart 17. This narrowly preceded the introduction of the
GST in July 2000 and the Sydney Olympics in September 2000.
National Perspective Part 1 1 07
Chart 17
Number of own account workers- 1985 to 2002. ('000)
250
200
150
Agriculture, forestry, and fish ing (01 1-042)
Retail trade (51 1-532)
Construction (411-425)
Average for all industries
..... ---
198.4 '"'"""..- ..............
---, ..... ___ _
112.4
100
73.7
50
U) CD '- 0) m 0 o; N co
.,. U) CD '- ro m 0 0 ro ro ro ro ro 0> m m m m m m m m 0 m m m 2' m Q) m m m 2' m m m m m 0 0 N N "' "' "' ;., ;., ;., ;., ;., ;., ;., <1l <1l "' "' <1l OJ "' "' <1l "' "' "' "' "' "' <1l <1l 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
201.8
165.0
101.3
9 1. 0
N 0
0
N
"' 2
Source : ABS 2002 (6291. 0.40 .001 Labour Force (SE) Self Employed- Australia- Quarterly- Labour Force-Own Account Workers- Australia, Aug 2002, Cat. no. 6291 .0)
133 Finally, the prevalence of subcontractors in the building and construction industry does not
appear to be localised to one State or Territory, as shown in chart 18.
1 08 Final Report of the Royal Commission into the Building and Construction Industry
Chart 18
Number of own account workers by State and Territory ('000) - August 2002
⢠Constructio n D State Average per industry (All industries)
80
70
603
60
50
40
30
20
10
0
0.7
NSW Vic Old SA WA Tas NT ACT
Source: ABS 2002 (6291 .0.40.001 Labour Force (SE) Self Employed -Australia- Quarterly- Labour Force Own Account Workers- Tables 1 c), 2c) 3c), 4c), 5c), 6c), 7c) , 8c), Aug 2002, Cat. no. 6291.0)
Labour hire companies
134 Labour hire firms operate by supplying labour to other companies, their 'clients'. Workers
employed by labour hire firms typically contact the labour hire firm to determine availability of
work. Workers are usually paid an hourly rate and are hired on a casual basis. There are three
operational models for labour hire firms.
⢠The first involves labour hire firms hiring self employed workers to clients. This model was
adopted by the labour hire firm Troubleshooters. Clients pay an hourly rate for labour, which includes a commission with an 'all in' rate paid to the worker. Under this model,
workers are responsible for all their own costs, including taxation, workers compensation and superannuation. There is no award based regulation under this model . Empl oyees
are not protected under standard employment contracts. Under this model the worker is
not employed by either the labour hire company or the client.
⢠The second form of labour hire involves the client of the labour hire firm employing a
worker as a 'temp' or 'agency' worker. The worker becomes a casual or temporary
employee of the firm where he or she is sent. The firm in return pays a commission, often
a percentage of the hourly wage, to the labour hire firm . The client bears normal empl oye r
responsibilities for the temporary employee such as abiding by employment regu lation (for example award conditions) with respect to wages, conditions and payroll tax. This
form of labour hire is usual ly related to white collar employment.
National Perspective Part 1 1 09
⢠The third form of labour hire involves a labour hire firm itself employing workers but
contracting their services to the 'client' firm. A commercial contract exists between the
labour hire firm and the 'client' firm . Employees are paid an hourly rate by the labour hire
firm but work under the direction of the client firm. The workers remuneration and
conditions (such as superannuation and long service leave) are subject to award
conditions or to an agreement negotiated with the labour hire company97 Under this
model the worker is an employee of the labour hire firm.
Unions
135 Trade unions are periodically formed to utilise the collective strength of the membership to
counterbalance the power of employers. The principal unions operating within the scope of my
Terms of Reference are:
⢠The Construction, Forestry, Mining and Energy Union (CFMEU);
⢠The Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and
Al li ed Services Union of Austral ia (CEPU);
⢠The Australian Workers' Union (AWU);
⢠The Automotive, Food, Metals, Engineering , Printing and Kindred Industries Un ion,
referred to as the Australian Manufacturing Workers Union (AMWU).
136 The CFMEU is the largest and most active union on large building projects. It also operates on some civil construction sites. 98
137 The CEPU is the second major union representing employees on large capital city building
projects, its members are involved in electrical, plumbing and roofing activities. The AWU 's
pri ncipal area of coverage in the in dustry is on civi l construction projects, such as tunnels,
bridges and road making. The AMWU has coverage of civi l construction sites, for workers in
metals and engineering manufacturing 99
138 A summary of the governance arrangements and objects of all major unions in the bu ilding and
construction industry is included at attachment 3.
Membership
139 The level of union membership varies between different sectors within the building and
construction industry. Anecdotal information is supported by evidence gathered by the
Commission indicating that union membership is much higher on large inner-city construction
sites than it is in the construction of single dwellings.
140 Mr Andrew Ferguson, the New South Wales state secretary for the CFMEU stated:
Let's say in the central business district, there is a higher level of union membership,
there's higher levels of expectation by workers in relation to union agreements. 100
141 In 1999, the Productivity Commission Report found uni on membership on large CBD bu ilding
projects to be 'almost 1 00%' .101 The evidence before this Commission supports this finding.
11 0 Final Report of the Royal Commission into the Building and Construction Industry
142 Chart 19 shows the general trend of declining membership of trade unions across all industries.
Creighton and Stewart confirm that membership of unions in Australia has dropped
significantl y. 102 Over the years shown, the proportion of trade union membership in the
construction industry has been sim il ar to that for all industries. In the two years to August 2000
there was a rise in the number of trade union members in the construction industry, from
1 00 600 to 116 200. Th is fell to 106 800 by August 2001. The proportion of trade union
members in building and construction and nationally for all industries at August 2001 was the
same at 24.5 per cent (chart 20). However, as the single dwelling sector, where unionisation is
low, is not within my Terms of Reference, these figures understate the proportion of employees
with union membership for those sectors of the industry under review by the Commission .
143 As at August 2001 a higher proportion of fu lltime employees (29 per cent) than part-time
employees (11 per cent) were trade union members in the building and constru ction industry.
Across all industries a much higher proportion of female employees were trade union members
(23 per cent) than in building and construction (4 per cent). 103
Chart 19
Union membership comparing percentage share in construction indust ry with all ind ustries, August 1992 to August 2001
50 ,---------------------------------------------------------------,
- Construction - - All industries
20 r---------------------------------------------------------------
10 r---------------------------------------------------------------
1992 1993 1994 1995 1995 1997 1998 1999 2000 2001
Source: ABS 2002 (Australia Now, Construction, Union Membership, Jan 2002)
Note: These numbers represent a proportion of union members surveyed at an appointed time during August of each year.
National Perspective Part 1 i i i
Chart 20
Union membership by industry, August 2001
50
40
Q)
30 Cl <1l c Q) 2 Q) 20 c.. 10
0
OJ c
E 2
D c
"' c Ui .2
[Ll
E ::J u <(
48.3
30.8 30.4
c: .Q t5 s Vl c 0 (.)
(JJ
ro Vl
(JJ
0
L
s
38.6 39 .3
(JJ Ol l"
0
Ui D c
"' t 0 0. Vl c
22.3
c
l" ::J (/) .S D c "' (JJ u c "' c i.L
c <])
0 u
-.;:::; c
E c uro "'
43.6
Vl
<]) u
'2' <]) (/)
.c ·c: ::J E E 0 u D c "' £ m I
(/)
(JJ u
2' (JJ (/)
0
D c:
"' ro c 8
24.5
Source: ABS 2002 (Employee earnings, benefits and trade union membership, Aug 2001: Au stralia, Cat . no. 6310.0)
144 According to Creighton and Stewart, the Australian Council of Trade Union 's (ACTU) res ponse
to the decline in union membership has been two-fold . 'One strategy has focused on
recruitment, with affiliates being encouraged not just to be active in targeting industries or types
of worker where organi sation has been weak , but to improve and expand the services to
members. Secondly, the ACTU committed itself in the !ate 1980s to restru cturin g the union
movement into larger, better-resourced units, setting a target of around 20 ind ustry-oriented
"groupings" for its affiliates' .1 04
145 According to Mr William Shorten, the National Secretary of Th e Australian Workers Uni on, the
'high rate of job casualisation , now accounting for more than 30 per cent of all Au stral ian jobs, has not helped unions arrest membership decline' .105
Construction Forestry Mining and Energy Union
146 CFM EU resulted from a series of amalgamations during the 1 990s, with separate unions
amalgamating along industry lines to form each of the divisions of CFMEU .106 CFMEU was
formed in 1992, with much of the membership and officials of the Construction and General
11 2 Final Report of the Royal Commission into the Building and Construction Industry
Division coming from the former Building Workers' Industrial Union and the Bui lders' Labourers' Federation.
Objects
147 The relevant objects of CFMEU are set out in attachment 3. CFMEU sees its core
responsibilities as the wages, working conditions and safety of building workers .10 7 Key objects
of the CFMEU include:
Structure
1. To uphold the right of combination of labour, and to improve, protect, and foster
the best interests of the Union and its members, and to assist them to obtain their
rights under industrial and social legislation;
2. To regulate the conditions under which all members of the Union may be
employed;
3. To affiliate to, federate with, amalgamate with, or otherwise combine with any trade
or industrial Union, or association, or association of Trade Unions or any other
organisation having objects similar in whole or in part to the objects of this Union. 108
148 The CFMEU is a reg istered organisation under the Workplace Relations Act 1996 (C'wth) with
three main divisions:
⢠The Construction and General Division
⢠The Forest, Furnishing, Building Products and Manufacturing Division (which includes the
FFTS Division , which was restructured into the Forestry Division as of 11 February 2002 109)
⢠The Mining & Energy Division;
and two transitional divisions:
⢠The Furniture Division
⢠The FEDFA Division (FEDFA).
149 The Construction and General Division and the FEDFA are the primary divisions with members
involved in building and construction .
150 The Construction and General Division has nine Divisional Branches: one each in New South
Wales, Victoria, Tasmania, South Australi a, Western Australia and the ACT; two in Queensland
(CFMEU Construction and General Division , Queensland Construction Labourers' Divisional
Branch and CFMEU Construction and General Division, Queensland Construction Workers
Divisional Branch); and the Clay and Ceramics Industry Divisional Branch .110
151 The Clay and Ceramics Industry Divisional Branch is not further discussed.
152 The Divisional Branches in New South Wales , South Australia, Western Australia, Tasmania and
the ACT are named 'The Construction and General Division, X Divisional Branch' where X is the
State or Territory concerned . The Victorian Divisional Branch is named 'The Construction and
General Division, Victorian Building Unions Divisional Branch' .111
National Perspective Part 1 11 3
Financial p ro file
153 The financial analysis of each union is further explained in attachment 1. The financ ial
information included in the following profile, and others below, does not account for state
registered organisations. In brief, the Construction and General Division of CFMEU had total
assets of $54.9 million for the year ending 31 December 2000. 112 Its total liabilities were
$10 million for the same period. 113 It thus had net assets of $44.8 million. 114
154 The Construction and General Division recorded total income from membership subscriptions
of $22.1 million for the year ending 31 December 2000. 115
Size and membership
155 CFMEU has offices in all capital cities in Australia and in many major regional centres. The union
employs approximately 400 fulltime staff and officials. 116 It has more than 1500 elected
delegates or shop stewards on construction projects throughout Australia. 117
156 On 3 April 2002 CFMEU declared to the Australian Industrial Commission that it had 11 0 000
members and employees or independent contractors. 118 However, Sutton's statement dated
21 June 2002 said that the CFMEU had more than 150 000 members across all divisions and
that it is the largest of the unions, in terms of the number of members, working in the building
and construction industry. Membership of the Construction and General Division is claimed to
be about 100 000. 11 9
157 CFMEU covers building tradespeople (including bricklayers, carpenters, plasterers, painters),
skilled non-trades construction workers (crane drivers, steel fixers, operators), and
construction labourers and trades' assistants. It has members who work in brick, tile and
pottery manufacturing and in furnishing trades. 120
158 CFMEU Rules and the Rules for the Construction and General Division define a person 's
eligibility for membership to that division. 121 Under CFMEU Rules, 'A member shall be attached
to the Division of the union covering the industry or employment of the member and shall be in
only one such Division'. 122 CFMEU Rules provide that 'the Union may reach agreement with
any organisation of employees, trade union, industrial organisation, whether incorporated or
otherwise or whether registered under a law of the Commonwealth, State or Territory or
unregistered' that provides for automatic membership of the CFMEU for members of any such
association. 123 The CFMEU can waive the requirement for an entrance fee or whole or part
contributions for members of other associations.
State employee organisations
159 In each state, apart from Victoria, there are organisations of employees registered under state
industrial relations legislation which are the state-based equivalents of CFMEU, or one of its
Divisions. The CFMEU Rules allow for members of state registered unions to be members of
both the organisation registered under the Workplace Relations Act 1996 (C 'wth) and the state
registered union. A number of senior officials in CFMEU are senior officials in a state registered
organisation. For example, Mr Peter Boden Zaboyak is an Assistant Secretary of both the
Construction and General Division, New South Wales Divisional Branch of the CFMEU (federally registered), and of the Construction and General Division of the Construction.
Forestry, Min ing, and Energy Union (NSW Branch) (state registered).
11 4 Final Report of the Royal Commission into the Building and Construction Industry
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and All ied Services Union of Australia
160 The Communications, Electrical, Electronic , Energy, Information, Postal, Plumbing and Allied
Services Union of Australia (C EPU) was established in 1994, as a resu lt of the amalgamation of
ten unions between 1988 and 1994. The major unions forming the CEPU were regi stered
federa lly from 1912. They were preceded by colonial organisations which had existed prior to
1901 . Th e main amalgamation to form the CEPU was between the Electrical and Plumbing Union and the Communication Workers Union in 1994.124
Objects
161 Key objects of the CEPU include (see attachment 3) :
Structure
3. 1 To enrol in the Union persons eligible to be members.
3.2 To advance the interests of members and secure a proper classification structure
with appropriate rates of pay
3.3 To ensure adequate training is available for members including the maintenance of
the principles of the apprenticeship system.
3. 4 To ensure that award rates of pay and other provisions adequately reflect the
training and skills of members. 12s
162 CEPU is registered under the Workplace Relations Act 1996 (C'wth). Th e Ru les of CEPU
provide for three divisions:
⢠the Communications Division;
⢠the Electrical Division (also known as the Electrical Trad es Union Division 126); and
⢠the Pl umbing Division (also known as the PGEU Divis ion121) .
163 The Communications Division is not further discussed.
164 The Electrical Division is often referred to by its members and other persons as the 'ETU'.
165 The CEPU Rules provide for the creation of Divisional Branches of the Electrical and Plumbin g
Divisions. In the case of the Electrical Division, there are Divisional Branches in all States,
except Victoria and Tasman ia; and in the Northern Territory. The members of the union in
Victoria and Tasmania are deemed a singl e Divisional Branch. 128 In the case of the Plumbing
Division, there are branches in each State and the Australian Capital Territory. 129
166 Th e Electrical Division makes provision in its rules for the creation of Sub-Branches by a Divisional State Councii. 13D
167 Each Division is autonomous on matters wh ich affect only that Division and each has its own
set of rules , as does the nati onal organisation. 131 Th e Electrical Division and the Pl umbing
Division 's rules are set out in Section B and C respectively of th e CEPU Rules.
168 The NSW Divisional Branch of the Electrical Division has its own set of registered rules, wh ich
are set out in Section B2 of the CEPU Rules. These rules provide that matters specified in the
National Perspective Part 1 11 5
NSW Divis ional Branch Rules prevail over any inconsistent provision in Section B, Divisional
Rules of the Electrical Divisiona! Rules of the CEPU .132
Financial profile
169 In brief, the Electrical Division's total assets for the year end ing 31 December 2000 were
$35.7 mi llion .133 The Plumbing Division had total assets of $6.3 million for the financial year ending 31 March 2001 .134
170 The Electrical Division's total liabilities for the period ending 31 December 2000 were
$11 .4 million .135 For the year ending 31 March 2001, the Plumbing Division recorded total
liabilities of $2 .1 million. 136 The net assets of the Electrical Division were thus $24.3 million, 137
and the Plumbing Division $4.2 million .138
171 For the year ending 31 December 2000 income generated by the Electrical Division totalled
$11.9 million .139
172 The Plumbing Division, excluding the National Office, received $3.2 million in membership
contributions and entrance fees in the year ending 31 March 2001, 140 with the National Office
receiving contributions of $686 000.141 Other income for the Plumbing Division totalled
$1.2 million; with combined income $4.4 million (see attachment 1) .142
Size and mem b ership
173 The CEPU has more than 170 000 members working across various industries. 143 Members
have job classifications in communications, electrical and electronic, information technology,
postal, plumbing and allied areas. Each member of the Union is attached to the division of the
Union covering the industry or employment of that member.144 A member is only in one division
or one divisional branch. 145
17 4 Rule 2 of the CEPU Rules sets out eligibility for membership.
175 A characteristic of CEPU membership is that it is skilled, in both the Electrical and Plumbing
Divisions . Members need to have appropriate qualifications. A concern about training and
qualifications is reflected in the objects of the union.
State employee organisations
176 In New South Wales, Queensland and South Australia there are two separate state registered
organisations which cover electrical trades and plumbers and gasfitter employees. Weste rn
Australia has a state registered organisation for plumbers and gasfitters employees, and the
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Al lied
Workers Union of Australia, Engineering and Electrical Division, WA Branch. Tasmania has one
state registered organisation named the Communications, Electrical, Electronic, Energ y,
Information, Postal, Plumbing and Allied Services Union of Australia. In Victoria, there are no state registered organisations.
177 There is no provision in the Ru les of the CEPU , or the Rules of the CEPU Electrical Division or
Plumbing Divisions, deeming membership of the CEPU to be membership of an equivalent
state registered organisation. The Rules of the NSW Divisional Branch of the Electrical Divis ion
of the CEPU , allow for the interchange of membership, and state that financial members of
11 6 Final Report of the Royal Commission into the Building and Construction Industry
kindred unions may, at the discretion of the Divisional State Council and or State Divisional
Branch Executive, be admitted to membership of the NSW Divisional Branch of the Electrical
Division of the CEPU , without payment of ent rance fees, if they are ful ly paid up members of the other union .146
Australian Workers' Union
178 The Australian Workers' Union was form ed in 1894, having been origi nally formed in 1886 as
the Amalgamated Shearers Union .147 In 1993 the AWU amalgamated with the Federation of
Industrial, Man ufactu ring and Engineering Empl oyees (FIM EE). FIM EE was formed in July 199 1
as an amalgamation of the Federated Ironworkers' Association of Australia and th e
Australasian Society of Engineers, which subsequently amalgamated, in November 1992, with
the Am algamated Society of Carpenters and Joi ners of Australia. All of these em ployee organisations had eligibility in the construction industry.148
Objects
179 Key objects of the AWU include (see attachment 3):
⢠To uphold the rights of combination of labour and to improve, protect and foster the best
interests of its members and to assist them to obtain their rights under industrial and
social legislation;
⢠To regulate and protect the conditions of labour, the relations between workers and
between workers and employers. To regulate conditions on the conduct of trade,
business or industry of the members;
⢠To endeavour by political action to secure social justice;
⢠To establish one union for Australian workers.149
Structure
180 The AWU is an organisation registered under the Workplace Rela tio ns Act 1996 (C'wth) . Its
Rules provide that it is divided into nine geographically based branches :
⢠Greater New South Wales Branch
⢠Newcastle and Northern Regions Branc h
⢠Port Kembla, South Coast and Southern Highlands Branch
⢠Queensland Branch
⢠Greater South Australian Branch
⢠Whyalla- Woomera Bran ch
⢠Tasmania Branch
⢠Victoria Branch
⢠West Australia Branch ;
and three specific industry branches:
National Perspective Part 1 i i 7
⢠Technical, Administrative, Professional Staff and Gas Industry
⢠Glass and Container Industry Branch
⢠Tobacco Workers Branch. 150
181 The Newcastle and Northern Regions Branch has 11 Sub-Branches. 151 The Queensland
Branch has seven districts, which are geographically based, with the exception of the Metals
and Construction Sub-Branch. 152 Each of the Techn ical, Administrative, Professional Staff and
Gas Industry, Glass and Container Industry and Tobacco Workers Branches have
Sub-Branches defined geographically by state. 153
182 The Rules provide that a Branch functions as a single unit of the union. It may be divided who lly
into Sub-Branches on a job, industry or locality basis. It can be divided into Districts. 154
183 Two or more Branches may form a Division, subject to the approval of the National Conference
or the National Executive. 155
184 The Ru les establish Industry Committees of representatives which include Civil and Mechanical
Engineering Construction, and Building and Construction. The Committees are constituted by
representatives as determined by the National Executive and must meet at least annually. 156
The rep resentatives may include Officers or employees of the union . The Committees have
advisory powers only. Such pow8rs are determined by the National Executive .157
Financial profile
185 The federally registered AWU recorded combined total assets of $27.9 million for the year
ending 30 June 2001. 158 Total liabilities for the financial year ending 30 June 2001 for the
federally registered AWU equalled $15.6 million. 159 The National Office had liabilities for that
period accounting for 54 per cent of the total, far in excess of those of any geographically
based branch. 160
186 Thus, for the year ending 30 June 2001 the net assets of the federally reg istered AWU totalled
$12.3 million. 161
187 The combined income for the National office and all the Branches of the federally registered
AWU was $29.2 million which included $2.4 million in non -core income for the year ending
30 June 2001 (see attachment 1 ). 162
Size and membership
188 The AWU has over 100 000 members. Ru le 5 of the AWU sets out eligibility for membership.
Any person applying for membership of the union must be admitted if they meet the eligibility
criteria. 163 The State Secretary of the Victorian Branch of the AWU, described the rule as 'long
and complex and there are a number of exclusions or qualifications relating to the AWU's
eligibility in the Buil ding and Construction Industry' .164
189 The AWU covers workers involved in:
⢠the construction, repair, maintenance or demolition of:
(i) Civil and or mechanical engineering projects,
11 8 Final Report of the Royal Commission into the Building and Construction Industry
(v) Sports or entertainment complexes and car parks excepting car park
buildings and car parks within the alignment of a building.
⢠all operations incidental to road making, water and sewerage, railway construction
work, pipeline construction (excluding welders) and in the manufacture or
preparation, applying, laying or fixing of bitumen emulsion, bitumen or asphalt preparations, manufacture of cement articles. 165
State employee organisations
190 The signing of an application form for membership of the AWU in a 'designated State
Branch' 166 constitutes an application for membership of the union and is deemed to be an
application for membership, in the case of each State Branch, of the appropriate state union
with constitutional coverage. For example, a worker applying to join the Whyalla-Woomera
Branch of the AWU is deemed additionally to be an applicant for the Australian Workers' Union
(Whyalla-Woomera Branch) Association of Employees, which is an association of employees
registered under the provisions of the Industrial and Employees Relations Act 1994 (SA).
Australian Manufacturing Workers' Union
191 The AMWU evolved through a series of amalgamations over the last 150 years. The most
recent amalgamations have been:
⢠In 1991 the Amalgamated Metal Workers' Union amalgamated with the Association of
Draughting Supervisory, and Technical Employees to form the Metals and Engineering Workers ' Union.
⢠In 1 993 the Metals and Engineering Workers' Union amalgamated with the Vehicle Builders Employees Federation of Australia to form the Automotive, Metals and
Engineering Union .
⢠In 1 994 the Automotive, Metals and Engineering Union amalgamated with the
Confectionery Workers and Food Preservers Union of Australia to form the Automotive, Food, Metals and Engineering Union.
⢠In 1 995 the Automotive, Food, Metals and Engineering Union amalgamated with the
Printing and Kindred Industries Union to form the Automotive, Food, Metals, Engineering,
Printing and Kindred Industries Union {the AFMEPKIU, also known as the AMWU). 167
192 There have been no further amalgamations since 1995.
Objects
193 Key objects of the AMWU include (see attachment 3):
⢠The contro l of industry in the interests of the community;
⢠The organi sation of all workers qualified for membership, the development of the most
cordial relations with other unions in the industry with a view to bringing into existence of
one union for the found ry, engineering, ship-building and kindred trades, and the
obtaining and maintaining of just and proper hours of work, rates of wages, and
conditions of labour;
National Perspective Part 1 i i 9
⢠The negotiation and settlement of differences and disputes between the members of the
union and employers by col lective bargaining and agreement, withdrawal of labour or otherwise. 168
Structure
194 The AMWU is a registered organisation under the Workplace Relations Act 1996 (C'wth). The
Rules of the 'Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union '
(AMWU Rules) provide that the union consists of metals and engineering members, 169 and the following divisions :
⢠Technical and Supervisory Division;
⢠the Vehicle Division;
⢠the Food and Confectionery Division; and
⢠the Printing Division. 170
I 95 None of the above Divisions is further discussed. The metals and engineering members are
those primarily involved in bu ilding and construction, although some members of the Techn ical and Supervisory Division are involved. 171
I 96 There is a State Branch of the AMWU in every state. Each consists of metals and engineering
members and some or al l of the Divisions. For example, the Secretary of the Western Australian
Branch of the AMWU, stated that his branch consists of the Technical and Supervisory Divisi on
and the Printing Division and metal and engineering members. He stated that the metal an d
engineering members are 'widely referred to as the Metal Division although no such Division
formally exists under the Rules of the AMWU'. He noted that the metal and engineerin g
members were formerly members of the Amalgamated Metal Workers Union. 172
Financia l profile
I 97 The AMWU National Council accounts recorded total assets of $57.6 million for the ye ar
ending 30 September 2001 ,173 a significant portion of which is land and buildings held by the
AMWU . The accounts recorded property at cost, and after depreciation, of $38.3 million for the
year ending 30 September 2001 H 4 For the year ending 30 September 2001 the National Council's net assets were $37.3 millionH5
I 98 The AMWU National Council General Fund received income of $35.9 million for the year endi ng
30 September 2001 H 6 This income comprised approximately $30.2 million in membership
contributions and a further $5.7 mill ion from other sources, primarily rent ($4.8 million) (see attachment 1). m
Size and membership
199 Members elect AMWU officials and organisers:
to organise and assist the unions on job delegates to represent members 1n a wide range
of industrial matters ... The Union has 7,000 shop stewards and Job Delegates throughout Australia whose main function is to provide leadership to members 1 n the
120 Final Report of the Royal Commission into the Building and Construction Industry
workplace. They also provide a link between the members and the formal structure of the Union.
The AMWU employs full-time Health and Safety Officers to check workplaces, inform
members on health hazards, monitor working environments, enforce acceptable
standards and improve safety on the job ... The AMWU employs Workers' Compensation
Officers to help members with their compensation claims. 178
200 The National Secretary of the AMWU stated on 8 October 2002 that the AMWU now represents over 160 000 workers. 179
201 Rule 1 of the AMWU Rules sets out eligibility for membership of the union. The eligibility rules
for metals and engineering members are in Rule 1 sub-rules 1 A, 1 B and 1 D of these Rules and
include other persons eligible for membership of the union who are not allocated to any of the Divisions. 180
State employee organisations
202 In Western Australia and Tasmania there are state registered organisations called the
Automotive, Food , Metals, Engineering, Printing and Kindred Industries Union of Workers -Western Australian Branch; and the Automotive, Food , Metals, Engineering, Printing and
Kindred Industries Union respectively. There is a federally based Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union in South Australia which does not have
separately registered 'state' rules, but is governed by its federally registered rules. Other states do not have state registered organisations.
Role of the Australian Council of Trade Unions and trades and labour councils
203 The Australian Council of Trade Unions (ACTU) is made up of 46 affiliated unions representing
around 1.8 million workers. 181 In 1981 the ACTU merged with the Council of Australian
Government Employees' Associations and since then has been 'the sole peak council for the Australian trade union movement' .182
204 Creighton and Stewart are of the view that 'this has given it an enormous advantage relative to
its counterparts in many other countries, where there are competing peak councils organised
by reference to political affiliation, sectarian loyalties, etc. It has given it a crucial strategic
advantage relative to business. '183
205 The ACTU plays an important role in the operation of the industrial relations system - 'for
example, by representing affiliates before State tribunals and the AIRC; helping fund important
legal proceedings; coordinating presentations for national wage hearings and for other
significant test cases; and representing the union movement in consultation with the federal
government over industrial relations legislation' .184
206 As well as fulltime officers, the ACTU employs specialist advisers in occupational health and
safety and international and trade union training areas .
207 ACTU uses democratic processes for establishing its policies and making its most important
operational decisions. These processes involve the ACTU Executive which consists of
National Perspective Part 1 1 21
approximately 50 people and meets three times a year, and the Congress, representing all
ACTU affiliates, which consists of approximately 800 delegates who meet every three years. 185
208 There is a branch of the ACTU in each State and Territory. The State and Territory branches are
as fol lows:
⢠Australian Capital Territory Trades and Labor Council;
⢠Labor Council of New South Wales;
⢠Northern Territory Trades & Labor Council;
⢠Queensland Council of Unions;
⢠Unions Tasmania;
⢠Unions WA;
⢠United Trades & Labor Council of South Australia; and
⢠Victorian Trades Hall Council. 186
The workforce
209 In August 2002, 692 800 people were employed in the building and construction industry. Of
these 593 I 00 (86 per cent) were full time and 99 700 (14 per cent) were part time; 241 600
were employed in general construction and 451 200 in construction trade services. Of the total
figure of 692 800, 441 I 00 (64 per cent) were employees, 41 600 (six per cent) were employers
and 206 500 (30 per cent) were 'own account workers'. 187
210 General construction includes the construction, alteration, renovation and repair of buil di ngs
and engineering construction projects. It encompasses assembly, erection or in stallation of
prefabricated buildings or engineering construction works.
2 11 Construction trade services include specialist trades that cover, for example:
⢠site preparation, inclu ding earthmoving work such as levelling of construction sites,
excavation of foundations, trench digging and removal of overburden;
⢠building structure services, including concreting, bricklaying, roofing and structural steel
erection;
⢠installation trade services, including plumbing, electrical, air conditioning and heating and
fire and security systems; and
⢠building completion services, including plastering , carpentry, tiling and carpeting , painting
and decorating, and glazing. 188
21 2 These ABS data are aggregated and cover the whole of the construction industry, including
single dwellings, which is not part of my Terms of Reference. Work in the domestic sector of the
construction industry accounted for 26 per cent of building and construction activity in
2001-02. 189 It is not possible to separate workforce statistics for the building of sin gle
dwellings.
122 Final Report of the Royal Commission into the Building and Construction Industry
Size of the workforce
21 3 As il lu strated in charts 21 and 22 , New South Wales, Victoria and Queensland employed the
largest proportion of workers in th e building and construction indu stry. The majority of the
workforce in each State and Territory is employed in construction trade services, rather than general construction work.
Chart 21
Employment in the building and construction industry in each State and Territory, August 2002 ('000)
Tas NT ACT
12.0 6.0 9.5
Vic 183.0
Source: ABS 2002 (Employment time series, Sept 2002, 6291 .0.40.001 labour force - Employed - Industry Au stralia - Quarterly)
National Perspective Part 1 123
Chart 22
Employment by building and construction industry sectors in each State and
Territory, August 2002 ('000)
Construction Trade Services ⢠General Construction
250
200
141.3
111.6
150
100
50
0
NSW Vic Old
34.9 9.1
SA
55.9
WA
7.9
4.1
Tas
5.1 0.9
NT
5.8 3.7
ACT
Source : ABS 2002 (Employment time series, Sept 2002, 6291 .0.40.001 labour force - Employed- Industry Australia - Quarterly)
214 Employment in the build ing and construction industry is not constant Chart 23 shows the numbers of people employed in the bui lding and construction industry for each quarter
between August 2000 and August 2002. It features a peak in numbers just before the Sydney
Olympics in September 2000, with a subsequent decline in the ensuing months. The rec ove ry
in numbers seemed to take about a year, and by November 2001 the number of people
employed by the industry had almost returned to the pre -Olympic figure . The August 2002
figure shows the number employed has again declined.
I 2 4 Final Report of the Royal Commission into the Building and Construction Industry
Chart 23
Numbers of employed people in construction industry at quarterly intervals, August
2000 to August 2002 ('000)
740
720.7
720
700
680
660
640
620
600
0 0
0 0 0 0 0 0 0 0 0 0 0 0
N N N
8 0 0 0 0 0J 0J 0J 0J 0J 0J N N N
t5 Qj c >- t5 Qj <1l ::> .0 <1l :;;; ::> .0 Ol E ::> Ol E ::> n ::> <(
c >- t5 <1l <1l 2 ::> 2 Ol .0 ::>
Source: ABS 2002 (Labour Force, Aug 2002: Australia , Cat. no. 6203.0)
Employment types
215 The majority of the workforce are employed as tradespersons or related workers (table 8) .
National Perspective Part 1 125
Table 8
Employment in the building and construction industry by occupation, August 2002
Occupation Employees Percentage
('000) of total
Managers and administrators 52 .4 8
Professionals 15.7 2
Associate professionals 36.6 5
Tradespersons and related workers 354.8 51
Advanced clerical and service workers 37.3 5
Intermediate clerical sales and service workers 32.7 5
Intermediate production and transport workers 65.5 9
Elementary clerical sales and service workers 4.0
Labourers and related workers 93.9 14
Total workers 692 .8 100
Source: ABS 2002 (Labour Force, Sept 2002: Australia, Cat. no. 6203.0)
216 These figures do not divide tradespersons and related workers into the various trades involved in
the building and construction industry. Some indication of the different types of tradespeople
working in the industry can be ascertained from the ABS Private Sector Construction Industry
Survey 1996-97, which provided data about the number of different types of businesses that
constitute construction trade services and the average number of employees per business. The
total number of operating businesses and employee numbers in each of the construction trade
services are set out in table 9.
Table 9
Total operating businesses and numbers of employees- construction trade services, 1996-97
Construction Trade Services Operating Employee
Businesses Totals
('000) ('000)
Site Preparation Services 7.1 19.2
Bu ilding Structure Services 28.7 67. 1
Installation Trade Services 38.9 114.0
Bui lding Completion Services 70.1 125.7
Other Construction Services 13.2 30.9
Total Construction Trade Services Businesses 158.0 356.9
Source: ABS 1999 (Private Sector Construction Industry, 1996-97: Australia Cat. no . 8772 .0)
1 26 Final Report of the Royal Commission into the Building and Construction Industry
Size of employer
217 As noted above, the building and construction industry is made up of mostly small businesses.
In 1996-97, 94 per cent of businesses employed less than fi ve people. 190
218 Across Australia, the average number of employees per business is between 2 and 2.6 (chart
24) . Th is further demonstrates that the majority of the workforce is employed in small
businesses. There is lower average employment for each business reported in the smaller
jurisdictions, Tasmania, the Australian Capital Territory, and Northern Territory, and higher than
average employment for each business in Western Australia.
Chart 24
Average number of employees in building and construction businesses in each State and Territory, 1996-97
3.0
2.5 2.5 2.5 2.4
2.6
2.5 -
2.5
2.2 2.1 - 2.0 2.0 1-- r- '-- - i 1.5 - 1-- 1-- - - 1-- - 1--; â¢â¢â¢â¢â¢â¢â¢â¢â¢â¢â¢â¢ - 1-- 1-- - -__:____ -j 1-- .. 1.0 0.5 - - r- - - - -0.0 ill NSW Vic Old SA WA Tas NT ACT Total Source: ABS 1999 (Private Sector Construction Industry, 1996-97: Australia Cat. no. 8772.0) Age of workers 219 The age of employees in the building and construction industry is similar to that in several other industries. In August 2002 the number of young employees was slightly less than the national average (chart 25). However, there were still 11 other industries where the proportion of workers in the 15 to 24 age bracket was less than the 13 per cent for the building and construction. Similarly, at 54 per cent the proportion of workers in the building and construction industry in the 25 to 44 age group was higher than the national average of 49 per cent. There were still a significant number of industries where the proportion of workers in this age group was higher than building and construction. The number of older workers in the bui lding an d constru ction industry, 45 years and over, was 31 per cent compared to the national average of 32 per cent. 191 National PerspectiVe Part 1 I 2 7
220 The early peak in chart 25 for the construction industry curve shows that generally the average
age of workers may be slightly lower than in other industries. Chart 26 shows that it is not vastly
different from the national averages.
Chart 25
Age spread of employed persons in selected industries, August 2002
40
-- Mining Manufacturing Construction Retail trade Transport and storage
35
30
"'
25
Ol c
"' l::' 20
"' a.
15
10
5
0
55 and over
Source: ABS 2002 (Labour Force: Australia, Aug 2002, Cat. no. 6203.0}
Chart 26
Age spread of employed persons in all industries, August 2002
30
-- Construction Total workers
25
20
"' Ol "' c Q)
l::' 15 Q) a.
10
5
0
19 55 and over
Source: ABS 2002 (Labour Force: Australta, Aug 2002, Cat. no. 6203.0}
128 Final Report of the Royal Commission into the Building and Consiruction Industry
Women in the building and construction industry
221 Historically, the building and construction industry has been characterised by a predominantly
male labour force. This continues today. ABS figures demonstrate that women make up on ly
I 2 per cent of the construction industry workforce, compared with 44 per cent nati onally
across all industries. The average weekly earnings of women employed within the bu ilding and construction industry is the lowest of all industries as indicated in chart 27.
Chart 27
Average adult total weekly earnings for full time employees, May 2002 ($)
2000
1500
1000
500
0
" (})
1--
(})
co <;:'
OJ c
c
:;e
K" (J)
U') (J)
"-0
';C'
:;;
(J)
<0
N
(J)
<:: 0
n 2 ti <:: 0 (.)
(J)
co
c.o -"" "-
Q)
Q) ro
co
⢠Fem ales
"-
o"- Nr- co
lO "- (J) ,--
"- N "-
Q)
I? 0
en D c
"' t 8_
"' c=
co (})
lO<;:' N (J)
=:J Males
"- co N .=
f--;=-" co
Q) u
c
l" :::J
-
co (J) "-
U') 0
C') 0
0
co
c Q)
0 u
:..;::::; c
E c
D <1l
"' c Q) E c (;; 6 (')
tD U')
<;:'
(J)
c
0
u
:::J D w
Source: ABS 2002 (Average Weekly Earnings: Australia, May 2002, Cat. no. 6302 .0.)
co N co
;;:; <;:'
2l c
c :::J E E 8 D c "' £ ro Q) I
(})
" (J)
a; (J)
Q)
(;; _c 0
D c
"' ro c Q) [l_
N "- (J)
co co "-
222 A study by McGrath-Champ, Crawford , Tan and Kelleher in I 998, found that of the sma ll
number of women employed in the building and construction industry, the majority were
employed in administrative and accounting functions, rarely in positions of sen ior or middle
management. 192 As outlined in chart 28 , women tend to be employed in clerical positions, with
very few women employed as tradespersons, labourers or professionals.
National Perspective Part 1 I 29
223 This was confirmed by the Australian Industry Group (AI G) in its submission to the Commission,
which stated that relatively few women are employed in the industry, other than in clerical and
administrative roles .193 Information provided by a project director of Baulderstone indicated
that, apart from the nurse, the only other women employed on site were two of the three site
engineers employed in the office. 194
224 There is a clear delineation between gender in particular occupations within the building and
construction industry (c hart 28) . An equitable industry would have shown approximately equal
heights for the female and male bars in this chart.
Chart 28
Percentage distribution of each gender across the industry, August 2002
60
[:::_j Females D Males
50
40
30
20
10
0
"0 if)
c
ro.8
c E
"'u 2
if) Q) if) "0 if) "0 if) Q)"Q if) Q) "0 if) c:-u if) "0 if)
ro rom c c ."ffi@ ."ffi ro c (5 ffi]? c ·u § -"'-"' 0 if) roo as 6 o c if) if) 0 "Uj 0 ·- c 0 Q) Q) 0 if) if) OS !:!s Eros E""s Eros if) if) if) -2'
227 There are a number of factors which cau se there to be extremely low numbers of women
working in the building and construction industry. These factors include marketing, traini ng and
education to women, and disc rim ination and harassment on work sites.
Workers born overseas
228 Often, discussions about the need for specific types of training in th e bu ilding and construction
industry refer to the num ber of buil ding and co nstruction workers from non-English speaking
backgrounds. The ABS published statistics do not provide information for the number of
people whose second language is English; they do provi de information on the number of
people born outside Australia. Th is is illu strated in chart 29.
229 Whi le there were a significant number of workers in the building and construction industry born
outside of Australia, the proportion of 23 per cent was almost the same as the nati onal
average. Based on this data, issues in respect of overse as born workers have the same level of
significance in the bu ilding and construction industry as in many other industries.
Chart 29
Proportion of labour force born outside Australia, August 2002
35
30
25
20
.!!l c Q) !2 &: 15
10
5
0
"" c E
c
0
·n 2
v; c
0
()
Q) D _g
ro Q5 a:
-c ro ro (.) - iil §en uu 0 c E ro E 0 Q)
g'
0
Ui D c
"' t 0 0.
Q) (.)
c
"' 's
30
i£ c
·u; ::> .D u
c
ro
20 20
c Q)
0 (.)
:;::::; c
Q)
'!!u u
E c
u ro
"' c Q) E c Qj ⬠6 1'5. (') e 0..
Source: ABS 2002 (Labour Force, Aug 2002: Australia, Cat. no. 6203.0)
2 Q)
(.)
2
ro c
0
(.)
u
c
"'
.2 ""5 ()
w Q) (.)
2 (]) "' Qj .c. 0
D c
"' ro c 0 t:' Q) 0..
National Perspective Part 1 I 31
Workers' incomes
230 Tab le I 0 sets out the average weekly earnings for workers in the construction industry for adult
managerial, non-managerial and junior wages.
Table 10
Construction Industry wages, May 2000 ($)
Type of wage Average weekly earnings
Adult managerial wages $764.70
Adult non-managerial wages $849.80
Junior wages $441.10
Source: ABS 2001 (Employee earnings and hours, May 2000: Australia, Cat. no. 6306.0)
231 Average adu lt weekly earnings in the bui lding and construction industry were similar to the
national average. However, the building and construction industry was the only industry where
the adult managerial wage ($764 . 70) was lower than the adult non-managerial wage ($849.80).
232 Managerial wages were much lower than the national average , but non-managerial wages
were much higher than the national average. This may arise from the high wage levels of
overtime paid in the industry. 198
233 Th e Queensland Government argued that this result is not surprising given the large number of
working proprietors in the building and construction industry who are likely to be very small
operators. 199
234 Average weekly earnings for wage and salary earners increased steadily in the construction
industry in the period I 993 to 1999, but have fallen in the last two years, in contrast to the
continued growth of average weekly earnings for all industries combined (chart 30). This could
be attributed to compositional changes in the industry's employment patterns and to the
volatility in the industry which coincided with the transition to the new tax system. 200
1 32 Final Report of the Royal Commission into the Building and Construction Industry
Chart 30
Average adult weekly earnings, May 1993 to May 2001 ($)
1000
-- FT adult construction - - $ All employees construction
$ FT adult all industries All industries
800
600
400
200
0 ______ ____
1993 1994 1995 1996 1997 1998 1999 2000 2001
Source: ABS 2002 (Australia Now, Construction, Average weekly earnings, Jan 2002)
235 It is often claimed that the income of workers in the bui1ding and construction ind ustry is highly
variable. The ABS provides information on the number of workers in each industry whose
earnings (excluding overtime) vary from one month to the next. This information is presented in
chart 31 to illustrate the proportion of workers in each industry with variable incomes.
236 As would be expected, given that work in the building and construction industry is project
based and affected by a range of factors including the weather, the level of variability in income
was relatively high . At 54 per cent, it was well above the average for all industries (34 per cent).
It was second to agriculture, forestry and fisheries, where 68 per cent of workers had earnings
that vary from month to month.
National Perspective Part 1 I 33
Chart 31
Proportion of employees with variable incomes, August 1998
80
68
70
60
50
49
Q)
"' "' 40 c 40 Q) Q) a. 30 20
10
0
Ol Ol Ol >- <:: Q) Q)
"'
c c c a. .Q D D Q) - Ol Q) u Q) 0 u 0 Q) Q) Q) Q) - c u c u c .>! u u E ·c: "§ 0. "' ro [1l .Y.
238 Employed persons in the building and construction industry work slightly more hours than the
national average (chart 32). The proportion of people in the bui lding and construction industry
working more than a 40 hour week was higher than the national average (chart 33) . This is
consistent with .ABS data indicating that 43 per cent of building and construction industry
employees are paid overtime. This is the highest of al l industries and well above the national average of 23 per cent. 201
Ch art 32
Em ployed persons: average hours worked, August 2002
50
40
30
20
10
0
Ol c
£.
44.9
c
0
n 2 t; c 0 (.)
39.9
Q) Ol l"
0
(i) 'D
c
ro t
8.
'i: Q)
c
0
0
·c: :::>
E E 0
0
Q) 0
c
l"
:::>
c
ro Q) 0
c
ro c
i.L
i: Q)
c Q)
0 ()
:,:::; c
Q)
E c
'D ro
ro
c Q) E c ro iD £ 6 (9 e Q..
Source: ABS 2002 (Labour Force, Aug 2002: Australia, Cat. no. 6203.0)
c
0
0
:::> 'D
w
i: 2l c ·c: :::> E E 0 0 'D c ro £ ro Q) I
2 Q)
0
e! 0
e! 'D
c
ro
(li
.2 'S
0
National Perspective Part 1 "135
Chart 33 Employed persons: proportion working more than 40 hours per week, August 2002
60
50
40
Q)
"' "' "E 30 Q) Q) Cl. 20 10
0
55
Ol c
§
R ::0 c "' 2 .c Q_ Q_ ::0
41
c
0
:;::;
" s
40
Q)
g
Q)
1Jl Q)
0
"' s
43
Q) Ol
0
U5
"D c
"' t 0 Q_
$
c
0
u
·c: ::0 E E 8
Q) u
c
::0
c
C1l
Q) u
c
C1l c
u::
ifl u
$
·u; ::0 .0
c Q)
0 u
:;:; c
E c
"D C1l
C1l
c Q) -o E c c 1l. (.')
e Cl.
Source: ABS 2002 (Labour Force , Aug 2002: Australia, Cat. no. 6203.0)
Workers' literacy and numeracy
c
0
u
::0
$
c ·c: ::0 E E 0 u "D c "' £ ro Q) I
Q)
(ij
c
0
t" u
t" "D c
C1l
2
:; ()
Q)
til
"' 15 "D §
(ij
Q) Q_
239 CFMEU, in its submission to the Senate Inquiry into the Workplace Relations Amendment
(Genuine Bargaining) Bill 2002, provided information from a 1996 ABS Survey into Aspects of
Literacy, in support of submissions that poor literacy and numeracy were impediments to
enterprise based negotiations by workers in the building and construction industry. CFMEU
stated that the 1996 study had found that the literacy skills of the construction workforce were considerably poorer than those of the Australian workforce in general. Fifty-five per cent of
construction workers had poor literacy skills compared to 39 per cent for all industrie s. Over 43
per cent of construction workers had poor numeracy skills compared to just over 36 per cent for all industries. The numeracy skill s of younger workers aged 15 to 34 years were poorer than
the numeracy skills of older workers (46 per cent as compared to 42 per cent) 202
1 36 Final Report of the Royal Commission into the Building and Construction Industry
Mobility of workers
240 While the level of mobility in the building and construction industry was high, particularly for
people moving between jobs within the industry, there were several other industries with similar
levels of mobility. For those people employed in the building and construction industry in
February 2002 13 per cent had moved jobs within the last year (chart 34). Th is compared with
a national average of 14 per cent, 22 per cent in mining, 21 per cent in accommodation, cafes
and restaurants, 19 per cent in financ e and insurance, 17 per cent in retail trade and property
and business services and 16 per cent for transport and storage and wholesale trade. Out of
17 industries, building and construction workers were the tenth most mobile.
Ch art 34
Mobility of labour force, February 2002
⢠Percentage moved jobs w1thin industry ⢠Percentage moved jobs between industries
25
20
" 15
"' "' c; " !::' " a. 10
5
0
Source:
Note:
D Percentage moved jobs
-- r---- -
- c-- r---- f--- - r---- r---- r-- -- r----
r- r- I
IIJ II
I
i
0> Ol 0) >. c Q) Q)
c c c a. 0 u TI Q)- Ol Q) 0 Q) 0 0 0 Q) Q) Q) Q)
£ ·c: .§ 0. :;::;
- c 0 c 0 "" c
0 0 0
"' .2' 2' 2' 2' 2' ""'
(ij
:::>
t) 1D TI .£ TI c :::>
"'
c
"'
c Q) a: !!! c Q
finance and insurance, and property and business services. They ranked equally with retail
trade, health and community services, and personal and other services. The national average was eight pe r cent.
242 The period of time workers had been employed in their current job in the building and
construction industry was slightly higher than the national average (chart 35) . In February 2002
30 per cen t of construction workers had spent over ten years with their current employer. Th is
compared with 24 per cent of workers nationa ll y. Consequently, without portable long service
leave arrangements, construction workers would be just as likely as the average worker to be
eligible for long service leave.
243 As noted in the following section , there is a higher level of involuntary redundancy in the
building and construction industry than in most other industries. Hence, the proportion of people choosing to leave their employer is less.
Chart 35
Duration of current job, February 2002
60
50
40
Q) tJ)
"' c 30 Q) Q) o._
20
10
0
f.-- f- 1--- f--
f-.- e.- 1---
f---- f-
>-a. 0. :0 (/) ill D c "' (/) ro tJ)
⢠under 1 year
e.-
c: 0
n 2 1i) c: 0 ()
ro (/)
1---
1---
e.-
f-
g 1-10years D over 1 0 years
1--
f-
2 (/) D c
ro t
g_ (/)
c
1-- 1-- 1-- I-
f--f--1---1---l---1--1--1--1-
1-- 1-- 1--
()
'2' 3l c
0
()
c :0 E E 0 ()
:0
(/)
.S D c
ro
ffi c
LI:
1--
()
2' QJ (/)
(/)
rn
'iii
:0
.0
c Q)
0 ()
:,:::;C - Q)
E c
D ro
ro
c QJ D E c c ;_ t 0 (') e (l_
e.-
I--
e.- 1--- 1--- 1--
(/)
QJ ()
2 QJ (/) c ·c :0 E E 0 () D c ro £ ro
I--
(/)
QJ ()
2' QJ (/)
ro c
0
(ll ()
(ll D c
ro
2
3
u
(/)
2l 2' QJ (/)
1' 0
D c
ro ro c
0
['?
Source: ABS 2002 (Labour Mobility Australia, Feb 2002, Cat. no. 6209.0)
1 38 Final Report of the Royal Commission into the Building and Construction Industry
Retrenchment
244 Tab le 12 presents information for people retrenched in the three years to 30 June 1997. It
includes people who were both retrenched and made redundant.
245 While retrenchments, as a proportion of employment, were higher in the building and
construction industry than the national average, there were still several other industries where
the results were as high or higher.
Table 12
Retrenched workers and total employees between the ages of 18-64, 1997
Industry Retrenched Proportion of Total
workers workers employees
('000) retrenched between 18-64
(per cent) ('000)
Agricu ltu re, forest ry and fishing 18.0 13 138.3
Mining 10.9 15 72.6
Manufacturing 166.9 19 899.6
Electricity gas and water supply 19.3 30 64.4
Construction 59.1 18 322.0
Who lesale trade 46.4 12 384.8
Retail trade 82 .0 12 693.3
Accommodation, cafes and restaurants 37.0 13 275.4
Transport and storage 30.6 10 291.7
Communication services 17.5 14 129.1
Finance and insurance 23.1 9 258.9
Property and business services 47.6 8 584.5
Government administration and defence 39.5 12 322.5
Education 21.5 4 518.5
Health and community services 33.9 5 644.3
Cultural and rec reational services 14.6 11 131 .7
Personal and other services 17.6 8 22 1.7
All industries 685.4 12 5953.5
Source : ABS 2001 (Labou r Force, Nov 2001: Australia, Cat. no . 6203.0)
Note: This was the most recent data on retrenched workers published in 6203.0.
National Perspective Part 1 1 39
246 In the three years before 1997 there was a short term fa ll in the level of building and
construction activity, fol lowed by a rise . This is likely to be reflected in a higher level of
retrenchments th an would occur in periods when activity in the industry is constant or growing
and a high number of people subsequently are re -employed in the industry. However, this
cyc lical pattern of fal ls and growth in building and construction activity is typical for this industry.
Consequently, the conclusions drawn from the data are likely to hold for the industry over time.
247 The building and construction in dustry had a high proportion of unemployed people who lost
their job involuntarily. Table 13 looks at people who have worked for two weeks or more in the
past two years and the reasons why they left their employment. It in cludes people who lost
their job involuntarily -for example they where laid off or retrenched from that job, left that job
because of their own ill -health or injury, or the job was seasonal or temporary - or they were
running their own busi ness and the business closed down, for example because of financial
difficulties. It also includes people v1ho left their job voluntaril y. Th is includes those whose last
job was running their own business where the business closed down or was sold voluntarily.
248 The only industry where the percentage of people who lost their job involuntarily was higher
was agriculture, forestry and fishing . These data provide support for the claim that the level of
in voluntary retren chment among unemployed building and construction workers is relative ly
high.
249 ABS provides information on whether retrenched workers found alternative employment. That
information indicates that there were only three industries - mining , finance and insurance, and
property and business services - where the proportion of retrenched workers who found new
employment was higher. 203
250 The number of retrenched workers remaining in th e same industry and occupation provides
some support for th e claim that it is typical for bu il ding and construction workers to be
retrenched at the end of one job and then re-employed in th e industry. The data indicate that
this was relatively more common in building and construction than in most other industries. On
average , across all industries, 37 per cent of retrenched workers were re-employed in the same
industry and occupation. In the bu il ding and construction industry, this rate was 52 per cent.
The only industry where th is rate was higher was agriculture, forestry and fishing (64 per cent).
25 1 This conclusion is further supported by a survey undertaken by the ABS that asked how
residential construction and construction trade businesses dealt with downturns in the industry.
That survey indicated that 2.5 per cen t of businesses looked to reducing their expenditure on
staff, 9.8 per cent reduced expenditure on employed trades staff and 13.9 per cent reduced
th e number of subcontractors they engaged.204
1 40 Final Report of the Royal Commission into the Building and Construction Industry
Ta ble 13
Unemployed persons: reasons for ceasing last job, August 2002
Ind ustry Lost job involuntarily Left job voluntarily Total
'000 per cent '000 per cent '000
Agricultu re, forestry and fish ing 17 .0 84 3.3 16 20 .3
Manufacturi ng 35.7 74 12.7 26 48.4
Construction 21.1 82 4.5 18 25.6
Wholesale trade 6.6 61 4.2 39 10.8
Retai l trade 31 .5 45 38.9 55 70.4
Accommodation, cafes and 14 .1 44 17.6 56 31.7
restaurants
Transport and storage 11.0 66 5.6 34 16.6
Government administration 8.5 75 2.8 25 11. 3
and defence
Education 6.4 69 2.9 31 9.3
Health and community services 5.5 43 7.2 57 12.7
Cultural and recreational services 6.9 68 3.3 32 10.2
Personal and other services 8.3 67 4.0 33 12.3
Other industries 42 .2 62 25 .4 38 67 .6
All Industries 214.8 62 132.4 38 347.2
Source: ABS 2002 (Labour Force, Aug 2002: Australia, Cat. no. 6203.0)
National Perspective Part 1 I 4 I
Notes to Profile of Participants
6
9
Australian Industry Group (AIG) 2002, Submission to the Royal Commission into the Building and Construction Industry, 28 March, exhibit 441, document 016.0672.0673.0001_001 at 0009-{)01 0.
Overview of Private Meetings held between the Honourable TRH Cole RFD QC and participants in the bui lding and construction industry, exhibit 442, paragraphs 39-40, document 088.0525.0010.0001.
Commission estimates based on ABS 2002 (Building Activity, June Quarter 2002: Australia, Cat. no. 8752.0); ABS 2002 (Engineering Construction Activity, June Quarter 2002: Australia, Cat. no. 8762.0).
Construction, Forestry, Mining and Energy Union 2002, Submission to the Royal Commission into the Building and Construction Industry in reference to discussion paper 3, 3 July, exhibit 825, document 001. 1819.1805.0003 at 0003.
Construction, Forestry, Mining and Energy Union 2002, Submission to the Royal Commission into the Building and Construction Industry in reference to discussion paper 3, 3 July, exhibit 825, document 001. 1819.1805.0003 at 0003.
Australian Prudential Regulation Authority (APRA) (online), Superannuation Institutions Statistics, Superannuation Market Statistics [accessed October 2002]. www.aora.qov.au/Statistics/Superannuation Market -Statistics. cfm
Australian Industry Group 2001, Statement by the Australian Industry Group, exhibit 17, document 100.0964 0072.0001 at 0020.
Overview of Private Meetings held between the Honourable TRH Cole RFD QC and participants in the building and construction industry, exhibit 442, paragraphs 37- 38, document 088.0525.0010.0001.
Overview of Private Meetings held between the Honourable TRH Cole RFD QC and participants in the building and construction indust ry, exhibit 442, paragraphs 37, document 088.0525.0010.0001. 10 Overview of Private Meetings held between the Honourable TRH Cole RFD QC and participants in the
building and constru ction industry, exhibit 442, paragraphs 38, document 088.0525.0010.0001. 11 Australian Prudential Regulation Authority (online), Superannuation Market Statistics June 2002 [accessed 14 January 2003]. http://www.apra.qov.au/Statistics/Superannuation-M arket-Statistics.cfm 12
Moneymanager (online), Superannuation [accessed 8 November 2002], http://www.moneymanager.com.au/tools/factsheets/super funds.html 13 Moneymanager (online), Superannuation [accessed 8 November 2002],
http://www.moneymanager.com.au/tools/factsheets/super funds.html 14 Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase One, 15 May, exhibit 494, parag raph 203, _ document 005.0151.0052.0002. 15
Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase One, 15 May, exhibit 494, paragraph 218, document 005.0151.0052.0002. 16 CBUS 2000 (online), Members, Australia [accessed October 2002].
http://www. cbussuper. com .au/members 17 CBUS 2000 (on line), Members, Australia [accessed October 2002]. http :1 !www. cbussuper. com. au/members 18
Commission estimates based on ABS 2002 (Building Activity, June Quarter 2002: Australia, Cat. no. 8752.0); ABS 2002 (Engineering Construction Activity, June Quarter 2002: Australia, Cat. no. 8762.0). 19 Parliament of Australia, Joint Standing Committee on Public Works,
www.aph.qov.au/house/committee/pwc/reports.htm . 20 Australian Procurement and Construction Council 2002, Client Skills: Skills required by Government as the Construction Industry Client, p. 2, [accessed 7 January 2003].
http://www.apcc.qov.au/apcc/docs/CiientSkills-v2.pdf 21 New South Wales Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 19 April, exh ibit 558, document 023.0638.0572.0001 at 0003.
1 4 2 Final Report of the Royal Commission into the Building and Construction Industry
22 Western Australian Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 6 March, exhibit 250, paragraph 65, document 030.0157.0729.0006.
23 Tasmanian Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 21 February, exhibit 179, document 016.0409.0260.0002 at 0002. 24 Northern Territory Government 2002, Submission to the Royal Commission into the Building and
Construction Industry, 22 March, exhibit 822, document 040.0429.0811.0002 at 0003.
25
Department of Infrastructure (Victoria) (online), Code of Practice for the Building and Construction Industry (March 1999), cl. 1.3.3 [accessed 6 January 2003],
http://www.buildinqcommission.com.au/ CVICWeb/knowledge/Code%20of%20Practice%20Buildinq.pdf 26 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 2 [accessed 6 January 2003],
http://www.apcc.qov.au/apcc/docs/code of practice.pdf 27 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 2 [accessed 6 January 2003],
http://www.apcc.qov.au/apcc/docs/code of oractice.pdf 28 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the
Construction Industry, p. 3 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of practice.pdf 29 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the
Construction Industry, p. 3 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of oractice.pdf
30 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 3 [accessed 6 January 2003], http :1 /www.apcc. qov.au/apcc/docs/ code of practice. pdf 31
Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 3 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of practice.pdf 32
Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 5 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of practice.pdf 33
Australian Procurement and Construction Council 1997 (onl ine), National Code of Practice for the Construction Industry, p. 6 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of practice.pdf. 34
Australian Procurement and Construction Council 1997 (online), National Code of Practice for the Construction Industry, p. 6 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of oractice.pdf 35 Australian Procurement and Construction Council 1997 (online), National Code of Practice for the
Construction Industry, p. 8 [accessed 6 January 2003], http://www.apcc.qov.au/apcc/docs/code of practice.pdf 36 Victoria- Overview Bundle Vol 1, exhibit 2(A), document 007.0137.0535.0084 at 0094. 37
Queensland Department of Industrial Relations 2000, Code of Practice for the Building and Construction Industry, cl. 1.1 [accessed 8 January 2003], http://www.ir.qld.qov.au/publications/b&ccodeofpractice.pdf
38 Kobelke, J. (Hon) 2002 (online), New Code of Practice for the Construction Industry, Media Statement, 28 January 2002, paragraph 1 [accessed 10 January 2002], http://www.mediastatements.wa.gov.au/medialmedia.nsf!HTMUMinisters+Menu?openDocument
39 Western Australian Government 2002 (online), Code of Practice for the Building and Construction Industry in Western Australia, p. 5 [accessed 20 January 2003], http://www.docep.wa.gov.au/ lr/publications/pdfs/ConductCode.pdf
National Perspective Part 1 143
40 Tasmanian Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 21 February, exhibit 179, document 016.0409.0260.0002 at 0004.
4 1
Tasmanian Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 21 February, exhibit 179, document 016.0409.0260.0002 at 0004.
42 Territory Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 22 March, exhibit 822, document 040. 0429.081 1.0002 at 0005.
43
Northern Territory Government 2002, Submission to the Royal Commission into the Building and Construction Industry, 22 March, exhibit 179, document 016.0409.0260.0002 at 0005.
44 Australian Procurement and Construction Council 2002, Client Skills: Skills required by Government as the Construction Industry Client, p. 10 [accessed 7 January 2003], http://www.apcc.gov.au/apcc/docs/CiientSkills-v2 .pdf
45
Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase One, 15 May, exhibit 494, document 005.0151.0052.0002 at 0006. 46 Commonwealth Government, Department of In dustry, Tourism and Resources 1999 (online), Building for
Growth: Key Initiatives ofthe Building and Construction Industries Action Agenda, 6 May [accessed 9 January 2003], http://www.i ndustrv.gov.au/ librarv/content librarv/ BC brochure.pdf 47 Commonwealth Government, Department of Industry, Tourism and Resources 1999 (online) , Bwlding for
Growth: Building and Construction Industries Action Agenda, 6 May [accessed 9 January 2003], http://www. industrv. gov.au/ librarv/content librarv/BC-response. pdf 48 Commonwealth Government, Department of Industry, Tourism and Resources 1999 (online), Building for
Growth: Key Initiatives of the Building and Construction Industries Action Agenda, 6 May [accessed 9 January 2003], http://www.industrv.gov.au/librarv/content librarv/BC brochure. pdf 49 Thompson, M. 1995, 'Current Trends in the Construction Industry - What will happen to Government
Reforms and Best Practice', paper presented at Synergy Conventions - International Best Practice in Construction , Sydney, Australia. 50 New South Wales Government, Premier's Department 1992 (online), Memorandum No. 92-33: Implementation of Recommendation from the Royal Commission into Productivity in the Building Industry
[accessed 1 July 2002], http://www.prerniers.nsw.gov.au/pubs dload part4/orem circs rnemos/prern memos/1992/m92-33.htm 51 New South Wales Government, Premier's Department 1992 (online), Memorandum No. 92-33:
Implementation of Recommendation from the Royal Commission into Productivity in the Building Industry
[accessed 1 July 2002], http://www.prerniers.nsw.gov.au/pubs dload part4/prem circs rnemos/prern memos/ 1992/m92-33.htm
52 New South Wales Government, Premier's Department 1992 (online) , Memorandum 92-37: Code of Practice for the Construction Industry [accessed 1 July 2002], http://www.premiers.nsw.gov.au/pubs dload part4/prem circs memos/ prern rnemos/1992/rn92-37.html 53 Local Government Act 7993 (NT), ss182(1) (by-law power), 121, 131 (control of roads), Sch. 2 (control of
public places); Peaceful Assembly Act 1992 (Old), s5(4) (the power of local authorities to regulate pedestrian ma ll s is subject to the right of a person 'to assemble peacefully with others in a public place'); Local Government Act 1993 (Tas), ss20 (powers), 145 (by-laws); Local Government Act 1989 (Vic), ss205, 207, Sch. 11 ell. 1 0(1 )(a) , 11. 54
Australian Constructors Association (ACA) (online) About ACA [accessed 6 January 2003], http://www.constructors.eom.au/pages/about/whoarewe.htm 55 Austral ian Constructors Association (ACA) (online) About ACA [accessed 6 January 2003], http://www. constructors. corn .au/pages/about/whoarewe. htm 56 Dempsey Statement, exhibit 905, attachment 1, paragraph 9, document 080.0566.0560.0015. 57
Australian Constructors Association (ACA) (online) About ACA [accessed 6 January 2003], http://www.constructors.eom.au/pages/about/whoarewe.htrn
1 44 Final Report of the Royal Commission into the Building and Construction Industry
58 Australian Constructors Association (ACA) (online) About ACA [accessed 6 January 2003], http://www.constructors.com.au/pages/about/whoarewe.htm
59 Australian Constructors Assoc1ation (ACA) (online) Code of Ethics [accessed 6 January 2003], http://www.constructors.com.au/ pages/code/ policies.htm 60 Australian Industry Group (AIG) (online), Member services brochure [accessed 6 January 2003],
http://www.aigroup.asn.au/PDFs/member services 1208.pdf 61 Australian Industry Group (AI G) 2001 , Submission to the Royal Commission into the Building and Construction Industry, 12 November, exhibit 17, document 100.0964.0072.0001 at 0048.
62 Australian Industry Group (AI G) 2001 , Submission to the Royal Commission into the Building and Construction Industry, 12 November, exhibit 17, document 100.0964.0072.0001 at 0004. 63 Master Builders Australia Inc (MBA Inc) 2001, Submission to the Royal Commission into the Building and
Construction Industry, 11 December, exhibit 6, document 064.0681.0226.0003 at 0005. 64 Master Builders Australia Inc (MBA Inc) 2001, Submission to the Royal Commission into the Building and Construction Industry, 11 December, exhibit 6, document 064.0681.0226.0003 at 0005. 65
Master Builders Australia Inc (M BA Inc) 2001, Submission to the Royal Commission into the Building and Construction Industry, 11 December, exhibit 6, document 064.0681.0226.0003 at 0007-0010. 66 Master Builders Australia Inc (MBA Inc) 2001, Submission to the Royal Comm1ssion into the Building and
Construction Industry, 11 December, exhibit 6, document 064.0681 .0226.0003 at 0005. 67 Master Builders Australia Inc (MBA Inc) 2001 , Submission to the Royal Commission into the Building and
Construction Industry, 11 December, exhibit 6, document 064.0681 .0226.0003 at 0006. 68 Housing Industry Association Ltd (HIA) 2002, Submission to the Royal Commission into the Building and
Construction Industry, 25 March, exhibit 521, document 007.0670.0881.0001 at 0008. 69 Housing Industry Association Ltd (HIA) 2002, Submission to the Royal Commission into the Building and Construction Industry, 25 March, exhibit 521, document 007.0670.0881.0001 at 0010.
70
Housing Industry Association Ltd (HIA) 2002, Submission to the Royal Commission 1nto the Building and Construction Industry, 25 March, exhibit 521 , document 007.0670.0881.0001 at 0010- 0011. 71 Civil Contractors Federation (CCF) 2000, Submission to the Senate Committee in reference to Workplace
Relations Amendment Bill 2000, 25 May, exhibit 168, document 017.0705.0540.0208. 72 Civil Contractors Federation (CCF) 2000, Submission to the Senate Committee in reference to Workplace Relations Amendment Bill 2000, 25 May, exhibit 168, document 017.0705.0540.0208. 73
Civil Contractors Federation (CCF) (online), About the Civil Contractors Federation [accessed
21 December 2002], http://content.e-mach.com/ccfnat!Your Website Page 2
74
Civil Contractors Federation (CCF) 2001 , Submission to the Royal Commission into the Building and Construction Industry, 1 November, exhibit 168, document 017.0705.0540.0198 at 0199. 75 Civil Contractors Federation (CCF) (online), CCF Code of Ethics [accessed 21 December 2002],
http:/ / content .e-mach .com/backdoor /ccfnat/code ethics/
76
National Electrical and Communications Association (NECA) 2002, Submission to the Royal Commission into the Building and Construction Industry, 21 May, exhibit 528, document 097.0993.0724.0002 at 0004. 77 Australian Industrial Relations Commission (AIRC) (online), National Electrical and Communications
Association Constitution and Rules [accessed 4 January 2003], http://www.airc.gov.au/ organisations/ rules/ 233vfed/233vfed.pdf 78 Air Conditioning and Mechanical Contractors' Association of Victoria Ltd (AMCA) 2002, Submission to the
Royal Commission into the Building and Construction Industry, 19 July, exhibit 857, document 031 .0615.0400.0001 at 0002.
79
Air Conditioning and Mechanical Contractors' Association of Victoria Ltd (AMCA) (on line), Code of Ethics [accessed 21 December 2002], http://www.amca.com.au/Code of Ethics/code of ethics.html
National Perspective Part 1 l 45
80 Australian Industry Group (AIG) 2002, Submission to the Royal Commission into the Building and Construction Industry, 12 November, exhibit 17, document 100.0964.0072.0001 at 0023.
8 1
Victorian Auditor-General 1999, Road Construction in Victoria: Major projects managed by VicRoads: Performance Audit Report 61, Melbourne, parag raph 8.48.
82
Master Bui lders Australia Inc (MBA In c) 2001 , Submission to the Royal Commission into the Building and Construction Industry, 11 December, exhibit 6, paragraph 74, document 064.0681.0226.0003.
83 Mayhew, C., Young, C., Ferris, R. & Hartnett, C., 1997, An Evaluation ofthe Impact of Targeted Interventions on the OHS Behaviours of Small Business Building Industry Owners/Managers/Contractors,
NOHSC, Sydney, cited in Bui lding and Construction Industry (Workplace Health and Safety) Taskforce 2000, Health and Safety in the Building and Construction Industry- Final Report, Queensland, p. 18.
84 As quoted by the CFMEU, Sutton Statement, exhibit 701, Appendix C, paragraph 3.1, document 098.0019.0116.0039 at 0043--D044 .
85 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Au slnfo, Canberra, p. 12.
86 Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase One, 15 May, exhibit 494, paragraph 25, document 005.0151.0052.0002.
87
ASS 2001 (Business Operations and Industry Performance, 1999-2000, Cat. no. 8140.0). Note: The 2000-01 data for this report exc ludes the Agriculture, forestry and fishing industry statistics. 88 ASS 2001 (Business Operations and Industry Performance, 1999-2000, Cat. no. 8140.0) . Note: The 2000-01 data for this report excludes the Agriculture, forestry and fishing industry statistics. 89 ASS 1999 (Private Sector Construction Industry Australia, 1996-97, Cat. No. 8772. 0) . 90 ASS 1999 (Private Sector Construction Industry, Australia, 1996-97, Cat. no. 8772.0). Note: The
2000-01 data for this report excludes the Agriculture, forestry and fishing industry statistics. 9 1 Overview of Private Meetings held between the Honourable TRH Cole RFD QC and participants in the building and construction industry, exhibit 442, paragraph 13, document 088.0525.0010.0001. 92 ASS 2002 (Forms of Em ployment: Australia, Sept 2002, Cat. no. 6359.0). 93 ASS 2002 (Glossary, Labour Force, Austral ia, Oct 2002, Cat. No. 6203.0). 94
ASS 2002 (Labour Force: Australia, Aug 2002 , Cat. no. 6203.0). 95 ASS 2002 (6291.0.40.001 Labour Force (SE) Self Employed- Australia- Quarterly- Labour Force- Own Account Workers - Australia, Aug 2002, Cat. no. 6291.0) and ASS 2002 (6291.0.40.001 Labour Force (SE) Self Employed- Australia- Quarterly - Labour Force- Employed Persons Table 91 - Australia, Aug 2002,
Cat. no. 6291 .0). 96 ASS 2002 (6291.0.40.001 Labour Force (SE) Self Employed- Au stralia- Quarterly- Labour Force- Own Account Workers- Australia, Aug 2002, Cat. no . 6291.0) and ASS 2002 (629 1.0.40.001 Labour Force (SE) Self Employed- Australia - Quarterly- Labour Force- Employed Persons Table 91- Australia , Aug 2002,
Cat. no. 6291 .0). 97 Underhill, E. 1999 (on line), 'Collective Action and Labour Hire Workers : A Preli minary Analysis of the 1997 Victorian Labour Hire Dispute', a paper presented at the Thirteenth Annual Conference of the Association of
Industrial Relations Academics of Australia and New Zealand, 'Current Research in Labour Relations' ,
Adelaide, vol. 2, p. 278 [accessed 7 January 2003]. http://www. mnqt. waikato. ac.nz/depts/ SMU Airaanz/old/conferce/adelaide 1999/pdf/pdf/ Underhilln .pdf 98 Construction, Forestry, Mining and Energy Union 2002, Response by the CFMEU Construction & General Division to Discussion Paper 16- Demarcation Disputes in the Building and Construction Industry,
6 December, exhibit 1913, document 050.0510.0860.002 at 0004-0005. 99 Productivity Commission 1999, Work Arrangements on Large Capital City Build1ng Projects. Labour Market Research Report, Ausl nfo, Canberra, p. 25.
100 Ferguson, T7601 .
146 Final Report of the Royal Commission into the Building and Construction Industry
101
Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects. Labour Market Research Report, Auslnfo, Canberra, p. xxi.
102 Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [5 .52]. 102 ABS 2002 (Australia Now, Construction, Union Membership, Jan 2002). Note: These numbers represent a
proportion of union members surveyed at an appointed tim e during August of each year. 104 Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [12 .34] .
105 Shorten, B. (online), Changing tactics for changing times [accessed 3 January 2003]. http://www.awu .net.au/media/media releases/ news93.html 106
Construction, Forestry, Mining and Energy Union (online), CFMEU Amalgamation, [accessed 29 May 2002]. http://www.cfmeu.asn.au/construction/historvjamalg.html, exhibit 701 , Appendix A, document 098.0019 0116 0024 107
Constru ction, Forestry, Mining and Energy Union (online), Solidarity and Political Action - Fi ghting for a better world [accessed 29 May 2002], http://www.cfmeu.asn.au/construction/ history/ solid.html, exhibit 701 , Appendix A, document 098 001 9. 0116.0032. 108
CFM EU Rules (1 05N -FED: incorporates alterations of 19 July 2002), Rule 4, exhibit 1342, document 033.0621.0146 .0066 at 0084-Q085. 109 CFMEU Rules (1 05N -FED: incorporates alterati ons of 19 July 2002), Ru le 42D, Divisional Restructuri ng
(FFTS) , exhibit 1342, document 033.0621 .0 146.0066 at 0123. 110 CFMEU Construction and General Division Rules (1 05N:BWIU: incorporates alterations of 13 December 2002), Rule 18, 28, exhibit 2076, document 098 0857 0170.0001 at 0022-0025, 0030. 111
CFMEU Construction and General Division Rul es (1 05N: BWIU: incorporates alterations of 13 December 2002). Rule 28, exhibit 2076, document 098.0857.0170.0001 at 0030. 112 Construction, Forestry, Mining and Energy Union , Construction an.d General Division, National Office (200 1),
Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Queensland Construction Labourers Divisional Branch (2001), Financial Statemen ts for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union , Constructi on and General Division, Queensland Construction Workers Divisional Branch (2001), Financial Statements for year ended 31 December 2000, 14 March; Construction, Forestry, Mi ning and Energy Union, Construction and General Division, South Australian Branch (2001 ), Fi nancial Statements for year ended 31 Decem ber 2000, 22 May; Construction, Forestry, Mining and Energy Union , Construction and General Division, Western Australian Branch (2001 ), Financial Statements for year ended 31 December 2000,
19 March; Construction, Forestry, Mining and Energy Union, Construction and General Division, Australian Capital Territory Branch (2001 ), Financial Statements for year ended 31 December 2000, 28 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Tasmanian Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 18 May; Construction , Forestry,
Mining and Energy Union, Construction and General Division, New South Wales Divisional Branch (2001 ),
Financial Statements for year ended 31 December 2000, 16 May; Constru ction, Forestry, Mining and Energy Union, Construction and General Division, Vi ctorian Building Uni ons Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 15 August; Construction, Forestry, Mining and Energy Union, Construction and General Division, Clay and Ceramics Industry Divisional Branch (2001), Financial Statements for year ended 31 December 2000, 23 January.
i
13
Construction, Forestry, Mining and Energy Union , Construction and General Division, National Office (2001 ), Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Queensland Construction Labourers Divisional Branch (2001), Financial Statements fo r year ended 31 December 2000, 22 May; Construction , Forestry, Mining and Energy Union, Construction and General Division, Queensland Construction Workers Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 14 March; Constructio n, Forestry, Mining and Energy Union, Construction and General Division, South Australian Branch (2001), Financial Statements for
National Perspective Part 1 I 4 7
year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Western Australian Branch (2001), Financial Statements for year ended 31 December
2000, 19 March; Construction, Forestry, Mining and Energy Union, Construction and General Division,
Australian Capital Territory Branch (2001 ), Financial Statements for year ended 31 December 2000, 28 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Tasmanian Divisional
Branch (2001), Financial Statements for year ended 31 December 2000, 18 May; Construction, Forestry,
Mining and Energy Union, Construction and General Division, New South Wales Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 16 May; Construction, Forestry, Mining and Energy
Union, Construction and General Division , Victorian Building Unions Divisional Branch (2001 ), Financial
Statements for year ended 31 December 2000, 15 August; Construction, Forestry, Mining and Energy Union, Construction and General Division, Clay and Ceramics Industry Divisional Branch (2001), Financial
Statements for year ended 31 December 2000, 23 January.
114 Construction, Forestry, Mining and Energy Union, Construction and General Division, National Office (2001 ).
Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy
Union, Construction and General Division , Queensland Construction Labourers Divisional Branch (2001), Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy
Union, Construction and General Division, Queensland Construction Workers Divisional Branch (2001),
Financial Statements for year ended 31 December 2000, 14 March; Construction, Forestry, Mining and Energy Union, Construction and General Division, South Australian Branch (2001 ), Financial Statements for
year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Western Australian Branch (2001 ), Financial Statements for year ended 31 December
2000, 19 March; Construction, Forestry, Mining and Energy Union, Construction and General Division, Australian Capital Territory Branch (2001), Financial Statements for year ended 3 1 December 2000, 28 May;
Construction, Forestry, Mining and Energy Union, Construction and General Division, Tasmanian Divisional
Branch (2001 ), Financial Statements for year ended 31 December 2000, 18 May; Construction, Forestry, Mining and Energy Union , Construction and General Division, New South Wales Divisional Branch (2001),
Financial Statements for year ended 31 December 2000, 16 May; Construction, Forestry, Mining and Energy Union, Construction and General Division , Victorian Building Unions Divisional Branch (2001), Financial
Statements for year ended 31 December 2000, 15 August; Construction, Forestry, Mining and Energy Union, Construction and General Division, Clay and Ceramics Industry Divisional Branch (2001), Financial
Statements for year ended 31 December 2000, 23 January. 115 Construction, Forestry, Mining and Energy Union, Construction and General Division, National Office (2001 ),
Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction and General Division, Queensland Construction Labourers Divisional Branch (2001 ),
Financial Statements for year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy
Union, Construction and General Division, Queensland Construction Workers Divisional Branch (2001), Financial Statements for year ended 31 December 2000, 14 March; Construction, Forestry, Mining and
Energy Union, Construction and General Division, South Australian Branch (2001), Financial Statements for
year ended 31 December 2000, 22 May; Construction, Forestry, Mining and Energy Union, Construction
and General Division, Western Australian Branch (2001), Financial Statements for year ended 31 December
2000, 1 g March; Construction, Forestry, Mining and Energy Union, Construction and General Division,
Australian Capital Territory Branch (2001), Financial Statements for year ended 31 December 2000, 28 May;
Construction, Forestry, Mining and Energy Union, Construction and General Division, Tasmanian Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 18 May; Construction, Forestry,
Mining and Energy Union, Construction and General Division, New South Wales Divisional Branch (2001 ), Financial Statements for year ended 31 December 2000, 16 May; Construction, Forestry, Mining and Energy
Union, Construction and General Division, Victorian Building Unions Divisional Branch (2001), Financial Statements for year ended 31 December 2000, 15 August; Construction, Forestry, Mining and Energy
Union, Construction and General Division, Clay and Ceramics Industry Divisional Branch (2001 ), Financial
Statements for year ended 31 December 2000, 23 January. 116 Construction, Forestry, Mining and Energy Union (online) , What is the CFMEU? [accessed 17 December 2002], http://www.cfmeu.asn.au
148 Final Report of the Royal Commission into the Building and Construction Industry
11 7 Sutton Statement, exhibit 701, paragraph 6, document 098.0019.0116.0001.
118 Maitland AIRC Statutory Declaration, CFMEU National Secretary, 3 April 2002, exhibit 2006, document 085.0391 0438.0001 at 0003.
119 Sutton Statement, exhibit 701, paragraph 6, document 098 .0019.0116.0001. 12 ° Construction, Forestry, Mining and Energy Union (online), Welcome to CFMEU Construction Online
[accessed 17 December 2002], http://www.cfmeu.asn.au/construction 121 CFMEU Construction and General Division Rul es (1 05N:BWIU: incorporates alterations of 13 December 2002), Rule 29, exh1b1t 2076, document 098.0857 0170.0001 at 0030-0031; CFM EU Rules (1 05N-FED:
incorporates alterations of 19 July 2002), Ru le 2-3, exhibit 1342, document 033.0621.0146.0066 at 0068-0084.
122 CFMEU Rules (1 05N-FED: incorporates alterations of 19 July 2002), Rule 7(iv), exhibit 1342, document 033.0621 .0146.0066 at 0087.
123 CFMEU Rules (105N -FED: incorporates alterations of 19 July 2002), Rule 8(iv)(a), exhibit 1342, document 033.0621.0146.0066 at 0089. 124
Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services Union (CEPU) (online), CEPU General Information - CEPU Structure, [accessed 19 November 2002], http://apro.techno.net.au/ceou/tob201.htm; CEPU CD General Information - CEPU CD History, [accessed 19 November 2002], http://www.apro.tech.net.au/cepu/tob205.htm 125
Rules of the Communications, Electrical , Electronic , Energy, Information , Postal, Plumbing and Allied
Services Union of Australia (128V Incorporates alterations of 17 April 2002), Rule 3, exhibit 1995, document 091 .0549 0085 0002 at 0019- 0021 .
126 CEPU Rules, Section "B" , Rules of the Electrical Division of the CEPU (128V-ELE: incorporates alterations of 17 April 2002), Ru le 1.1, exhibit 1996, document 085.0222.0445.0083 at 0084. 127
CEPU Rules, Section "C", Rules of the Plumbing Division of the CEPU (128V-P LU: incorporates alterations of 31 October 2000), Rule 1, exhibit 1994, document 085 0222 0445.0002 at 0004. 128 CEPU Rules, Section "B", Rules of the Electrical Division of the CEPU (128V-ELE: incorporates alterations of
17 April 2002), Rule 11.1, exhibit 1996, document 085.0222 .0445.0083 at 0103. 129 CEPU Rules, Section "C", Rules of the Plumbing Divis1 on of the CEPU (128V-PLU: incorporates alterations of 31 October 2000), Rule 48.1.1 exhibit 1994, document 085 0222.0445.0002 at 0029. 130
CEPU Rules, Section "B", Rules of the Electrical Division of the CEPU (1 28V-ELE: incorporates alterations of 17 April 2002), Rule 11.12.1, exhibit 1996, document 085.0222.0445 0083 at 0109. 131 Rules of the Communications, Electrical , Electronic, Energy, Information, Postal , Plumbing and Allied
Services Union of Australia (128V: incorporates alterations of 17 April 2002), Rule 4, 6, exhibit 1995, document 091.0549.0085.0002 at 0021 - 0023, 0024-0025; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (C EPU) (on line), CEPU CD General Information CEPU CD History, [accessed 19 November 2002], http://apro.techno.net.au/cepu/tob205.htm; CEPU General Information- CEPU Structure, [accessed 19 November 2002],
http://apro.techno.net.au/cepu/tob201 .htm 132 Rules of the NSW Divisional Branch of the Electrical Division of the Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (1 28V-NSW: incorporates
alterations of 3 March 2000), Rule 1A, exhibit 1997, document 085.0222.0445.0044 at 0045.
133 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division , National Office (2001), Annual Report 31 December 2000, 4 June; Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services Union of Australia, Electrical Division, New South Wales Branch (2001 ), Financial Statements 31 December 2000, 9 August; Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services
Union of Australia, Electrical Division, Victorian Branch (2001), Financial Report 31 December 2000, 30 June; Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services
National Perspective Part 1 I 49
Union of Australia, Electrical Division, Queensland Branch (2001), Annual Report 31 December 2000,
9 April; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services
Union of Australia, Electrical Division, South Australian Branch (2001), Balance Sheets and Revenue Statements 31 December 2000, 4 April; Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia, Electrical Division, Western Australian Branch (2001 ),
Financial Accounts 31 December 2000, 31 May; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division, Tasmanian Branch
(2001), Financial Accounts 31 December 2000, 22 January. 134 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Un1on of
Australia, Plumbing Division, National Office (2001), Financial Report, 6 December; Communications,
Electrical, Electronic, Energy, Information, Postal, Plumbing and Al lied Services Union of Australia , Plumbing Division, Canberra Branch (2001), Financial Accounts, 5 June; Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Tasmanian
Branch (2001 ), Financial Report, 16 July; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Queensland Branch (2001 ),
Financial Report, 14 June; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia, Plumbing Division, South Australian Branch (2001), Financial
Statements, 26 September; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia, Plumbing Division, Victorian Branch (2001 ), Financial Report, 25 July; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division, New South Wales Branch (2001), Financial Report 31 March 2001,
23 October; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Western Australian Branch (2001), Financial Report, 30 August. 135
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division, National Office (2001 ), Annual Report 31 December 2000, 4 June;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Electrical Division, New South Wales Branch (2001), Financial Statements 31 December 2000, 9 August; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services
Union of Australia, Electrical Division, Victorian Branch (2001 ), Financial Report 31 December 2000,
30 June; Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Al lied Services Union of Australia, Electrical Division, Queensland Branch (2001), Annual Report 31 December 2000,
9 April; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia , Electrical Division, South Australian Branch (2001), Balance Sheets and Revenue
Statements 31 December 2000, 4 April; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division, Western Australian Branch (2001),
Financial Accounts 31 December 2000, 31 May; Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services Union of Australia, Electrical Division, Tasmanian Branch
(2001), Financial Accounts 31 December 2000, 22 January. 136 Communications, Electrical, Electron ic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division, National Office (2001 ), Financial Report, 6 December; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing
Division, Canberra Branch (2001 ), Financial Accounts, 5 June; Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Tasmanian
Branch (2001), Financial Report, 16 July; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia , Plumbing Division, Queensland Branch (2001 ),
Financial Report, 14 June; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia, Plumbing Division, South Australian Branch (2001), Financ1al
Statements, 26 September; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Victorian Branch (2001 ), Financial Report, 25 July;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, New South Wales Branch (2001 ), Financial Report 31 March 2001,
I 50 Final Report of the Royal Commission into the Building and Construction Industry
23 October; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia, Plumbing Division, Western Australian Branch (2001), Financial Report, 30 August.
137 Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Electrical Division, National Office (2001 ), Annual Report 31 December 2000, 4 June;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Electrical Division, New South Wales Branch (2001), Financial Statements 31 December 2000,
9 August; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services
Union of Australia, Electrical Division , Victorian Branch (2001), Fi nancial Report 31 December 2000,
30 June; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division , Queensland Branch (2001 ), Annual Report 31 December 2000,
9 April; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division, South Australian Branch (2001), Balance Sheets and Revenue
Statements 31 December 2000, 4 April; Communications, Electrical , Electronic, Energy, Information, Postal ,
Plumbing and Allied Services Union of Australia, Electrical Division, Western Australian Branch (2001 ),
Financial Accounts 31 December 2000, 31 May; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical Division, Tasmanian Branch
(2001), Financial Accounts 31 December 2000, 22 January.
138 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division , National Office (2001), Financial Report, 6 December; Communications,
Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Canberra Branch (2001 ), Financial Accounts, 5 June; Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Tasmanian
Branch (2001), Financial Report, 16 July; Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Queensland Branch (2001 ), Financial Report, 14 June; Communications, Electrical , Electronic, Energy, Information, Postal , Plumbing
and Allied Services Union of Australia, Plumbing Division, South Australian Branch (2001), Financial
Statements, 26 September; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia, Plumbing Division, Victorian Branch (2001), Financial Report, 25 July;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division, New South Wales Branch (2001 ), Financial Report 31 March 2001, 23 October; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia, Plumbing Division, Western Australian Branch (2001), Financial Report,
30 August.
139 The income of $11.9 million excludes the $1.4 million received in sustentation fees by the National Office of the Electrical Division. Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia, Electrical Division, National Office (2001 ), Annual Report 31 December 2000, 4 June;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Electrical Division, New South Wales Branch (2001) , Financial Statements 31 December 2000, 9 August; Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services
Union of Australia, Electrical Division, Victorian Branch (2001), Financial Report 31 December 2000, 30 June;
Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Electrical Division, Queensland Branch (2001), Annual Report 31 December 2000, 9 April;
Communications, Electrical, Electronic, Energy, Information, Postal , Plumbing and Allied Services Union of
Australia, Electrical Division, South Australian Branch (2001), Balance Sheets and Revenue Statements 31 December 2000, 4 April; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and
Allied Services Union of Australia, Electrical Division, Western Australian Branch (2001), Financial Accounts
31 December 2000, 31 May; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia, Electrical Division, Tasmanian Branch (2001), Financial Accounts
31 December 2000, 22 January.
National Perspective Part 1 i 51
14 ° Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Canberra Branch (2001 ), Financial Accounts, 5 June; Communications,
Electrical, ElectroniC, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing
Division, Tasmanian Branch (2001 ), Financial Report, 16 July; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Queensland
Branch (2001), Financial Report, 14 June; Communications, Electrical , Electronic, Energy, Information,
Postal , Plumbing and Allied Services Union of Australia, Plumbing Division, South Australian Branch (2001), Financial Statements, 26 September; Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia, Plumbing Division, Victorian Branch (2001), Financial
Report, 25 July; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, New South Wales Branch (2001), Financial Report 31 March
2001, 23 October; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia, Plumbing Division, Western Australian Branch (2001 ), Financial Report, 30 August. 141 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division, National Office (2001), Financial Report, 6 December. 14 2 Communications, Electrical, Electronic, Energy, Information , Postal, Plumbing and Allied Services Union of
Australia, Plumbing Division, National Office (2001), Financial Report, 6 December; Communications,
Electrical, Electronic, Energy, Information, Postal, Pl umbing and Al lied Services Union of Australia, Plumbing
Division, Canberra Branch (2001), Financial Accounts, 5 June; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Tasmanian Branch (2001 ), Financial Report, 16 July; Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia, Plumbing Division , Queensland Branch (2001),
Financial Report , 14 June; Communications, Electrical , Electronic, Energy, Information, Postal , Plumbing and Allied Services Union of Australia, Plumbing Division, South Australian Branch (2001), Financial
Statements, 26 September; Communications, Electrical , Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, Victorian Branch (2001), Financial Report, 25 July;
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumbing Division, New South Wales Branch (2001), Financial Report 31 March 2001,
23 October; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Plumb1ng Division, Western Australian Branch (2001 ), Financial Report,
30 August. 143 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union
(CEPU) (online), CEPU Communications Division, Origins of the CEPU [accessed 7 January 2003],
http://www.cepu.asn.au/comm.cepu/rules/fr stats.html 144 Rules of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia (128V: incorporates alterations of 17 April 2002), Rule 5.1.2, exhibit 1995,
document 091.0549.0085.0002 at 0023. 145 Rules of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied
Services Union of Australia (128V: incorporates alterations of 17 April 2002), Rule 5.1.3, exhibit 1995,
document 091 0549.0085 0002 at 0023. 146 Rules of the NSW Divisional Branch of the Electrical Division of the Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia (128V: incorporates alterations
of 3 March 2000), Rule 9.1, exhibit 1997, document 085.0222.0445.0044 at 0049. 147 Australian Workers' Union (online), The War that Never Ended, History of the AWU [accessed 13 November
2002], http://www.awu.net.au/historv/history.html; National Organising Centre, Policy [accessed
13 November 2002], http://www.awu.net.au/policy.html 148 Shorten Statement, exhibit 122A, paragraph 5, document 063.0805.0016.0002. 149
Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 4, exhibit 1999, document 091.0549.0085.0069 at 0079-0082.
152 Final Report of the Royal Commission into the Building and Construction Industry
150 Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 33(7), exhibit 1999, document 091.0549.0085.0069 at 0142- 0148.
151 Rules of The Australian Workers' Union (002 N: issued 10 April 2002), Rule 33(7)(d) , exh ibit 1999, document 091.0549.0085.0069 at 0143-0144.
152 Rules of The Australian Workers' Union (002N: issued 10 Ap ril 2002) , Rule 33(7)(n), exhibit 1999, document 091.0549.0085.0069 at 0145. 153
Rules of The Australian Workers' Union (002N: issued 10 April 2002) , Rule 33(7)(1), (v), (w), exhibit 1999, document 091 .0549.0085.0069 at 0146-0148. 154 Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 33(1 ), exhibit 1999, document
091.0549.0085.0069 at 0142 . 155 Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 33(3), exhibit 1999, document 091 .0549.0085.0069 at 0142.
156 Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 42(1 ), exhibit 1999, document 091.0549.0085.0069 at 0155. 157
Rules of The Australian Workers' Union (002N : issued 10 April 2002), Rule 42(3), (5), exhibit 1999 , document 091.0549.0085.0069 at 0155. 158 The Tobacco Workers Branch of the Australian Workers Union and the Federated Tobacco and Cigarette
Workers Union of Australia, New South Wales (2001), Consolidated Financial Statements for the year ended 30 June 2001, 3 1 August; Australian Workers Union National Office (2001), Summary of the Financial Accounts for the year ended 30 June 2001, 18 December; Amalgamated Australian Workers Union (SA) State Union , Greater South Australian Branch (2001 ), Statement for financial year ended 30 June 2001,
18 November; Australian Workers Union Glass and Container Industry Branch (2001), Financial Statements, 11 December; Australian Workers Un ion Technical Administrative Professional Staff and Gas Industry
Branch (2001 ), Financial Returns 2000/2001, 13 August; Australian Workers' Union, Queensland Branch and the Australian Workers' Union of Employees, Queensland (2001 ), Summary of the Combined Financial Statements for the year ended 30 June 2001, 12 December; The Australian Workers' Union, Queensland Branch (2001), Financial Statements year ended 30 June 2001, 17 October; Australian Workers Union Victorian Branch (2001 ), 2000-2001 Audited Accounts, 10 October; Australian Workers Union Whyalla!Woomera Branch (2002), Audited Financ1al Statements 2001, January ; Australian Workers' Union Tasmanian Branch (2001), Financial Statements 2000/2001, 27 July; Australian Workers' Union Western
Australian Branch (2001 ), Financial Statements for year ending 30 June 2001, 13 November; Australian Workers' Union Greater New South Wales Branch (2001 ), 2000/2001 Financial Statement, 13 August; Australian Workers' Union Port Kembla, South Coast and Southern Highlands Branch (2001 ), 2001 Financial Statements, 11 September; Australian Workers' Union Newcastle and Northern Regions Branch (2001) , Financial Statements for the year ended 30 June 2001, 22 November. 159
The Tobacco Workers Branch of the Australian Workers Union and the Federated Tobacco and Cigarette Workers Union of Australia, New South Wales (2001), Conso li dated F1nancial Statements for the year ended 30 June 2001, 31 August; Australian Workers Union National Office (2001 ), Summary of the Financial
Accounts for the year ended 30 June 2001 , 18 December; Amalgamated Australian Workers Union (SA) State Union, Greater South Australian Branch (2001), Statement for financial year ended 30 June 2001, 18 November; Australian Workers Union Glass and Container Industry Branch (2001 ), Financial Statements, 11 December; Australian Workers Union Technical Administrative Professional Staff and Gas Ind ustry
Branch (2001 ), Financial Returns 2000/2001, 13 August; Australian Workers' Union , Queensland Branch and the Australian Workers' Union of Employees, Queensland (2001), Summary of the Combined Financial Statements for the year ended 30 June 2001, 12 December; The Australian Workers' Union, Queensland Branch (2001 ), Financial Statements year ended 30 June 2001, 17 October; Australian Workers Union Victorian Branch (2001 ), 2000-2001 Audited Accounts, 10 October; Australian Workers Union Whyalla!Woom era Branch (2002), Audited Financial Statements 2001, January; Australian Workers' Union Tasmanian Branch (2001 ), Financial Statements 2000/2001, 27 July; Australian Workers' Union Western Australian Branch (2001 ), Financial Statements for year ending 30 June 2001, 13 November; Australian
National Perspective Part 1 I 53
Workers' Union Greater New South Wales Branch (2001 ), 2000/2001 Financial Statement, 13 August;
Australian Workers' Union Port Kembla, South Coast and Southern Highlands Branch (2001 ), 2001 Financial Statements, 11 September; Australian Workers' Union Newcastle and Northern Regions Branch
(2001). Financial Statements for the year ended 30 June 2001, 22 November.
160 Australian Workers Union National Office (2001 ), Summary of the Financial Accounts for the year ended 30 June 2001 , 18 December.
161 The Tobacco Workers Branch of the Australian Workers Union and the Federated Tobacco and Cigarette
Workers Union of Australia, New South Wales (2001), Consolidated Financial Statements for the year ended
30 June 2001, 31 August; Australian Workers Union National Office (2001), Summary of the Financial Accounts for the year ended 30 June 2001 , 18 December; Amalgamated Australian Workers Union (SA)
State Union, Greater South Australian Branch (2001), Statement for financial year ended 30 June 2001,
18 November; Australian Workers Union Glass and Container Industry Branch (2001 ), Financial Statements, 11 December; .A.ustralian Workers Union Technical Administrative Professional Staff and Gas Industry
Branch (2001 ), Financial Returns 2000/2001, 13 August; Australian Workers' Union, Queensland Branch
and the Australian Workers' Union of Em oloyees, Queensland (2001 ), Summary of the Combined Financial Statements for the year ended 30 June 2001 , 12 December; The Austral ian Workers' Union, Queensland
Branch (2001 ), Financial Statements year ended 30 June 2001, 17 October; Australian Workers Union
Victorian Branch (2001 ), 2000-2001 Audited Accounts, 10 October; Australian Workers Union Whyalla/Woomera Branch (2002), Audited Financial Statements 2001, January; Australian Workers' Union
Tasmanian Branch (2001 ). Financial Statements 2000/2001, 27 July; Australian Workers' Union Western Australian Branch (2001 ), Financial Statements for year ending 30 June 2001, 13 November; Australian
Workers ' Union Greater New South Wales Branch (2001). 2000/2001 Financial Statement, 13 August; Australian Workers' Union Port Kembla, South Coast and Southern Highlands Branch (2001 ), 2001
Financial Statements, 11 September; Australian Workers' Un ion Newcastle and Northern Regions Branch
(2001 ), Financial Statements for the year ended 30 June 2001 , 22 November. 162 The Tobacco Workers Branch of the Australian Workers Union and the Federated Tobacco and Cigarette
Workers Union of Australia, New South Wales (2001 ), Consolidated Financial Statements for the year ended 30 June 2001, 31 August; Australian Workers Union National Office (2001), Summary of the Financial
Accounts for the year ended 30 June 2001 , 18 December; Amalgamated Australian Workers Union (SA) State Union, Greater South Australian Branch (2001), Statement for financial year ended 30 June 2001,
18 November; Australian Workers Union Glass and Container Industry Branch (2001 ), Financial Statements, 11 December; Australian Workers Union Technical Administrative Professional Staff and Gas Industry
Branch (2001 ), Financial Returns 2000/ 2001, 13 August; Australian Workers' Union , Queensland Branch and the Australian Workers' Union of Employees, Queensland (2001 ), Summary of the Combined Financial
Statements for the year ended 30 June 2001, 12 December; The Australian Workers' Union, Queensland
Branch (2001), Financial Statements year ended 30 June 2001, 17 October; Australian Workers Union Victorian Branch (2001). 2000-2001 Audited Accounts, 10 October; Australian Workers Union
Whyalla/Woomera Branch (2002), Audited Financial Statements 2001, January; Australian Workers' Union Tasmanian Branch (2001), Financial Statements 2000/2001, 27 July; Australian Workers' Union Western
Australian Branch (2001 ), Financial Statements for year ending 30 June 2001, 13 November; Australian
Workers' Union Greater New South Wales Branch (2001 ), 2000/2001 Financial Statement, 13 August;
Australian Workers' Union Port Kembla, South Coast and Southern Highlands Branch (2001 ), 2001 Financial Statements, 11 September; Australian Workers' Union Newcastle and Northern Regions Branch
(2001). Financial Statements for the year ended 30 June 2001 , 22 November. 163 Rules of The Australian Workers' Union (002N: issued 10 April 2002), Rule 7, exhibit 1999, document
091 .0549.0085.0069 at 0114- 0116.
164 Shorten Statement, exhibit 122A, paragraph 6, document 063.0805.0016.0002. 165 Shorten Statement, exhibit 122A, paragraph 6, document 063.0805.0016.0002. 166
Branches of the AWU in NSW, Queensland, South Australia and Western Australia, as set out in Rule 8 of
the Rules of The Australian Workers' Union (002N: issued 10 April 2002), exhibit 1999, document 091 .0549.0085.0069 at 0116- 0119.
i 54 Final Report of the Royal Commission into the Building and Construction Industry
167 John Ferguson Statement, exhibit 992, paragraph 9(d), document 057.0863.0167 .0001; Australian Manufacturing Workers' Union (online), Australian Manufacturing Workers Union Information Kit , pp. 7- 8 [accessed 17 December 2002], http://www.amwu.asn.au/images/amwu information kit. pdf 166
Rules of the AMWU (188V: incorporates alterations of 2 December 2002), Rule 3, exhibit 2075, document 003 0988.0127.0001 at 0020. 169 John Ferguson statement, exhibit 992, paragraph 9, document 057.0863.0167.0001. 170
Rules of the AMWU (188V: incorporates alterations of 2 December 2002), Rule 48(4), 50(4), 52(4) and 54(4), exhibit 2075, document 003.0988 0127 0001 at 0086, 0102-0104, 0137-0139, 0168- 0169. 171 John Ferguson Statement, exhibit 992, paragraph 9, document 057.0863.0167.0001. 172
John Ferguson Statement, exhibit 992, paragraph 9, 23, document 057.0863.0167.0001. 173 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001 ), Financial Statements for the year ended 30 September 2001, 4 December. 174
Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001), Financial Statements for the year ended 30 September 2001 , 4 December. 175 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001 ), Financial Statements
for the year ended 30 September 2001, 4 December. 176 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001), Financial Statements
for the year ended 30 September 2001 , 4 December. 177 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2001 ), Financial Statements for the year ended 30 September 2001, 4 December. 178
Australian Manufacturing Workers Union (online), Australian Manufacturing Workers Union Information Kit ,
pp. 2-3 [accessed 17 December 2002], http://www.amwu.asn.au/images/amwu informati on kit. pdf 179 Doug Cameron, Doug 's Column: Workers must have a strong National and International Voice, 8 October 2002 [accessed on 23 December 2002], http://www.amwu.asn.au/default.asp?action- LoadArticle&ID-768 180
Rules of the AMWU (188V: incorporates alterations of 2 December 2002), Rule 3A(1 ), exhibit 2075, document 003.0988.0127.0001 at 0021. 181 Australian Council of Trade Unions (onl ine), About the ACTU [accessed 23 December 2002],
http://www.actu.asn.au/public/about/actu.html 182 Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction , 3rd edn, Federation Press, Sydney, [5.51].
183 Creighton, B. and Stewart, .A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [5.51]. 184 Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction , 3rd edn, Federation Press, Sydney, [5.51].
185 Australian Council of Trade Unions (online), About the ACTU [accessed 23 December 2002], http://www.actu.asn.au/public/about/actu.html 186 Australian Council of Trade Unions (online), ACTU National Directory On-line [accessed 6 January 2003],
http://www.directorv.actu .asn.au/index.php3?0age- actu&report-tlc 187 A person who operates his or her own unincorporated economic enterprise or engages independently in a profession or trade, and hires no employees. Australian Bureau of Statistics 2002, Labour Force, Aug 2002,
Cat. no. 6203.0, Auslnfo, Canberra. 188 ABS 1999 (Private Sector Construction Industry, 1996-97, Cat. no. 8772 .0). 189 ABS 2002 (Building Activity, June Quarter 2002, Cat. no . 8752 .0); ABS 2002 (Engineering Constru ction
Activity, June Quarter 2002, Cat. no. 8762.0).
190 ABS 1999 (Private Sector Construction Industry, 1996-97, Cat. no. 8772.0) . Reported employment in this survey includes working partners and directors of businesses, as well as all employees. It specifically
excludes staff engaged on a contract or subcontract basis. 191 ABS 2002 (Labour Force: Australia, Aug 2002, Cat. no. 6203.0).
National Perspective Part 1 1 55
192 McGrath-Champ, S. , Crawford, L. , Tan, A & Kelleher, J. 1998 (onli ne), 'Women and Ethnic Workers: Issues
in the Au stralian Construction Industry', a paper presented at the Twel fth Annual Conference of the
Association of Industrial Relations Academics of Australia and New Zealand Conference, Wellington, p. 499, [access·ed 7 January 2003],
http://www. mngt. waikato .a c. nz/depts/ sm l/airaanz/old/conferce/ wgtn 1998/ PDF/mcgrath. pdf
193 Australian Industry Group 2002, Submission by the Australian Industry Group in Response to Discussion
Papers 1-5, 1 July, exhibit 778, document 041 .0313.0689.0001 at 0025-0027.
194 Fletcher T5169/8-11 .
195 McGrath-Champ, S. , Crawford, L. , Tan, A & Kelleher, J. 1998 (online), 'Women and Ethnic Workers Issues
in the Australian Construction Industry', a paper presented at the Twelfth Annual Conferen ce of the
Association of Industrial Relations Academics of Australia and New Zealand Conference, Wellington, p. 499, [accessed 7 January 2003],
http://www. mngt. waikato .a c. nz/depts/sml/airaanz/old/conferce/wgtn 1998/PDF /mcgrath. pdf
196 Strong, T10081/36-37.
197 Andrews Statement, exhibit 471, paragraphs 33- 36, document 045.0010.0735.0001; Andrews Statement,
exhibit 471, annexure 'Construction, Forestry, Mining and Energy Union and Graham Andrews Builders Ply
Ltd Certified Bargaining Agreement 1999-2002', document 010.0938.0493.0001; Andrews Statement,
exhibit 4 71, annexure 'Andrews Statutory Declaration filed with AIRC', document 010.0938.0493.0004.
198 ABS 2001 (Employee earnings and hours, May 2000, Cat. no. 6306.0) .
199 Queensland Government 2002, Queensland Government Submission to the Royal Commission into the Building and Construction Industry, 4 July, exhibit 1338, document 001. 0001.0529.0002 at 0022.
200 ABS 2002 (Australia Now, Construct ion, Average weekly earnings, Jan 2002). 20 1 This information includes part time workers. Thi s reduces the average for industries such as retail trade,
accommodation, cafes and restaurants and health and community seNices, where there was a high proportion of part time workers. As the chart also includes workers in the dwelling sector, the results would
be affected by any differences between the hours worked in this sector, compared with the parts of the industry subject to my Terms of Reference.
202 Austral 1an Bureau of Statistics unpublished data from the SuNey of Aspects of Literacy 1996, cited in Construction, Forestry, Mining and Ellergy Union 2002, Submission to the Senate Inquiry 1nto the Workplace
Relations Amendment (Genuine Bargaining) Bill 2002, April. 203 ABS 1998 (Retrenchment and redundancy, July 1997: Australia, Cat. no. 6266.0). 204
ABS 1999 (Private Sector Construction Activity, 1996-97: Australia, Cat. no. 8772.0).
1 56 Final Report of the Royal Commission into the Building and Construction Industry
4 Regulatory Framework
There is a complex of legislation, regulations, industrial instruments, rules and codes that make
up the regulatory framework covering the building and construction industry. All three levels of
government, Commonwealth , State and Territory and local, contribute to this regu latory
framework. The State and Territory provisions are discussed in, Volume 12 of this report, State
and Territory Overviews.
2 The regulatory framework covers aspects of the industry extending beyond workplace practices and conduct. This volu me focusses on the Commonwealth regulatory framework
covering workplace practices and conduct in the building and construction industry. It
discusses the key institutions that operate within that framework.
⢠The Office of the Empl oyment Advocate
⢠Industri al tribunals
⢠The Federal Court
3 The regulatory framework pertaining to occupational health and safety is the subject of a Volume 6 of this report, Reform - Occupational Health and Safety.
Workplace Relations Act 1996 (C 'wth)
4 The Workplace Relations Act 1966 (C'wth) is the main piece of legislation governing workplace
practice and conduct in the building and construction industry. The principal object of the Act is :
Section 3 Principal object of this Act
The principal object of this Act is to provide a framework for cooperative workplace relations
which promotes the economic prosperity and welfare of the people of Australia by:
(a) encouraging the pursuit of high employment, improved living standards, low
inflation and international competitiveness through higher productivity and a flexible
and fair labour market; and
(aa) protecting the competitive position of young people in the labour market,
promoting youth employment, youth sk1J!s and community standards and assisting
in reducing youth unemployment; and
National Perspective Part 1 I 57
(b) ensuring that the primary responsibility for determining matters affectkJg the
relationship between employers and employees rests with the employer and
employees at the workplace or enterprise level; and
(c) enabling employers and employees to choose the most appropriate form of
agreement for their particular circumstances, whether or not that form is provided for by this Act; and
(d) providing the means:
(i) for wages and conditions of employment to be determined as far as possible
by the agreement of employers and employees at the workplace or
enterprise level, upon a foundation of minimum standards; and
(iij to ensure the maintenance of an effective award safety net of fair and
enforceable minimum wages and conditions of employment; and
(e) providing a framework of rights and responsibilities for employers and employees,
and their organisations, which supports fair and effective agreement-making and
ensures that they abide by awards and agreements applying to them; and
m ensuring freedom of association, including the rights of employees and employers to join an organisation or association of the1r choice, or not to join an organisation or association; and
(g) ensuring that employee and employer organisations registered under this Act are
representative of and accountable to their members, and are able to operate effectively; and
(h) enabling the Commission to prevent and settle industrial disputes as far as possible
by conciliation and, where appropriate and within specified limits, by arbitration; and
(i) assisting employees to balance their work and family responsibilities effectively
through the development of mutually benefiCial work practices with employers; and
OJ respecting and valuing the diversity of the work force by helping to prevent and
eliminate discrimination on the basis of race, colour, sex, sexual preference, age,
physical or mental disability, marital status, family responsibilities, pregnancy,
religion, political opinion, national extraction or social origin; and
(k) assisting in giving effect to Australia's international obligations in relation to labour
standards.
5 The Workplace Relations Act 1966 (C'wth) covers a number of significant issues for the
building and construction industry, namely bargaining, right of entry, freedom of association and the right to strike .
6 The Act retains enterprise bargaining as a key feature of Australian workplace relations law and practice. These enterprise bargaining objects, outl ined in s3 of the Act, 1 are important because
they ass ist the Australian Industrial Relations Commission (AIRC) in exercising its discretion
1 58 Final Report of the Royal Commission into the Building and Construction Industry
under the Act and provide a clear statement of government policy towards labour market reform.
7 In theory, bargaining under the Workplace Relations Act 1996 (C'wth) generally occurs at the
workplace or enterprise level, that is, at the 'single business or part of a single business' level 2
The types of agreement include collective, certified agreements, and individual ag reements.
Agreements between an employer and a group of employees are made under Part VIB Division
2 (Division 2 agreements) and the union stream of agreement is governed by Division 3. The
Workplace Relations Act 1996 (C'wth) provides for bargaining periods within which industrial
action is protected. A more detailed description of the bargaining framework is outlined below.
Entry and inspection of premises
8 Part IX Division 11A of the Workplace Relations Act 1996 (C 'wth) is headed: 'Entry and
inspection of prem ises etc. by organisations.' Similar provisions exist in State industrial relations legislation. The Workplace Relations Act 1996 (C'wth) contains a scheme which
empowers approved permit holders to investigate suspected breaches of the Act, Awards, an
order of the AIRC or certified agreements. 3 An org anisation that is registered under the
Workplace Relations Act 1996 (C'wth) 4 may apply to the Registrar for a permit to be issued to
an officer or employee under s285A of the Workplace Relations Act 1996 (C'wthP
9 Section 285A permits are issued at the discretion of the Reg istrar and are vali d for three years
after the day of issue, or at an earlier time if the person to whom the permit was issued ceases
to be an officer of the organisation concerned. 6 Permits may be revoked by the Registrar where
the holder has 'intentionally hindered or obstructed any employer or employee or otherwise
acted in an improper manner' while exercising the powers under Part IX Division 11A. 7
1 0 The powers that a permit holder is permitted to exercise are set out in ss285B and 285C of the Workplace Relations Act 1996 (C'wth) .
11 Permit holders may enter any premises where employees work for the purpose of investigating
a suspected breach of the Workplace Relations Act 1996 (C 'wth), if the em ployees are
members of the same organisation to which the permit holder belongs. 8 This right is subject to
specific limitations. This right of entry operates only during working hours9 and is conditional
upon the occupier of the premi ses bei ng given 24 hours notice of the proposed entry. 10 If a
permit holder is asked to produce his permit, he is not entitled to enter or remain on the
property unless he shows the occupier the permit. 11
1 2 Once a permit holder has entered premises in accordance with the Workplace Relations Act
1996 (C'wth) , he has the right to access any documents that are kept by the employer on the
premises that are relevant to the alleged or suspected breach .12 The range of material that the
permit holder can inspect and copy is very broad and includes 'any time sheets' , 'any pay
sheets ' or 'any other documents other than an AWA, an ancillary document or a document that shows some or all of the content of an AWA or of an ancillary document' .13 The permit holder
can require the employer, which has in its employ a member of the organisation to which the
permit holder belongs, to produce any of these documents 'at the premi ses at which the
employees work or at some other agreed place' .14
National Perspective Part 1 i 59
13 A permit holder may exercise the power to require the production of documents without first
having exercised a right of entry or any of the associated rights set down in ss2858(2) and (3)
of the Workplace Relations Act 1996 (C'wth) .15
14 A permit holder who has entered premises in accordance with the Act may inspect or view 'any
work, material, machinery, or appliance that is relevant to the suspected breach' .16 The Workplace Relations Act 1996 (C'wth) empowers the permit holder to interview any person
about a suspected breach who is a member, or is eligible to be a member, of the same organisation as the permit holderH
15 A permit holder may enter a work premises if it is covered by an Award that binds the
organisation that the permit holder represents and the people who are working there are
members, or are eligible to become members, of that organisation. 18 This right to enter may
on ly be exercised during the employees' meal-time or other breaks 19 and if the occupier of the
premises has been given 24 hours notice. 20
16 Civil penalties attach to the conduct of:
⢠a permit holder who, in exercising powers under s2858 or s285C, intentionally hinders or obstructs any employee;
⢠an occupier of premises, that refuses or unduly delays entry to premises by a permit holder who is entitled to enter the premises;
⢠an employer that refuses to observe a permit holder's right to inspect and copy documents that are relevant to a suspected breach or who does not comply with a
permit holder's right to require the production of relevant documents; or
⢠a person who intentionally hinders or obstructs a permit holder from exercising any of the powers in s2858 or s285C. 2 1
17 Contravention of a penalty provision does not constitute an offence. 22 An eligible court 23 may, however, impose a penalty on a person who contravenes such a provision. The maximum
penalty for a body corporate is $10 000, and $2000 in other cases. 24 The court may grant an
injunction requiring a person not to contravene or to cease contravening, a penalty provision .2 5
18 A Registrar may, on application in accordance with the regulations, revoke a permit if sati sfied
that the permit holder has, in exercising powers under Division 11 A of Part IX, intentionally
hindered or obstructed any employer or employee or otherwise acted in an improper manner26
19 Th e AIRC has the power to revoke a permit issued to a person pursuant to s285A, for the
purpose of preventing or settling an industrial dispute. If the AIRC takes this action then:
... it may make any order that it considers appropriate, for the purpose of preventing or
settling the industnal dispute, about the issue of any further permit to the person, or of
any permit or further permit to any other person, under that section. 27
Freedom of association
20 Part XA of the Workplace Relations Act 1996 (C'wth) deal s with freedom of association. Part
XA seeks to ensure that employers, employees and independent contractors may free ly
l 60 Final Report of the Royal Commission into the Building and Construction Industry
choose whether they will or will not join an industrial association and that employees and
independent contractors are not discriminated against or victimised as a resu lt of exercising
such a choice. 28 Part XA was inserted into the Workplace Relations Act 1996 (C'wth) by the
enactment of the Workplace Relations and other Legislation Amendment Act 1996 (C'wth).
21 Sections 298K and 298L of the Workplace Relations Act 1996 (C'wth) are designed to provide
comprehensive protection against victimisation of employees and independent contractors. 29
Section 298K applies when an employer dismisses an employee or independent contractor,
refuses to engage them, discriminates against them in their terms of engagement, injures them
in their employment or alters their position to their prejudice. An employer is forbidden from
engaging in such conduct, or threatening such conduct, for 'a prohibited reason, or for reasons
that include a prohibited reason ' .3° Conduct for a prohibited reason includes, among other things , where it is carried out because:
⢠an employee or independent contractor is not, or does not propose to become, a
member of an industrial association; or
⢠in the case of a refusal to employ another person as an independent contractor, the
independent contractor has one or more employees who are not, or do not propose to
become, members of an industrial association 31
22 Contravention of Part XA does not constitute an offence 32 Hence the civi l standard of proof
applies. 33 Furthermore, if an application is made under Part XA Division 6 in respect of the
conduct of a person or an industrial association, the alleged reason for the conduct is
presumed unless the respondent proves otherWise 34 f\pplications for relief may be made to
the Federal Court, which may make one or more orders, including orders requiring the payment
of appropriate compensation, or orders imposing a penalty of up to $2000 for an individual, or
up to $1 0 000 for a corporation. 35
23 Part XA Division 5 forbids industrial associations, and their officers and members, from
engaging in various forms of victimisation 36 They must not advise, encourage or incite an
employer to take action that would contravene s298K of the Workplace Relations Act 2996
(C 'wth). 37 For the purposes of Part XA an industrial organisation is responsible for the actions
of its officers or agents38 Remedies for breaches of Part XA include the imposition of financial penalties, reinstatement, payment of compensation and injunctions (inc luding interim
injunctions) 39 Other orders may be made 40
24 Part VIB (Certified Agreements) provides protection for both employees and employers
negotiating a certified agreement. In negotiating an agreement under Divisions 2 or 3 of Part
VIB of the Workplace Relations Act 1996 (C'wth), employers must not discriminate against
employees on the grounds that they do not belong to a union, or a particular union 41 Part VIB
Division 9 (s 170NC) prohibits coercion in relation to making, varying , terminating or extending
the nominal expiry date of an agreement under Division 2 or 3 of Part VIB 4 2 Industrial
associations are prohibited from taking or threatening to take industrial action against an
employer to that end 43 An injunction may be granted requiring a person not to contravene or
to cease contravening a provision such as s170NC 44
National Perspective Part 1 6
Right to strike
25 Australia's federal structure and common law make it almost impossible to specify the
circumstances in which employees and un ions will be legal ly entitled to engage in industrial
action. The law in relation to industrial action in Australia has been affected, influenced and
shaped by the common law, by Commonwealth, State and Territory legislation, by jurisprudence of the courts and industrial tribunals, and by Australia's international obligations.
26 The forms of industrial action engaged in by participants in the building and construction
industry are many and varied. Industrial action here refers to action taken by employers,
employees and their representative organisations which affects the performance of work, and
which is engaged in for the purpose of supporting or advancing some workplace or other
cause. Industrial action in the building and construction industry typically involves strikes, bans, limitations and restrictions on work, or threats to engage in same.
27 Except in the case of 'protected action' most forms of industrial action will offend against the
Workplace Relations Act 1996 (C'wth), State industrial relations legislation or some other
statutory prohibition, or constitute an industrial or other tort, a breach of contract or a criminal offence.
28 There is, at the Federal level and in some States, a statutory right to engage in limited forms of
industrial action, most notably 'protected action' during periods of bargaining with respect to
enterprise agreements. In so far as a 'right' to engage in industrial action might be said to exist
under Australian law, however, it is mostly a negative or residual right, permitted only to the
extent that it has not been comprehended by the common law or prohibited by legislation.
29 Despite the fact that most forms of industrial action are unlawful, the principal piece of Federal
legislation, the Workplace Relations Act 1996 (C'wth), does not specify the circumstances in
which industrial action is allowed or prohibited. Although it is silent as to most forms of
industrial action, the Workplace Relations Act 1996 (C'wth) does touch in various ways on the rights and obligations of employers, employees and unions in respect of industrial action. The
Workplace Relations Act 1996 (C'wth) will not apply to all industrial disputes on all building and
construction sites. It will, however, generally apply to 'industrial action' as that term is defined in s4(1) of the Act.
Application of the Workplace Relations Act 1996 (C'wth) to industrial action
30 The application of the Workplace Relations Act 1996 (C'wth) to industrial action on building and
construction sites depends principally on whether the action in question falls within the scope
of the definition of 'industrial action' in s4(1 ).
31 The Workplace Relations Act 1996 (C'wth) has potential application to industrial action taken
by employers, employees or their representative organisations where:
⢠the action concerns the terms or conditions of work prescribed by a Federal award, an order of the AIRC, a federally certified agreement or Australian Workplace Agreement
(AWA) , or an award, determination or order made by another tribunal under a law of the
Commonwealth or otherwise by or under a law of the Commonwealth; 45
1 62 Final Report of the Royal Commission into the Building and Construction Industry
⢠the action is taken in connection with an actual , threatened , impending or probable
industrial dispute which extends beyond the li mits of any one State and that is about
matters pertaining to the relationship between employers and employees (including
demarcation disputes), or with a situation that is likely to give rise to such a dispute; 46
⢠the action involves employees of the Commonwealth or a constitutional corporation , or
persons employed in a Territory, failing or refusing to attend fo r work or to perform any work at all; 47 or
⢠the action involves persons who are members of an organisation registered under the Act
who fail or refuse to attend for work or to perform any work at all in accordance with a
decision made or directi on given by the organisation , the committee of management of
the organisation , or an officer or group of members of the organisation actin g in that capacity. 48
32 Relevant action is:
⢠the perform ance of work in a manner different from that in which it is customari ly
performed , or the adoption of a practice in relation to work, the resu lt of which is a
restri ction or limitation on , or a delay in , the performance of the work;
⢠a ban , limitation or restriction on the performance of work, or on acceptance of or offering
for work; or
⢠a failure or refusal by persons to attend for work , or a failu re or refusal to perform any
work at all by persons who attend for work.
33 The definition of 'industrial acti on ' in the Workplace Relations Act 1996 (C 'wth) does not
include action which is authorised or agreed to by the employer or employees, or action taken
by an employee based on a reasonab le concern about an imminent risk to his or her health or
safety, provided that the employee has not unreasonably failed to comply with a direction of his
or her employer to perform other avai lable work that is safe and appropriate 49
Authorised industrial action under the Workplac e Relations Act 1996 (C'wth)
34 The Workplace Relations Act 1996 (C 'wth) expressly authori ses industrial action in certain
limited circumstances: employers , employees and unions are entitled to engage in 'protected
action' during bargaining periods for certified agreements; 50 and employers and employees
may engage in 'AWA industrial action' for the purpose of compelling or inducing an employer
or employee to make an AWA, on particular terms and conditions. 5 1
35 Broadly speaking, 'protected action ' is industrial action taken for the purpose of supporting or
advancing claim s made in respect of a proposed certified agreement during a validly initiated
bargaining period. To be protected, the action may only be taken by a union that is a
negotiating party and its members, officers and employees, and employees and employers
who are negotiating parties 52
36 'Protected action ' carries a number of benefits, namely:
⢠ord ers made by the AIRC under s127 do not apply to protected action;53
National Perspective Part 1 1 63
⢠under si70MT(2) of the Act, no action lies under any written or unwritten law of a State or
Territory in respect of protected action unless the action has involved or is likely to involve
personal injury, wilful or reckless destruction of or damage to property, or the unlawful
taking , keeping or use of property; 54
⢠employers must not dismiss or detrimentally alter the position of an employee for
engaging or threatening to engage in protected action; 55 employers may, however, stand
down employees, refuse to pay employees for not performing work as directed , or engage in protected action of their own. 56
37 Action will not be protected where it involves a secondary boycott (si70MM), until the nomin al
expiry date of a certified agreement has passed (s170MN), or certain wri tten notice of such
action is given by the negotiating party (si70MO).
Prohibited industrial action under the Workplace Relations Act
38 The Workplace Relations Act 1996 (C'wth) contains two important express prohibitions on
industrial action.
⢠Section 170MN of the Act prohibits industrial action by employees, unions and uni on
offi cials where there is a certified agreement in force by which the employees or unions
are bound which has not reached its nominal expiry date, where the action is engaged in
for the purpose of supporting or advancing claims against the employer in respect of
employees whose employment is subject to the certified agreement. The limitation as to
purpose in si70MN substantially limits its scope.
⢠Section 170VU(I) of the Act prohibits employees, during the period of an AWA and before its nominal expiry date, from engaging in industrial action in relation to the
employment to which the AWA relates . Under si70VU(2), an employer must not lock out
an employee for the purpose of supporting or advancing claims in respect of the
employee's employment during the period of operation of an AWA before its nominal
expiry date.
39 Those provisions aside, the Workplace Relations Act (C'wth) does not contain express
prohibitions on other form s of industrial action.
40 Part XA of the Workplace Relations Act (C'wth) is concerned with freedom of association. Thi s
Part contains various limitations on industrial action taken fo r the purpose of infringing freedom
of association .
Section 127 orders
41 The Australian Industrial Relations Commission may make orders under sl27 of the Workplace
Relations Act 1996 (C 'wth) that industrial action stop or not occur of its own motion or on the
application of a party to th e industrial dispute, a person who is directly affected or who is likely
to be directly affected by the industrial action, or an organisation of wh ich such a person is a member. 57 A person to whom an order under sl27(1) is expressed to apply must comply with
the order. 58 An order under s 127 that industrial action stop or not occur is grounded on an
industrial dispute, negotiations for an agreement under Division 2 of Part VIB , or work that is regulated by an award or a certified agreement.
I 64 Final Report of the Royal Commission into the Building and Construction Industry
Strike pay
42 Under s187 AA(1) of the Workplace Relations Act 1996 (C'wth), employers are generally
proh ibited from making payments to employees in relation to periods during which the
employees were engaged in industrial action . Under s187 AA(2), employees must not accept
such payments from an employer. Contravention of these provisions is not an offence, but a
court may grant a range of relief for contravention, including fines not exceeding $10 000, orders for compensation, and injunctions 59
Trade Practices Act 1974 (C'wth)
43 Part IV of the Trade Practices Act 197 4 (C'wth) concerns restrictive trade practices. The policy
objectives of this Part:
... can be described by saying that it contains provisions which proscribe and regulate
agreements and conduct and which are aimed at procuring and maintaining competition in trade and commerce. 60
44 The Trade Practices Act 19 7 4 (C 'wth) covers some areas of restrictive trade practices in the
bui lding and construction industry but not all. In particular, workplace relations and enterprise
bargaining issues are exempt from Part IV of the Trade Practices Act 1974 (C'wth) under
s5 1 (2)(a) . Th e Trade Practices Act 1974 (C 'wth) does impact on workplace relations through its
prohibition on both primary and secondary boycotts 5 1 These prohibiti ons, concerning unlawful
industrial action, were restored to the Trade Practices Act 1974 (C 'wth) by the Workplace
Relations and Other Legislation Amendment Act 1996 (C'wth). Section 60 of the Trade
Practices Act 1974 (C 'wth) also applies to workplace relations issues. This section prohibits a
corporation from using physical or undue harassment or coercion in connection with the supply
or possible supply of goods or services to a consumer or the payment for goods or services by a consumer. 62
45 Trade unions were initially exempt from the operati on of the Trade Practices Act 1974 (C 'wth).
in 1 g75 the Trade Practices Review Committee (the Swanson Committee) recommended that
protection should be afforded to businesses that were affected by industrial action through
their dealings with another business that was the target of the industrial action. As a result ,
s45 D, which prohibited secondary boycotts, was inserted into the Trade Practices Act 1974
(C'wth). The provision was used, usually to obtain an injunction restraining persons from
engaging in such conduct.
46 The effect of s45D is to prohibit various kinds of conduct engaged in by one party in concert
with another, that has the effect of interfering with the provision of supply of goods or services
to or by a target employer. It requires the purpose of the conduct to be to cause loss or lessen
competition; and that the conduct did cause, or was likely to cause, loss or lessen competition .
Section 51 (2)(a) exemption
47 Section 51 (2)(a) of the Trade Practices Act 1974 (C'wth) exempts from Part IV, 'any act done,
or any provision of a contract, arrangement or understanding that relates to the remuneration,
conditions of employment, hours of work or working conditions of employees ' 63 In the
absence of the exemption in s5 1 (2)(a), certain employment agreements may breach Part IV of
National Perspective Part 1 I 65
the Trade Practices Act 1974 (C'wth), 64 for example, the price fixing provisions under s45A or
unconscionable conduct provisions under s51 AC of the Act.
48 The National Competition Council stated the objective of s51 (2)(a) as being:
Boycotts
.. to excise the labour market from goods and services markets for the purposes of
applying competition law, supporting a public policy observed both nationally and
internationally that labour markets are treated differently to markets for goods and non
labour services. This policy is reflected in the mechanisms and institutions in place under
Federal and State industrial relations legislation, international agreements relating to
labour that recognise collective bargaining and the exemption of employment matters
from competition laws in countries with regulatory and legal systems comparable to Australia's. 65
49 Section 45D(1) covers secondary boycotts engaged in for the purpose of or likely to have the
effect of causing substantial loss or damage. Under s45D(1 ), one person (A) must not engage
in conduct, in concert with another person (B), which:
⢠hinders or prevents a third person (C) either supplying goods or services to a fourth
person (D) or acquiring goods or services from D; and
⢠is eng aged in for the purpose (it need not be the main purpose), and would have or be likely to have the effect, of causing substantial loss or damage to the business of D.
50 Th is section will apply if Dis a corporation, or if Cis a corporation and D is not a corporation,
where the conduct would be likely to have the effect of causing substantial loss or damage to
the business of C. D must not be an employer of A or B.
51 Section 45 DA rep licates s45D, but applies where the conduct engaged in is for the purpose,
and would have or be likely to have the effect, of causing a substantial lessening of competition in any market in wh ich D supplies or acquires goods or services . This section will apply where
C or D or both are corporations, and where the conduct would have or be likely to have the
effect of cau sin g substantial loss or damage to th e business of the party that is a corporation .
Again , D must not be an employer of A or B.
52 Section 45DB prohibits a person (A) from acting in concert with another (B) for the purpose and
having the effect, or likely to have the effect, of preventing or substantially hindering a third
person (C) from engaging in trade or commerce involving the movement of goods between
Australia and places outside Australia.
53 C must not be an employer of either A or B. Again , it is sufficient that the purpose be one of the purposes for the action being taken.
54 Th e Trade Practices Act 1974 (C'wth) contai ns a number of defences to these provisions66 and provides a mechanism to determine whether an employee association may be held liable for
the actions of its members or officials67
55 Section 77 confers upon the ACCC the power to seek orders for penalties contemplated by
s76 6 8 The Trade Practices Commission (TPC) did so twice in respect of participants in the
1 66 Final Report of the Royal Commission into the Building and Construction Industry
building and construction industry, in August and December 1977, when it instituted
proceedings in the Federal Court against unions. The TPC alleged that the unions had engaged
in secondary boycott action against companies that had not entered into enterprise bargaining agreements with the union. On each occasion the matter was resolved by consent, with the
Federal Court making declaratory and injunctive orders, and, in one case, an award of
compensation. 69 The secondary boycott provisions have been invoked infrequently in the building and construction industry.
Other Acts
56 The re are a number of pieces of Commonwealth legislation which, while not directly targeting the buildin g and construction industry, affect working arrangements and entitlements within the industry.
⢠Taxation obligations are governed by the Income Tax Assessment Act 1997 (C'wth) and
the New Business Tax System (Alienation of Personal Services Income) Act 2000 (C'wth) .
⢠The main superannuation legislation is the Superannuation Guarantee (Administration)
Act 1992 (C 'wth); the Superannuation Guarantee Charge Act 1992 (C'wth); the Superannuation Industry (Supervision) Act 1993 (C 'wth); and the Superannuation
(Resolution of Complaints) Act 1993 (C'wth). In additi on, the Workplace Relations Act
1996 (C'wth) enables federal awards to regulate minimum superannuation arrangements. ?o
⢠Employment of foreign nationals is governed by the .Migration Act 1958 (C'wth) .
57 In addition, management of bu il ding and construction corporations are governed by the Corporations Act 2001 (C'wth).
National Construction Code
58 In support of the Workplace Relations Act 1966 (C 'wth), the Commonwealth introduced a National Construction Code? 1 The Code aims to promote best practice in the building and
construction industry. The National Construction Code is the central code within the industry,
with no government of any State or Territory proclaiming a Code inconsistent with it.
59 The Commonwealth Government, as a capital provider, is able to set requirements that affect work arrangements. All parties invited to express interest in any Commonwealth construction
project must be informed of the application of the Nati onal Construction Code to the project.
Failure to demonstrate compliance with the Code could resu lt in the deprivation of the right to
deal with government, with disadvantageous commercial consequences.
Awards
60 The major Federal Awards applying to the building and construction industry include:
⢠the National Building and Construction Industry Award 2000;
⢠the Plumbing Tra des (Southern States) Construction Award 1999;
⢠the Plumbing Industry (OLD and WA.) Award 1999;
National Perspective Part 1 167
⢠the National Electrical, Electronic and Communications Contracting Industry Award
1998;and
⢠the Spnnkler Pipe Fitters Award 1998.
61 The various Awards, made un der th e Workplace Relations Act 1996 (C'wth), contain a safety
net of allowable Award mattersn
62 The National Building and Construction Industry Award applies to and is binding upon :
⢠the CFMEU and its officers and members employed by employers respondent to the Award;
⢠the AWU in respect of carpenters and joiners who are employed by the Crown or local
government authorities respondent to the Award in New South Wales (exc luding the
County of Yancowinna), South Australia, Tasmania and Victoria; and
⢠the employers and organisations of employers respondent to the Award in respect of
their employees or employees of their members within the classifications contained in the
Award whether members of the CFMEU or not. 73
63 The Award applies to the employment of persons engaged on construction work as labourers,
tradespersons or operators. It defines construction work as all work performed under the
Award 'in connection with the erection, repair, renovation , maintenance, ornamentation and
demolition of buildings or structures , including the making, assembling or fixing of any material
necessitating the use of tradesperson's tools or machines including all work performed by stonemasonry classifications (provided that in South Australia, Victoria, Western Australia and
Queensland work in stonemasonry yard s and/or shops and in cemeteries is not regarded as
construction work) and the pre-fabrication of a building in an open yard ' ? 4
64 Th e Award is high ly prescriptive. It contains a wide range of allowances, special rates and detail
in respect of ro stered days off, crib time, overtime, special time, shift work , weekend work and
a dispute resolution procedure.
Bargaining framework
65 There has been a significant shift from award coverage to the use of collective agreements in
that section of the building and construction industry falling within the Commission's terms of
reference . The use of collective agreements generally takes the form of pattern bargaining.
66 Pattern bargaining is effected by agreements struck at four levels - industry, sector, projects
and the enterprise. The dominance of industry and project level agreements (derived from
activities of head contractors, employer associations and trade unions) means that, in practice,
there is little genuine enterprise bargaining occurring on major building and construction industry sites. 75 Subcontractors employ up to 95 per cent of labour on major building sites but
do not participate in these negotiations. Bargaining occurs at a national level between the
CFMEU and major head contractors. 76 In some States, the outcome of industry level negotiations is reflected in an industry ag reem en t which, in turn , is reflected in a pattern
enterprise agreement. Subcontractors are usually compelled to sign the pattern enterprise
1 68 Final Report of the Royal Commission into the Building and Construction Industry
agreement to work on major sites. Information on key features of construction industry
agreements is inclu ded at annexure 3 of Volume 4 of this report, National Perspective Part 2.
Enterprise bargaining
67 Enterprise bargaining has existed in Australia for many years without any formal legislative or
industrial tribunal fiat. Enterprise bargaining means:
Negotiations between an employer and its employees (or their representatives) to
formulate an agreement on pay and working conditions for a specific enterprise. 77
68 What is comparatively new is the more formal recognition and encouragement of enterprise
bargaining and enterprise agreements by industrial tribunals and legislation in Australia. Since
1 995 the Commonwealth and every State has passed legislation embracing enterprise
bargaining . Thi s was intended to produce a decentralised structure of determination of
employment conditions. 78
The Industrial Relations Reform Act 1993 (C'wth)
69 In 1 994 the Industrial Relations Reform Act 1993 (C'wth) introduced some major changes to
the Federal industrial relations system including:
⢠structural changes to institutions;
⢠enterprise bargaining;
⢠limited protected industrial action; and
⢠a floor of minimum rights.
70 The Industrial Relations Court of Australia was established to take over the jurisdiction of the
Industrial Divi sion of the Federal Court.
71 The changes provided a new focus on enterprise ag reements. It provided for two methods of
agreement being reached, one between an employer and its employees, and the other
between the employer and an employee association. It brought into Australian law for the first
time a form of enterprise agreement, known as the 'enterprise flexibility agreement', which
enabled employees and employers to negotiate an agreement and have the agreement
registered. There was no necessity for there to be an industrial dispute. The Act relied on heads
of power in the Constitution additional to the 'conciliation and arbitration' power of s51 (xxxv) .
72 The two methods of bargaining were the predecessors to Division 2 and Division 3 Certified
Agreements, of the Workplace Relations Act 1996 (C'wth).
The Workplace Relations Act 1996 (C'wth)
73 The Industrial Relations Act 1988 (C'wth) was amended and retitled the Workplace Relations
Act 1996 (C 'wth) by the Workplace Relations and Other Legislation Amendment Act 1996 (C'wth). The Workplace Relations Act 1996 (C 'wth):
⢠affi rmed and advanced a new commitment to enterprise bargaining;
⢠introduced individual agreements, the Australian Workplace Agreements;
National Perspective Part 1 I 69
⢠retained the notion of protected action and a measu re of immunity from liabi lity for
industrial action; and
⢠reintroduced the secondary boycott provisions into the Trade Practices Act 1974 (C 'wth).
7 4 Relevant sections of the current Workplace Relations Act 1996 (C'wth) are at attachment 5.
75 The Workplace Relations Act 1996 (C'wth) had as one of its aims the simplification of awards
made by the Australian Industrial Relations Commission. It restricted awards to 20 allowable
award matters, which establi shed a safety net of minimum wages and conditions, leaving all
other matters, including above award conditions, open to negotiation. Enterprise flexibility
agreements were repl aced by agreements made between an employer and its employees
under Part VIB Division 2 (s 170LK agreements) and agreements with an organisation of
employees (s170LJ agreements).
76 Part VIB provides for Certified Agreements to be made between an employer and one or more
employee organisations, or between an employer and a valid majority of employees whose
employment, at the time, wi ll be subject to the Agreement. 79 In the case of a new business
wh ich does not yet have any employees, a 'Greenfields' Certified Agreement can be made
between the employer and one or more employee organisations with entitlement to represent the interests of one or more persons likely to be employed by the employer.so
77 The formal process of negotiations for a Certified Agreement under the Workplace Relations
Act 1996 (C'wth) are begun by the employer, or an organisation of employees, by initiating a
bargainin g period .s1 Notice must be given by the initiatin g party to each other negotiating party and to the AIRC .s2
78 Once the negotiating parties have agreed on the terms of a Certified Agreement, one of them
may make application to the AIRC within 21 days to have that agreement certified.S3 To be
certifi ed by the AIRC , an Agreement must satisfy the requirements set out at s170LT of the
Workplace Relations Act 1996 (C'wth). These requirements include:
⢠that the application for certification is made in accordance with either Division 2 or 3 of Part VIB ;
⢠that the agreement passes the no-disadvantage test;
⢠that a val id majority of persons employed at the time whose employment would be subject to the Agreement have genuinely approved or made the Agreement;
⢠that the terms of the Agreement have been explained to those employees with regard to
their particular circumstances;
⢠that the Agreement includes procedures for the prevention and settlement of disputes;
⢠that an employer did not coerce any employee not to req uest union representation if the
employee wished such representation; and
⢠that the Agreement specifies a nominal expiry date that is not more than three years after the date on which the Agreement comes into operation.s4
1 70 Final Report of the Royal Commission into the Building and Construction Industry
79 The AIRC must certify an agreement that satisfies these criteria and can not certify agreements
that do not satisfy the criteria. 85
80 The purpose of these provisions is to ensure that any Agreement certified by the Commission
has been genuinely negotiated at the enterprise level between the actual parties to it (including
the specific employees whose employment will be regu lated by the proposed agreement), and
that appropriate steps have been taken to ensure that the agreement has been understood,
and approved by a valid majority of the actual employees of the enterprise to be subject to the agreement.
Australian Workplace Agreements
81 Australian Workplace Agreements are agreements made between an employer and an
individual employee. They are governed by Part VID of the Workplace Relations Act 1996
(C'wth). These agreements were not provided for under the Industrial Relations Reform Act 1993 (C'wth).
82 Under s1 70VPB, the Office of the Employment Advocate (OEA) has the power to approve
A WAs. A WAs are subject to a no disadvantage testB6
Industry level agreements
83 Industry level ag reements generally result from negotiations between State employer
associations and relevant trade unions. The most influential industry agreements in Australia
are the Victorian Building Industry Agreement, the Queensland Statement of Intent and in Tasmania there is a Framework Agreement.
84 These agreements commonly apply on large inner city bu ilding sites. Where the agreements
apply, the terms of the agreement are imposed on all contractors working on the particular project.
Victorian Building Industry Agreement
85 The Victo rian Building Industry Agreement (VBIA) was negotiated by a negotiating party of
representatives of the Master Builders Association of Victoria, the Building Industry Group of
Unions, the Victorian Trades Hall Council and other employer associationsB7 The VBIA
provides that contractors agree that all companies engaged on their build ing sites wi ll apply the
terms and conditions outlined in the Agreement.
86 The VB IA specifies terms and conditions including site allowances, superannuation, long service leave, workcover, redundancy, rostered days off and provisions for inclement weather
and for workplace health and safety. A significant difference between the VBIA and the
Queensland Statement of Intent is that the Victorian Ag reement does not specify wage rates or
the actual amount to be paid into superannuation , long service leave or redundancy fu nds.
Remuneration rates are specified in a union-endorsed pattern EBA. The VBIA applies from
2000 to 2005.
87 The VBIA encourages parties to enter into enterprise agreements but does not include any
specific clauses addressing union membership.
National Perspective Part 1 i 7 i
Queensland Construction Sector Statement of Intent
88 The Queensland Statement of Intent was negotiated between the Queensland Master Buil ders
Association on behalf of building contractors, and the Construction, Forestry, Mining and
Energy Industrial Union of Employees Queensland and the Australian Building Construction
Employees and Bu ilde rs ' Labourers' Federation (Queensland Branch) Union of Employees. The
former Statement of Intent was signed by about 35 major building contractors as well as the two un ions.
89 The Statement of Intent specifies that contractors agree that all companies engaged on their
building sites will apply the terms and conditions outlined in the Statement of lntent. 88 It
specifies actual rates of pay and allowances and increases to those rates for the period January 2000 to December 2002.
90 Clause 15 of the Statement of In tent envisages that companies which sign it will negotiate a
Certified Agreement. In addition, the provisions of the Statement of Intent encourage union
membership among all employees on building sites .
Framework Agreement - Tasmania
91 The Framework Agreement in Tasmania was a result of discussions initiated in early 2000 by
the CFMEU and facilitated by the Master Bu ilders Association of Tasmania Inc. between four of
its largest members and the Construction, Forestry, Mi ning and Energy Union 89 There are two
statewide model enterprise bargaining agreements between the four major builders, one for the 'building contractors' , the other for 'trade contractors '. Th e Framework Agreement is narrower
in its application than the Queensland and Victorian agreements, as it is not made applicable to
subcontractors working on a particular site, although in practice they are often required to comply with its terms.
92 The Framework Agreement specifies terms and conditions of employment including wage
rates, payments to superannuation and redundancy funds and a productivity allowance. It
includes wage increases over the period of the agreement from 1999 to 2002 . The agreement in cludes clauses encouraging union recognition and membership.
Project agreements
93 Project agreements proceed on the basis that multi-employer building or construction projects
are, in fact, a single workplace (or enterprise), and that terms and conditions of employment
should be negotiated for the whole project, rather than for individual participants in that enterprise.
94 Project agreements are typically reached between an employer association, a principal
contractor and unions. The interests and rights of subcontractors and their employees working
on a particular site are subordinated. In practice, project agreements are reached between a
principal contractor and unions. Thus , the major employers of labour, subcontractors, and their
employees have no say in the terms applicable to these employees on that site . The MBA Inc
argued that the terms and conditions of project agreements frequently flow on to other sites.
Th e MBA Inc considered it would be 'extremely difficult if not impossible to stop project
agreements becoming standard' 9o
I 7 2 Final Report of the Royal Commission into the Building and Construction Industry
95 Project agreements are used on many large capital city bui lding projects in Sydney and
Brisbane. In Victo ri a, some sites use project agreements whilst others rely on the VBIA.
96 Project agreements may be registered as multiple-business agreements under s170LC of the
Workplace Relations Act 1996 (C'wth). However, there are difficulties in registering multi
employer agreements under this legislation . The Act requires the consent of all employers and
the majority of employees to be covered by such an agreement and the agreement has to be
certified by a Full Bench of the AIRC whi ch must be satisfied it passes a public interest test. No
bu ilding and construction industry project agreement has been registered as a multi-employer
agreement under the Act. 9 1 'Protected action ' is unavailable in relation to a proposed multiple business agreement. 92
97 Some States, in particular Queensland and New South Wales, expressly provide for the making
of project agreements. Otherwise, project agreements generally remain unregistered
agreements 93 Wh ile unregistered agreements may be recognised under Federal workplace
relations law, 94 their legal status and effect are open to doubt. Ryan v Textile Clothing and
Footwear Union of Australia95 illustrates the difficulties of enforcing industrial agree ments that
are uncertified or unregistered.
Pattern Agreements
98 A Pattern Agreement has been described as:
a bargaining process in which unions or employers attempt to achieve common
outcomes across different enterprises in an industry or sector; for example by the
adoption of standard agreements or a specified wage increase. 96
99 Pattern bargain agreements usually have common effective start and expiry dates, and similar
if not identical terms and conditions. Pattern bargaini ng takes place on both a sectoral and
industry basis.
1 00 Widespread pattern bargaining exists in the bu ilding and construction industry despite the
Workplace Relations Act 1996 (C'wth) seeking to encourage bargaining at the enterprise level.
Office of the Employment Advocate
The OEA's powers and functions
1 01 Section 83BA of Part IVA of the Workplace Relations Act 1996 (C'wth) provides that there is to
be an Employment Advocate.
I 02 Section 83BB sets out the functions of the Employment Advocate, which include:
(a) providing assistance and advice to employees about their rights and obligations
under this Act,
(b) providing assistance and advice to employers (especially employers in small
business) about their rights and obligations under this Act;
National Perspective Part 1 I 73
(c) providing advice to employers and employees, in connection with A WAs, about th e
relevant award and statutory entitlements and about the relevant provisions of this
Act;
(e) investigating alleged breaches of A WAs, alleged contravention of Part VIO and any
other complaints relating to A WAs;
(& investigating contraventions of Part XL\;
(g) providing free legal representation to a party in a proceeding under Part VIO or XL\ ,
if the Employment Advocate considers this would promote the enforcement of the provisions of those Parts.
1 03 Staff of the Office of Employment Advocate are engaged under the Public Service Act 1999 (C'wth) 97
1 04 The Employment Advocate may appoint a person who is appointed or employed by the
Commonwealth, a State or Territory to be an authorised officer. Authorised officers can enter
premises, inspect documents or materials and interview a person, for the purposes of
ascertaining whether the terms of an AWA, the provisions of Part VID (AWAs) or Part XA
(Freedom of Association) or the provisions of the Act prescribed by the regulations are being complied with 98
1 05 A memorandum of understanding was created in December 1 997 between the Office of the Employment Advocate and the Department of Workplace Relations and Small Business (now
Department of Employment and Workplace Relations (DEWR)) to clarify work arrangements
between the Department's employees who were appointed inspectors under the Workplace
Relations Act 1996 (C'wth) and the OEA. Like the OEA, the inspectors have a role in advising
employers and employees of their rights and obligations under the Workplace Relations Act
1996 (C'wth) and have certain powers to enforce compliance with the Workplace Relations Act
1996 (C'wth). These powers are set out in ss84 and 86 of the Workplace Relations Act 1996
(C'wth) and Regulation 9 of the Workplace Relations Regulations 1996. The memorandum of
understanding specifies the areas of prime responsibility of the OEA and the inspectors and the
way in which the OEA and the inspectors should interact. 99 It provides for information sharing and referral of appropriate matters between the OEA and Department of Workplace Relations
and Small Business.
1 06 The responsibilities of the Employment Advocate and those who assist that officer as set out in
both the Workplace Relations Act 1996 (C'wth) and the memorandum of understanding are in relation to:
Australian Workplace Agreements including filing and approval requirements ... ;
Application of the WRA provisions relating to:
Freedom of Association (FOA)
Coercion and applying duress in agreement making
Right of Entry
Strike Pay
1 7 4 Final Report of the Royal Commission into the Building and Construction Industry
The tndustrial relations provisions of the Code. 100
I 07 The responsibilities of the inspectors employed by Department of Workplace Relations and
Small Business as set out in both the Workplace Relations Act 1996 (C'wth) and the Memorandum of Understanding are in relation to:
Application of and compliance issues relating to:
Federal awards and certified agreements
Schedule 1 A of the WRA in respect of VIC employers and employees
time and wage records and pays/ips requirements (except those relating to A WAs)
minimum entitlements under the WRA (eg termination provisions). 701
I 08 Under the Memorandum of Understanding, 102 the Employment Advocate was given the role of
investigating compliance with sl 70NC (coercion of persons to make, vary or terminate certified
agreements), Part VI ll A (strike pay) and Division I I A of Part IX (right of entry) in recognition that
the OEA had greater expertise in these areas, and should undertake the enforcement and compliance functions of the inspectors.
I 09 In order that the Employment Advocate's officers had power to undertake these additional
functions, some of th e Em ployment Advocate's authorised officers, who acted in investigative
roles , were appointed as inspectors under Part V of the Workplace Relations Act 1996 (C 'wth) .
In addition, to assist with the sharing of responsibi lities, some of the Department of Workplace
Relations and Small Business's inspectors were appointed as authorised officers under the Workplace Relations Act 1996 (C'wth) .103
I I 0 Under the Workplace Relations Act 1996 (C 'wth) and the relevant regulations, inspectors were
given power to initiate prosecutions in certain circu mstances, whereas authorised offi cers of
the Employment Advocate were not. 104 The powers granted to authorised offi cers and inspectors are subject to Directions from the Minister. 105
I I I Pursuant to the Commonwealth Implementation Guidelines for the National Code of Practice
for the Construction Industry, th e OEA has a role in investigating and ensuring compliance with
the Code. The Memorandum of Understanding refers to this power.106 OEA's role in
investigation and enforcement of the Code may require 'the exercise of powers based on contractual provisions of the contract between th e Commonwealth and th e contracting partyâ¢.107
I I 2 The Employment Advocate does not have statutory authority to investigate or prosecute criminal matters. If information relating to a criminal matter arises during the course of their
investigations, the OEA officers advise the complainant to refer the matter to th e local police. 108
The OEA's operations
I I 3 The Office of the Employment Advocate includes:
(a) a Cl ient Service Network team which is based in each State and the Northern Territory;
(b) a Policy and Research Unit;
National Perspective Part 1 I 7 5
(c) a National AWA team (based in Sydney and Brisbane);
(d) a legal team;
(e) · a Corporate and Planning Services team; and
(f) a National Communications Team .109
114 The OEA receives complaints from industrial associations (employer and employee
representative groups), employers, employees and industrial practitioners.
115 The procedure for investigation of a complaint involves a number of steps.
(a) The OEA will ascertain what outcome is being sought by the complainant and will explain
the process of the investigation.
(b) The OEA officers will try to establish the facts concerning the complaint, by conducting
interviews with persons involved.
(c) If the OEA ascertains that there has been a breach of the Workplace Relations Act 1996
(C'wth) it will usually seek voluntary compliance from the offending party.
(d) Voluntary compliance usually takes the form of undertakings given by the offending party
that there will be no further breaches of the Workplace Relations Act 1996 (C'wth) . Th ere
may also be compensation payments or penalties ordered.
(e) If voluntary compliance is not achieved proceedings may be instituted, in cluding
proceedings for urgent interlocutory rel ief where necessary.
(f) The OEA can provide free legal advice if the OEA decides that it is warranted in any given
case. 110
116 An example of a dispute being resolved through voluntary compliance arose in Victoria:
A subcontractor was terminated from a project allegedly because he did not have an
enterprise agreement with the CFMEU. The head contractor agreed that one of the reasons the contract had been terminated was because the subcontractor had not
provided any 'EBA details'. The head contractor made written undertakings to
discontinue the practice of asking if subcontractors had an EBA and paid the
subcontractor for all work undertaken in preparation for the contract. 111
117 Other disputes have been resolved voluntarily, for example, a deed of agreement was entered
into in response to complaints received from Baulderstone subcontractors that Baulderstone had breached section 1 70 NC of the Workplace Relations Act 1996 (C'wth) on a project at
Tandys Lane. Baulderstone denied the allegations and did not admit liability, but gave a number
of undertakings set out in the deed of agreement. In another instance, the OEA obtained written assurance from Multiplex that subcontractors which had a section 170LK agreement
and complained that they were not allowed onto the Multiplex site by the CFMEU site delegate would be allowed onto the sit e. 112
118 The pri mary focus of the OEA has been on AWAs and freedom of association .11 3 It receives
more complaints about contraventions of the freedom of association provisions in the building and construction industry than in any other industry. 114 A large proportion of the building and
1 7 6 Final Report of the Royal Commission into the Building and Construction Industry
construction industry complaints have related to freedom of association, fo llowed by coercion to make, vary or terminate an agreement (s170NC) , right of entry and strike pay. 11 5
119 Over a quarter of the OEA's activity in the building and construction industry from March 1997
to 1 March 2002 related to s170NC of the Workplace Relations Act 1996 (C'wth). Examples of such investigations were given by the Commonwealth.
(a) A subcontractor was pressured by a union to sign a union enterprise bargaining
agreement, and the head contractor was subjected to industrial action on other building
sites because it objected to the pressure exerted on the subcontractor. The OEA
negotiated a resolution whereby the subcontractor could continue working on site without signing a union enterprise bargaining agreement.
(b) A number of subcontractors were being denied access to a building site by a union
requiring that they enter into a union enterprise bargaining agreement. The OEA raised
the issue with the head contractor, and subsequently all subcontractors were permitted
on site, without a union enterprise bargaining agreement. 116
Industrial tribunals
The constitutional framework
120 The powers of the Commonwealth Parliament to make laws regarding industrial relations arise
primarily from the provisions of s51(xxxv) of the Constitution, which provides a power to make laws with respect to:
Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State.
121 The limitations of this power are considerable and well known, although the precise boundaries
of these limits may not always be clear. In general terms:
⢠Section 51 (xxxv) does not empower the Commonwealth Parl iament to regulate industrial
matters by direct legislation. It only empowers the Commonwealth to establish machinery
for the prevention or settlement of industrial disputes extend ing or capable of extending
beyond any one State. That machinery is presently found in the Workplace Relations Act
1996 (C 'wth).
⢠Section 51 (xxxv) empowers the AIRC , established under s8 of the Act, to operate by way
of conciliation and arbitration . It is beyond the constitutional power given under s51 (xxxv)
for the AIRC to act by any other method.
⢠Section 51 (xxxv) empowers the AIRC to deal only with industrial disputes. An award wi ll
bind only the parties in dispute and cannot be made a common rule applying to all
employers and employees in the industry affected, except in the case of Commonwealth
territories or public sector employment where validity is derived from the territories power and the executive power of the Commonwealth, respectively. 117 Otherwise, unless there
is an industrial dispute extending beyond any one State or capable of doing so, the AIRC
has no jurisdiction. It cannot deal with matters that are not in dispute. As to matters that
are in dispute, the AIRC can operate only within the ambit of the dispute.
National Perspective Part 1 '1 7 7
⢠The dispute must be industrial in character. In particular, the activities to which an award
can be directed, the re lationship between the parties to the dispute and the matters over
which they are disputing must al l have an industrial character.
⢠The dispute must be one which extends beyond the limits of any one State. In particular,
it must exist as a sing le dispute at the one time between employers and employees in
more than one State (or in a State and a Commonwealth territory) .
122 These limitations on s5 1 (xxxv) have caused legislators to utilise other sources of constitutional
power to expand the role and powers of the AI RC. For example, the power to legislate for
Commonwealth territories (ss52(i) and 122 of the Constitution) is rel ied on in the case of
employers and employees in the Commonwealth territories. The executive power of the
Commonwealth (ss6 1 and 51 (xxxix)) is re lied on in the case of the Commonwealth public
service, and the corporations power (s51 (xx)) is relied on in the case of most certified agreements. The external affairs power (s51 (xxix)) is re li ed on in the case of termination of
employment and unlawful termination of employment.
1 23 These limitations contrast w ith the constituti onal power of the respective State Parliaments
where the only limitation is territorial. The State industrial tribunals established under State
legislation may be , and sometimes are, authorised to determine matters without adherence to
the processes of conciliation and arbitration . For example, under the Industrial Relations Act
1996 (NSW), an 'arm' of the NSW Industrial Relations Commission, namely the Commission in
Court Session , is a superior court of record of equivalent statu s to the NSW Supreme Court
and exercises judicial powers accordingly.
124 State industrial tribunals are also empowered to deal with matters on application, without any
need to find the existence of a dispute as the jurisdictional basis for the proceedings. Determinations may be made to bind any or all employers and employees in the industry
concerned . The definition of 'industrial matters' , the defin ition of the employment relationship
and the definition of 'industry' are all within the power of the respective State Parl iaments,
unhindered by the constitutional restrictions that apply to the Commonwealth Parliament.
125 State industrial tribunals may be, and sometimes are, empowered to enforce their orders or direct ions wi th penalties, for example financial civil penalties and demarcation orders. The
Australian Industrial Relations Commission lacks enforcement powers by reason of the
constitutional doctrine of separation of powers.118 Judicial functions are, relevantly, the
preserve of the Federal Court of Australia, the Federal Magistrates Court and State courts
invested with federal jurisdiction.
126 Thus, State legislation and State industrial tribunals supply industrial regulation where
Commonwealth laws and the AIRC are constitutionally unable to reach. In the case of Victoria,
however, those State powers have been expressly referred to the Commonwealth . Th is is discussed below.
127 Many State awards are intended to apply to industries that have not been touched by Federal awards, but others purport to apply to all employers and employees in industries for which
Federal awards have been made in the settlement of interstate industrial disputes. In such
cases, a Federal award does no more than lay down a set of legally binding ru les in respect of
the parties to th e dispute, and in respect of the matters in dispute between them. Any conflict
1 7 8 Final Report of the Royal Commission into the Building and Construction Industry
between these rules and those prescribed by State law or State awards is resolved by s 1 09 of
the Constitution which provides that where a law of a State is inconsistent with the law of the
Commonwealth, the latter prevails, and the former shall (to the extent of the inconsistency) be
invalid. Section 109 is utilised by s152 of the Workplace Relations Act 1996 (C 'wth) to give priority to Fed eral awards.
128 However, since Commonwealth legislation that relies on the conciliation and arbitration power
of s51 (xxxv) can apply only to the parties to an interstate dispute, and only in respect of matters
that are in dispute, the inconsistency between a Federal award and State laws or State awards
can only arise within these limits unless some other Commonwealth power, for example s51 (xx)
(corporations power), supports a provision which has an intra-State operation. Where no
Federal award exists, or where the Federal award does not apply to the employer and
employee in question, or where the Federal award does not apply to a particular aspect of the
employment contract, the rights and obligations of employers and employees are subject on ly
to the State law or the State award. It has been accepted though that in part settlement of an
industrial dispute, the AIRC may make an award which operates within a single State. 11 9
129 The Workplace Relations Act 1996 (C'wth) requires that if the AIRC:
is satisfied that a State award or State employment agreement governs the wages and
conditions of employment of particular employees whose wages and conditions of
employment are the subject of an industrial dispute, the Commission must cease dealing
with the industrial dispute in relation to those employees, unless the Commission is
satisfied that ceasing would not be in the public interest. 120
The legislative framework of the tribunals
130 The AIRC is constituted under Part II of the Workplace Relations Act 1996 (C'wth). It consists
of a President, two Vice-Presidents and such numbers of Senior Deputy Presidents, Deputy
Presidents and Commissioners as, from time to time, hold office under the Act. 121 Each
Presidential Member has the same ran k, status and precedence as a Judge of the Federal
Court. 122 A member of the AIRC holds office until the member resigns, is removed from office or attains the age of 65 years. 123
131 The AIRC may perform a function or exercise a power of its own motion, or on the application
of a party to an industrial dispute, or on the application of an organisation or person bound by
an award or certified agreement made or certified under the Act. 124
132 Section 37 empowers the President to assign an industry or group of industries to a panel of
members of the AIRC consisting of at least one Presidential Member (as the Panel Head) and
at least one Commissioner. The President has established such panels . The building, metal and
civi l construction industries, the electrical contracting industry and the plumbing industry,
among others, are grouped in a panel presently headed by Ross VP.
133 Part II Division 3 of the Act addresses representation and intervention before the AIRC.
⢠A party may appear in person.
⢠A party may be represented by counsel, a solicitor or an agent by leave of the AIRC.
There are varying circumstances in which leave may be given .
National Perspective Part 1 I 79
⢠A party that is an 'organisation' (defined in s4 to mean an organisation registered under
the Act) may be represented by a member, officer or employee of that organisation.
⢠A party (other than an organisation or employing authority) may be represented by a
member, officer or employee of an organisation of which the party is a member. By
means of these, a union officer or employee has a right of representation on behalf of that
union or any member of that un ion. 125
134 Part II Di vi sion 4 provides for appeals to a Full Bench of the AIRC and references to the Federal
Court. An appeal lies with leave of the Full Bench of the AIRC against any of the decisions of
the AIRC at first instance listed in s45. For leave to appeal to be granted a Full Bench must be
of the opinion that the matter is of such importance that, in the public interest, leave should be granted. 126
135 In Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission, 127 the High
Court stated the ambit of appeals under s45 as follows:
.. . s 45 does not require a Full Bench of the Commission to "make such order as it thinks
fit". Nor is there anything else in the terms of s 45 to suggest that the powers of a Full Bench are exercisable or ... are required to be exercised in the absence of error on the
part of the primary decision-maker.
Because a Full Bench of the Commission has power under s 45(6) of the Act to receive
further evidence on appeal, an appeal under that section is properly descnbed as an appeal by way of reheanng. And because there is nothing to suggest otherwise, its
powers under sub-s (7) are exercisable only if there is error on the part of the primary
decision-maker. And that is so regardless of the different decisions that may be the
subject of an appeal under s 45 .
. . . in the case of a discretionary decision [which is under appeal], the exercise by a Full
Bench of the Commission of its powers under s 45{7) of the Act depends on the decision
at first instance being attended by appealable error.
Because a decision-maker charged with the making of a discretionary decision has some
latitude as to the decision to be made, the correctness of the decision can only be
challenged by showing error in the decision-making process. And unless the relevant
statute directs otherwise, it is only if there is error in that process that a discretionary
decision can be set aside by an appellate tribunal. The errors that might be made in the
decision -making process were identified, in relation to judicial discretions, in House v The Kin g in these terms:
"If the judge acts upon a wrong principle, if he allows extraneous or irrelevant
matters to guide or affect him, if he mistakes the facts, if he does not take into
account some material consideration, then his determination should be reviewed
and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. "128
1 80 Final Report of the Royal Commission in to the Building and Construction Industry
136 Section 46 of the Workplace Relations Act 1996 (C'wth) empowers the AIRC to refer a
question of law arising in a matter before it for the opinion of the Federal Court of Australia.
137 The Rules of the AIRC are made under s48 . They provide for the practice and procedure to be
followed in the AIRC and the conduct of business in the AIRC .
138 Information on state industrial tribunals, in particular the legislative framework, awards and
certified agreements, conciliation, arbitration and injunctions, is included at attachment 4.
Awa rds and Certified Agreements
139 The objects of Part VI (Dispute prevention and settlement) of the Workplace Relations Act 1996
(C'wth) , are set out in s88A of the Act which provides:
The objects of this Part are to ensure that:
(a) wages and conditions of employment are protected by a system of enforceable
awards established and maintained by the Commission; and
(d) the Commission's functions and powers in relation to making and varying awards
are performed and exercised in a way that:
(i) encourages the making of agreements between employers and employees
at the workplace or enterprise level; and
(ii) uses a case-by-case approach to prote_ct the competitive position of young
people in the labour market, to promote youth employment, youth skills and
community standards and to assist in reduCing youth unemployment.
140 The AIRC must perform its functions under Part VI 'in a way that furthers the objects of the Act and, in particular, the objects of [Part VI]'. 129
141 The capacity of the AIRC to establish and maintain a system of enforceable awards (through
s88A(a)) is contingent upon the existence of an 'industrial dispute' about an 'allowable award matter'. 130
142 The term 'industrial dispute' is defined in s4 to mean:
(a) an industrial dispute (including a threatened, impending or probable industrial
dispute);
(i) extending beyond the limits of any one State; and
(ii) that is about matters pertaining to the relationship between employers and
employees; or
(b) a situation that is likely to give rise to an industrial dispute of the kind referred to in
paragraph (a);
and includes a demarcation dispute (whether or not, in the case of a demarcation dispute
involving an organisation or the members of an organisation in that capacity, the dispute
extends beyond the limits of any one State).
National Perspective Part 1 1 81
143 The 'allowable award matters' about which the AIRC may make an award are listed in
s89A(2)(a) to (t) of the Act. Those matters are as follows:
(a) classifications of employees and skill-based career paths;
(b) ordinary time hours of work and the times within which they are performed, rest
breaks, notice periods and variations to working hours;
(c) rates of pay generally (such as hourly rates and annual salaries), rates of pay for
juniors, trainees or apprentices, and rates of pay for employees under the supported wage system;
(d) incentive-based payments (other than tallies in the meat industry), piece rates and
bonuses;
(e) annual/eave and leave loadings;
m long service leave; (g) personal/carer's leave, including sick leave, family leave, bereavement leave,
compassionate leave, cultural/eave and other like forms of leave;
(h) parental/eave, including maternity and adoption leave;
(i) public holidays;
OJ allowances;
(k) loadings for working overtime or for casual or shift work;
(!) penalty rates;
(m) redundancy pay;
(n) notice of termination;
(o) stand-down provisions;
(p) dispute settling procedures;
(q) jury service;
(r) type of employment, such as full-time employment, casual employment, regular
part-time employment and shift work;
(s) superannuation;
(t) pay and conditions for outworkers, but only to the extent necessary to ensure that
their overall pay and conditions of employment are fair and reasonable in comparison with the pay and conditions of employment specified in a relevant
award or awards for employees who perform the same kind of work at an employer's business or commercial premises.
144 Section 89A(3) provides that the power of the AIRC 'to make an award dealing with matters
covered by subsection (2) is limited to making a minimum rates award' .
1 82 Final Report of the Royal Commission into the Building and Construction Industry
145 Section 89A(1 )(b) empowers the AIRC, within that framework, to make an award or order to
prevent or settle industrial disputes about an allowable award matter. The dispute might extend
beyond an allowable matter, but the AIRC 's award (or order) can only apply to those aspects of
the dispute that are allowable award matters. Similarly, s89A(1 )(c) of the Act empowers the
AIRC to vary an award or order to maintain the settlement of an industrial dispute about an
allowable award matter. The AIRC may include in an award provisions that are incidental to the
matters in s89A(2) and necessary for the effective operation of the award. 13 1
146 In making or varying an award, the AIRC must give effect to any determinations made by a Full
Bench of the AIRC and any principles established by a Full Bench about the making or varying
of awards in relation to each of the allowable award matters. 132
147 Within the statutory framework described above, s111 (b), (e) and (n of the Act empower the
Commission, in relation to an industrial dispute, to:
(b) make an award or order .. .
(e) make an award or order Including, or vary an award or order so as to include, a
provision to the effect that engaging in conduct in breach of a specified term of the
award or order shall be taken to constitute a commission of a separate breach of the term on each day on which the conduct continues;
m set aside, revoke or vary an award, order, direction, determination or other decision of the Commission.
148 Section 143 provides that where the AIRC makes a decision or determination that, in the
AIRC's opinion , is an award or an order affecting an award, the AIRC shall promptly reduce the
decision or determination to writing that expresses it to be an award.
149 Because of the constitutional limitations on awards made by the AIRC, an award determining
an industrial dispute is binding only on the parties to the dispute and their successors. Under
s 141 (and with rel iance on the territories power and the executive power to the Constitution)
however, the AIRC may declare that any determinant of an award (subject to such conditions,
exceptions and limitations as are specified in the declaration) be a common rule in a territory for
an industry in relation to which the industrial dispute arose, or a common rule for the whole or
a specified class of public sector employment.
150 This may be contrasted with the States where, free from constitutional limitation , awards are
frequently made as 'common rule awards' for an industry.
151 If a State law or a State award is inconsistent with, or deals with a matter dealt with in, an award
made under the Workplace Relations Act 1996 (C 'wth), the latter prevails and the former, to the
extent of the inconsistency or in relation to the matter dealt with, is invalid. 133 However, if the
AIRC is satisfied that an existing State award, or State employment agreement governs the
wages and conditions of employment, subject of an industrial dispute brought before it, the
AIRC must cease dealing with the industrial dispute in relation to those employees, unless the
AIRC is satisfied that ceasing would not be in the public interest. 134
National Perspective Part 1 1 83
152 The AIRC has power to certify and where satisfied that the requirements have been met must
certify agreements under Part VIB of the Workplace Relations Act 1996 (C'wth).
153 The AIRC may certify agreements under Part VIB, Division 3 of the Act that empowers the AIRC
to certify agreements 'to settle, further settle or maintain the settlement of, or to prevent,
industrial disputes; or to prevent industrial situations from giving rise to industrial disputes' .135
These certified agreements derive their constitutional validity from the conciliation and
arbitration power (s51 (xxxv) of the Constitution).
154 Both kinds of agreements must be approved by a valid majority of employees covered by the
ag reement 136 and must be certified by the AIRC to be enforceable under the Act. 137
Section 170LT(1) provides:
If an application is made to the Commission in accordance with Division 2 or 3 to certify
an agreement, the Commission must certify the agreement if, and must not certify the
agreement unless, it is satisfied that the requirements of this section are met.
155 Section 170LT requires the AIRC to be satisfied that employees who are parties to the
agreement, or are to be bound by it , have been given a proper and adequate opportunity to
understand it, and that a valid majority of those persons genuinely approved it. 138 The
proposed agreement must include procedures for preventing and settling disputes about matters arising under the agreement. 139
156 A certified ag reement comes into operation when it is certified by the AIRC and ceases to have
effect if it is replaced by another certified agreement after its nominal expiry date or if it is
terminated either by the AIRC or with its approval. 140 While a certified agreement rema ins in
operation it overrides any inconsistent Commonwealth industrial awards made before it where the nominal expiry date has passed. 141 It prevails over any inconsistent State award or
employment agreement with some exceptions. 142
Conciliation
157 The AIRC, and each of the industrial tribunals in each State, is directed, under its applicable
legislation, to endeavour first to settle disputes by conciliation. The applicable legislation is set out below.
158 The Workplace Relations Act 1996 (C'wth) , s89, provides:
The functions of the Commission are:
(a) to prevent and settle industrial disputes:
(i) so far as possible, by conciliation; and
(ii) as a last resort and within the limits specified in this Act, by arbitration; and
(b) such other functions as are conferred on the Commission by this or any other Act.
159 Section 89 is supported by other provisions of the Act.
160 Section 1 00 of the Act provides:
1 84 Final Report of the Royal Commission into the Building and Construction Industry
(1) Where an alleged industrial dispute is notified under section 99 . . . the relevant
Presidential Member shall, unless satisfied that it would not assist the prevention or
settlement of the alleged industrial dispute, refer it for conciliation by himself or herself or by another member of the Commission.
(2) If the Presidential Member does not refer the alleged industrial dispute for
conciliation:
(a) The Presidential Member must publish reasons for not doing so; and
(b) The Commission must deal with the alleged industrial dispute by arbitration.
161 Section 103 of the Act provides:
(1) A conciliation proceeding before a member of the Commission shall be regarded
as completed when:
(a) the parties have reached agreement for the settlement of the whole of the
industrial dispute and the agreement has been certified under Division 4 of
Part VIB; or
(b) whether or not the parties have reached agreement for the settlement of part
of the industrial dispute:
(i) the member of the Commission is satisfied that there is no likelihood
that, within a reasonable period, conciliation, or further conciliation, will
result in agreement, or further agreement, by the parties on terms for the
settlement of the industrial dispute or any other matter in dispute; or
(ii) the parties to the industrial dispute have informed the member that there
is no likelihood of agreement, or further agreement, on matters in dispute
and the member does not have a substantial reason to refuse to regard
the conciliation proceeding as completed.
(2) Nothing in this Act prevents the exercise of conciliation powers in relation to an
industrial dispute merely because arbitration powers have been exercised in
relation to the industrial dispute.
162 Section 11 0 provides:
(1) Where the Commission is dealing with an industrial dispute, it shall, in such manner
as it considers appropriate, carefully and quickly inquire into and investigate the
industrial dispute and all matters affecting the merits, and right settlement, of the
industrial dispute.
(2) In the hearing and determination of an industrial dispute or in any other
proceedings before the Commission:
(a) the procedure of the Commission is, subject to this Act and the Rules of the
Commission, within the discretion of the Commission;
National Perspective Part 1 I 85
(b) the Commission is not bound to act in a formal manner and is not bound by
any rules of evidence, but may inform itself on any matter in such manner as
it considers just; and
(c) the Commission shall act according to equity, good conscience and the
substantial merits of the case, without regard to technicalities and legal
forms .
(3) The Commission may determine the periods that are reasonably necessary for the
fair and adequate presentation of the respective cases of the parties to an industrial
dispute or other proceeding and require that the cases be presented within the
respective periods.
(4) The Commission may reqwre evidence or argument to be presented in writ1ng, and
may decide the matters on which it will hear oral evidence or argument.
163 Subsections 11 9(1) and (5) provide:
(1) For the purpose of the performance of a function, or the exercise of a power, of the
Commission in relation to an industrial dispute, a member of the Commission may,
of the member's own motion, or an application made by a party to, or intervener in, the industrial dispute, direct a person to attend, at a specified time and place, a
conference to be presided over by a member of the Commission or another person
nominated by the President.
(5) The conference shall be held in private except to the extent that the person
presiding over the conference directs that it be held in public.
Arbitration
164 The Workplace Relations Act 1996 (C 'wth) provides for prevention and settlement of industrial
disputes so far as possible by conciliation and 'as a last resort and within the limits specified in
this Act, by arbitration'. 143 The applicable State leg islation si milarly intends industrial tribunals to
use their arbitration powers only where conciliation has failed to resolve the industrial dispute.
165 For constitutional reasons, the AIRC is empowered to make orders and give directions but has
no power to address non-compliance with those orders or di rections.
166 The applicable legislation under the Workplace Relations Act 1996 (C'wth) is set out below.
167 The arbitration powers of the AIRC are contained in s104(1) to (5) of the Workplace Relations
Act 1996 (C'wth) which provide:
(1) When a conciliation proceeding before a member of the Commission in relation to
an industrial dispute is completed but the industrial dispute has not been fully
settled, the Commission shall proceed to deal with the industrial dispute, or the
matters remaining in dispute, by arbitration.
(2) Unless the member of the Commission who conducted the conciliation proceeding
is competent, having regard to section 105, to exercise arbitration powers in
1 86 Final Report of the Royal Commission into the Building and Construction Industry
relation to the industrial dispute and proposes to do so, the member shall make a report under subsection (3).
(3) The member shall, for the purpose of enabling arrangements to be made for
arbitration in relation to the industrial dispute, report to the relevant Presidential
Member or, if the member is a Presidential Member, to the President as to the
matters in dispute, the parties and the extent to which the industrial dispute has been settled.
(4) The member shall not disclose anything said or done in the conciliation proceeding
in relation to matters in dispute that remains unsettled.
(5) In an arbitration proceeding under this Act, unless all the parties agree, evidence
shall not given, or statements made, that would disclose anything said or done in a
conciliation proceeding under this Act (whether before a member of the
Commission or at a conference arranged by a member of the Commission) in
relation to matters in dispute that remain unsettled.
168 Section 105 provides that where a member of the AIRC has exercised conciliation powers in
relation to an industrial dispute, the member shall not exercise arbitration powers in relation to
the industrial dispute if a party to the arbitration proceeding objects. A party must object before
arbitration is commenced, otherwise the right to object is lost. 144 For this reason, a member of
the AIRC must make it clear when the conciliation phase is ended, and arbitration is to begin,
so that the parties have an opportunity to exercise their rights of objection.
169 The existence of the industrial dispute, which is the subjeGt of the arbitration, gives the AIRC its
power to make an award by way of an order or determination, to dispose of the dispute. For
this reason, the ambit of the dispute determines the constitutional vali dity and enforceability of
an award or order made by th e AIRC in the exercise of its arbitral function. 145 This is not to say
that the award must adhere to the remedy or relief claimed , but it does mean that the relief
must be reasonably incidental to the settlement of the defined dispute. 146
170 Th e ambit of any consequential award is constrained by s89A(1) that provides that when the
AIRC is dealing with an industrial dispute by arbitration, the industrial dispute can on ly include
matters (described as allowable award matters) covered by s89A(2) and (3). These matters are
listed above. In other words, the dispute may involve more than allowable award matters but
the AIRC can arbitrate only to the extent that the dispute involves allowable award matters.
171 Accordingly, if parties are in dispute, for example about whether one party is in breach of the
terms of an award or certified agreement, the AIRC may exercise its conciliation powers in an
effort to resolve the dispute, but has no power to ru le upon the meaning of the award or
certified agreement. That power lies with the courts. 147
172 Section 170N(1) of the Act provides that, during a bargaining period, the AIRC must not
exercise its arbitration powers under Part VI in relation to a matter that is at issue between the
negotiating parties. But that prohibition does not prevent the AIRC exercising its arbitration
powers to deal with an application to vary an award by making a safety net wage
adjustments. 148
National Perspective Part 1 187
Injunctions
173 The bui lding and construction industry is especially vulnerable to significant financial loss
arisjng from industrial action . The Commission received evidence throughout Australia about
this vu lnerability and the manner in which industrial action is taken and addressed as a
consequence.
17 4 The extreme financial vulnerabi lity of owners, bui lders and subcontractors (in particular) to
industrial action, particularl y strike action, makes it critical that such persons have recourse to
a body with effective inj unctive powers where such a remedy should be provided. The
Commission heard evidence of a widespread reluctance on the part of participants in the
industry to approach a court seeking injunctive relief in respect of industrial action.
175 The injunctive powers conferred by Commonwealth legislation is addressed below.
176 The AIRC is empowered to make orders that industri al action, which is occurring or threatened,
impending or probable, should either stop or not occur. 149 Orders may be made regarding
industrial action (or threatened industrial action) that is in relation to:
(a) an ind ustrial dispute; or
(b) the negotiation or proposed negotiation of an agreement under Division 2 of Part VIB; or
(c) work that is regulated by an award or certified agreement. 150
177 A person to whom an order is expressed to apply must comply with the order.151 Accordingly,
a sl27 order has the effect of making any behaviour which is the subject of the order a
contravention of the Workplace Relations Act 1996 (C'wth) . Where behaviour contravenes an
order made under sl27(1 ), a person or organisation affected by the order may apply to the
Federal Court of Australia (the Federal Court) for an injunction. The Federal Court can issue an
injunction on such terms as it sees fit where a person to whom an order applies engages in
conduct that constitutes a contravention of that order, or proposes to engage in such
conduct. 152 The Court may grant interim injunctions pending the determination of an
application for an injunction. 153
178 Mu nro J of the AIR C recently stated his view of the efficacy of sl 27 orders as follows :
I am not one who thinks that a section 127 order will resolve many problems at a site or
forever stop industrial action. It simply is another step in the process. In this instance, if
Trans field wants to enforce it, it will have to go to the Federal Court. However, in this case
a section 127 order is about the only step that is within the Commission's repertoire to
indicate the degree to which it seeks to discourage industrial action during the life of an
agreement. 154
179 Orders of the AIRC made under sl27 must be unambiguous and clearly directed to particular
persons and conduct. For example, the Federal Court declined to grant an injunction because
the relevant order was directed to 'industrial action ' on a given day and this failed to identify
precisely the action to be prohibited. The application was made with the intention of obtaining
an order prohibiting a work stoppage. The order was also defective because it was directed at
union members subject to awards but the relevant awards were not identified in the order. 155
1 88 Final Report of the Royal Commission into the Building and Construction Industry
180 The AIRC's power under s127 is discretionary. The Full Bench of the AIRC has described that
discretion as manifestly 'at large', but guided by the objects of the Act and an understanding of
the relationship of the power and the effect of its exercise upon the scheme of the Act. 156
However, once the AIRC makes an order, a person or organisation to whom an order under
s127(1) is expressed to comply, must comply with the order. 157
181 A significant limitation on the scope of a s127 order is found in s170MT(1). An order made by
the AIRC under s127 does not apply to protected action. 158
182 The AIRC has no power to enforce an order made under s127 nor could it be invested with
such an enforcement power because its judicial character would make such an order constitutionally impermissible under the separation of powers doctrine. The role of enforcing an
order of the AIRC, therefore, is invested in the Federal Court under s127(6) and (7). This
incapacity of the AIRC to enforce its own orders is a significant limitation, particularly in the
build ing and construction industry, where continuance of industrial action, even for small
periods of time, inevitably has significant financial consequences.
183 In Tran sfield Construction Pty Ltd v Automotive, Food, Metal, Engineering, Printing & Kindred
Industries Union ,159 Merkel J adopted an approach to s127 which emphasises the Court's role
of enforcement of an order made by the AIRC under s127(1) :
In considering the strength of the claim for interlocutory relief due weight is to be given to
the fact that s 127(1) orders have been made by the AIRC and to the reasons given by
the AIRC for making those orders. The legislature has reposed in the AIRC, as an expert
industrial tribunal, the power to determine whether an order to stop industrial action
should be made. While the Court has an undoubted discretion under ss 127(6), its role is
essentially intended to be one of enforcement of an order that has been made where
there has been a contravention or proposed contravention of that order. While I accept
that there is no presumption or pre-disposition in favour of the making of an enforcement
order ... I would expect that, in the usual course, there would have to be good reason not
to enforce an order of the AIRC, given that the legislature has reposed in the AIRC, rather
than the Court, the question of whether an order under s 127(1) is to be made and has
provided that when it has been made the persons to whom the order is expressed to
apply "must comply with" it (s 127(5)). Good reason may be shown if, for example, the
AIRC erred in law, the order is shown to be invalid for any reason or where subsequent
circumstances have arisen that make its enforcement inappropriate or unjust. I doubt,
however, that the legislature intended that the Court should be required to embark on a
hearing de novo of the s 127(1) application. 160
184 The role of the Federal Court of Australia in enforcing orders made by the AI RC under s127 is
discussed below.
Federal Court of Australia
185 The role of the Federal Court of Australia in industrial disputes is a product of its place in our
Federal system, and of the historical development (in State courts, as well as overseas) of the economic torts, and later legislative initiatives of the Commonwealth. While the Federal Court of
Australia has jurisdiction under statute (particularly the Workplace Relations Act 1996 (C'wth)
National Perspective Part 1 I 89
and the Trade Practices Act 1974 (C 'wth)), it lacks jurisdiction in toti, except to the extent th at
an issue arising in tort is associated with a matter arising under either of the above Acts. 161
General role of the Federal Court under the Workplace Relations Act 1996 (C 'wth)
186 Whi le the AIRC is given primary responsibility under the Workplace Relations Act 1996 (C 'wth)
in relation to the prevention and settlement of disputes, 162 the Federal Court has jurisdiction
over some matters arising under the Workplace Relations Act 1996 (C'wth) .163 Th ese include
where a writ of mandamus or prohibition or an inj unction is sought against a member of the
AIRC , or of the Registry, 164 and matters remitted to it from the High Court of Australia under s44 of the Judiciary Act 1903 (C 'wth).165
187 The Federal Cou rt 's jurisd iction under the Workplace Relations Act 1996 (C'wth), includes:
(a) certain functions regard ing the protection of employers and independent contractors ,
including:
⢠an application to review a contract for services that is binding on an independent
contractor on the ground th at it is unfai r or harsh; 166
⢠an application in relation to an alleged unlawful termination of employment;167
⢠an application for a penalty in respect of an alleged breach of an award, order of the
AIRC, or a certified agreement; 168 and
⢠an action for recovery of wages owing un der an award , AIRC order, or certified agreement; 169
(b) certain functions relati ng to the proper maintenance of the affairs of industrial
organisations, including :
⢠an app lication by a member of an industri al organisati on for an order declaring part
or all of a ru le of that organisation to be invalid, 170 or for performance of the rules of the organisation ; 171
⢠an application for an inquiry into an election , 172 or into a ballot for an amalgamation
in respect of an industrial organisation; 173
⢠a range of applications dealing with other issues arising in amalgamations of
industrial organisations, and withdrawal from amalgamations of industrial organisations; 17 4
⢠an application for leave to hold office in an industrial organisation after be ing convicted of a prescribed offence; 175
⢠an application for a declaration having the effect of waiving certain validating
provisions relating to the management and administration of industrial
organisations, 176 or having certain other effects on the affairs of industrial organi sations; 177 and
⢠an application for a declaration as to a person's entitlement to be admitted as a
member of an industrial organisation, 178 for an order that a person's membership
1 90 Final Report of the Royal Commission into the Building and Construction Industry
cease, 179 or for an order that the register of members of an organisation be rectified; 180
(c) certain functions relating to the supervision of proper behaviour in engaging in industrial
action, including:
⢠an application for an injunction to restrain a contravention of an order of the AIRC
under s127(1) of the Workplace Relations Act 1996 (C'wth) that industrial action
stop or not occur, where it is of the opinion that another person or organisation has
engaged , or is proposing to engage, in conduct that would contravene that order; 181
⢠an application for a penalty in respect of a range of provisions designed to maintain
the effectiveness of the provisions contained in Part VIB of the Workplace Relations
Act 1996 (C'wth) in relation to enterprise bargaining, and Part VID in relation to
Australian Workplace Agreements; 182 and
⢠an application for penalties or injunctions in respect of the paying, or making
demands for the payment, of strike pay; 183
(d) certain functions relating to the maintenance of appropriate standards of behaviour by
industry participants, including:
⢠an application for a penalty or injunction for a contravention of certain provisions
relating to the rights and obligations of holders of entry permits; 184
⢠an application for an order cancel ling the registration of an organisation; 185
⢠an application pursuant to s298T for a penalty in relation to the freedom of
association provisions arising under Part XA of the Workplace Relations Act 1996
(C'wth); 186 and
⢠proceedings in relation to offences prescribed by Part XI of the Workplace Relations
Act 1996 (C 'wth); and
(e) a limited role in supervising the role of the AIRC, including:
⢠determining a question of law arising in a matter before the AIRC, 187 or if a registrar
refers a question of law arising in a matter before him or her for the opinion of the
court; 188 and
⢠determining any application for writs of mandamus or prohibition, or for an
injunction against a member of the AIRC or the registry, upon remittal from the High
Court of Australia, 189 or any other matter remitted to it from the High Court of
Australia under s44 of the Judiciary Act 1903 (C'wth}. 190
188 A party to a proceeding under the Workplace Relations Act 1996 (C'wth}, other than an
application in relation to an alleged unlawful termination of employment, will not be liable for the
costs of any other party unless they instituted the proceedings vexatiously or without
reasonable cause. 19 1
National Perspective Part 1 1 91
The role of the Federal Court in relation to enterprise bargaining and industrial disputes
Proceedings in tort
189 The Workplace Relations Act 1996 (C 'wth) limits the circumstances in which an action in tort
under State or Territory law may be brought against a union, or an officer, member or employee
of a union in relation to conduct by the organisation, or by the officer, member or employee
acting in that capacity, in contemplation or furtherance of claims th at are the subject of an industrial dispute. 192
190 If an employer wishes to bring an action in tort in respect of such conduct, the employer may
give written notice to the AIRC .193 The AIRC must then take immediate steps to try, or to
continue to try, by the exerc ise of its powers under the Act, to stop the conduct. 194 The AIRC is required to certify in writing if:
(a) it forms the opinion that it is not likely to stop the conduct promptly; or
(b) it decides that it would cause substantial injustice to the person who gave notice if the
person were prevented from bringing an action; or
(c) it has not stopped the conduct by the end of 72 hours after the notice was given. 195 If the
AIRC issues a certificate, the party seeking to bring the action is permitted to do so. 196
1 91 This restriction does not apply to the following conduct:
(a) conduct resultin g in personal inju ry or damage or taking of property; or
(b) demarcation disputes; or
(c) clai ms relating to payment in relation to industrial action; or
(d) conduct in breach of an AIRC or State industrial authority direction. 197
192 Section 170WC confers a limited immunity on similar actions in respect of 'Australian
Workplace Agreement industrial action '. Unlike s166A, s170WC is not limited to action in tort
but the same limitations in relation to personal injury, damage to property and defamation
apply. The immunity is conditional on giving three working days notice of intention to take the
Australian Workplace Agreement industrial action. 198
193 In relation to interlocutory injunctive relief restraining tortious conduct, the effect of s166A is
limited following the judgment of Beach J of the Supreme Court of Victoria in Patrick
Stevedores No 1 Pty Ltd v Maritime Union of Australia 199 (confirmed in Tenix Defence Systems
Pty Ltd v The Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union 200).
Beach J drew a distinction between an application for interlocutory relief and an action in tort,
stating that an application for injunctive relief is not an action in tort under the law of the State
of Victoria 201 His Honour held that the application for an injun ction to prevent the union
committing the tort of interference with contracts was an application seeking that the Court exercise its equitable jurisdiction.202 Consequently, s166A does not impair a party 's right to seek interlocutory injunctive relief. 203
1 92 Final Report of the Royal Commission in to the Building and Construction Industry
Anti-suit injunction
194 Even where a party has obtained a s166A certificate, there is the possibility that the Federal
Court will exercise its discretion to grant an anti-suit injunction to prevent that party from
bringing an action for damages (where there is or may be protected action occurring). This
developing area of law was considered in Australian Workers ' Union v Yallourn Energy Pty
Ltd204 (the Australian Workers Union case) and Construction, Forestry, Mining and Energy Union v Master Builders' Association of Victoria (No 1)2°5 (the Master Builders case) . In both
cases the Federal Court indicated that it was wi lling to grant the anti-suit injunctions but did not
do so after the employers gave undertakings that they wou ld not proceed with the actions 2 06
195 In the Australian Workers Union case, Merkel J considered the power to grant an anti -suit
injunction. After a discussion of case law on the issue, His Honour noted that the:
court may exercise its jurisdiction to prevent the bringing of a proceeding as relief sought
in a suit for a declaration of non-liability or where under domestic law the proceeding is
not sustainable or the bringing of the proceeding is an abuse of process or for an ulterior
purpose. 207
196 No action lies under any law in force in a State or Territory in respect of industrial action that is
protected 208 Merkel J was of the opinion that s170MT(2) is a substantive provision operating
as a bar to action rather than a defence that might be wai ved 209 The effect of this is not to
prohibit the bringing of an action . Merkel J stated that:
where there is a genuine issue as to whether action is protected, then a legal proceeding
can properly be brought so as to enable that issuf? to be determined. In that sense the
extinguishment of the cause of action does not prevent a court from exercising jurisdiction in a matter concerning protected action in order to determine whether the cause of action is extinguished. 210
197 His Honour therefore concluded that an anti-suit injunction could be granted in respect of
protected action , where the party engaging in protected action has brought a suit for a
declaration of non-liability211 In such an action, the main issue will be whether the action fa lls
within the definition of 'protected action'. Merkel J noted that in such a situation the court must
proceed in accordance with equitable principles relating to a grant of interlocutory relief: it must then determine whether there is a serious issue to be tried and, if so , whether the balance of
convenience favours the grant of an interlocutory injunction.
198 The unions based their application for an injunction on the ground that seeking a s166A
certificate amounted to a breach of s170NC of the Workplace Relations Act 1996 (C 'wth) . It
was argued that the proceedings contemplated by the certificate constituted 'action ' under this
section and it was being taken to coerce the union in relation to the making of the agreement.
Merkel J rejected the respondent's submission that the contemplated proceedings were
'unconnected' with the bargaining in relation to the certified agreement. His Honour saw that all steps taken by the parties during a bargaining period were about the parties ' bargaining
position and :
a proceeding by an employer in tort in respect of industrial action alleged by the union to
be protected action or a proceeding by a union to impose penalties on an employer
National Perspective Part 1 1 93
under ss 1 70MU and 1 70MC in respect of the action, even if ultimately found to have
been properly brought, will be likely to affect the parties respective bargaining
positions. 212
199 His Honour consequently found that there was a serious issue to be tried in relation to this
allegation. However, the injunction was not granted because the employer gave undertakings
not to start proceedings.
200 A similar approach was adopted by Goldberg J in the Master Builders case. Th e facts in this
case can be distinguished in relation to s 170MT because the s 166A certificate expressly did
not apply to protected action. Again, the injunction was not granted on the basis of
undertakings by the employer.
201 Thus the anti- su it injunction may be used to avoid the effect of employer attempts to penalise
unions, as described above .
202 The availability of anti-suit injunctions from the Federal Court may have been significantly
reduced by the judgment of Weinberg J in National Tertiary Education Industry Union v Commonwealth of Australia, 213 at least where the industrial action sought to be restrained is
not arguably protected action, since it would be difficult to estab lish that the bringing of
proceedings either in tort, or sl 27 in respect of unlawful industrial action, was unlawful ,
illegitimate or unconscionable 214 His Honou r gave detailed consideration to (but did not
appear to accept the correctness on the judgments in the Australian Workers' Union case and
the Master Builders case. 21 5
Section 127 orders
203 The power of the Federal Court to grant injunctions under ssl27(6) and (7) is discreti onary. In Australian Paper Ltd v Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia, North J observed that the equitable principles
relating to the grant of injunctive relief apply:
The power to grant an injunction is a discretionary power in very wide terms. The word
'may' in s 127(6) is used in a permissive sense (Acts Interpretation Act 1901 (Cth)
s 33(2A)) . Even if the Court determines to grant an injunction, the terms may be moulded to meet the needs of the particular circumstances. The power to grant an interim
injunction is 1n equally wide terms.
The Court only acqwres jurisdiction if the Commission has made an order, but the mere
fact that the Commission has made an order does not mean that the Court is bound to, or will grant, an injunction. The grant of an injunction is an independent function
performed by the Court. The Court is not entitled to grant an injunction without satisfying
itself that an injunction is appropriate in all the Circumstances. In performing its function,
the Court will determine whether the respondents have contravened, or propose to contravene, the Commission's order and will take into account the Circumstances of
such Industrial action to establish whether the circumstances justify the grant of an
injunction. The proceedings in the Commission leading to the making of the order under
s 127(1), the positions put by the parties to the Commission, the decision of the
I 94 Final Report of the Royal Commission into the Building and Construction Industry
Commission, and the responses of the parties to that decision may well be relevant facts
bearing on whether the Court should grant an injunction. The independent function of the
Court follows from the different roles the Court and the Commission perform under s
127. The order of the Court may be enforced through contempt proceedings, by fine,
sequestration or imprisonment. Thus, in determining whether to grant an injunction, the
Court must consider whether, if there were to be conduct in breach of the injunction, it
would be of such nature or effect that, in all the circumstances, it should carry the
possible consequence of a fine , sequestration or imprisonment. These considerations do
not arise when the Commission makes an order under s 127(1].2 16
204 However, North J's remarks indicating that the Court has a broad discretionary power will need
to be read against Merkel J 's statement in the Transfield case that 'in the usual course, there
would have to be good reason not to enforce an order of the AIRC '.21 7
205 In Inner and Eastern Health Care Network v Health Services Union of Australia 218 the AIRC
made an order under s127(1) on 29 October 1997. The order was directed against the branch
of a union, being a union which was registered under the Workplace Relations Act 1996
(C'wth). The applicant subsequently applied to the Federal Court on 6 November 1997 for an
injunction under s127(6) to enforce the order of the Commission as well as an interim injunction
under s127(7).
206 In considering the application Marshall J noted that:
The making of an order by the Commission under s 127(1) of the Act is a very serious
step. Persons who are required to comply with such an order must know with certainty
that it is directed towards their conduct ... it is critical for the purposes of proceedings in
Court pursuant to s 127(6) and s 127(7) of the Act that the order made by the
Commission under s 12 7(1) of the Act be a valid order. It is a/so critical that such an order clearly identify the persons upon whom it is binding and the precise conduct which it
seeks to prohibit. 219
207 The branch of the union did not have corporate status and therefore could not be a respondent
to proceedings before the Court. As the order was drafted to bind the branch it was not binding
on the union. The applicant argued that there was simply a misdescription in the AIRC's order
and that the misdescription could be cured by the Court. Rejecting this submission, Marshall J
stated that it is not the function of the Court to redraft orders made by the AIRC under s127 of
the Act but to exercise its discretion as to whether or not it should grant an injunction to restrain
contravention of the order made by the AIRC 22° Consequently, the application for an injunction
was dismissed.
National Perspective Part 1 1 95
208 In The Original Juice Co Pty Ltd v Automotive, Food, Metals, Engineering, Printing & Ktndred
Industries Union, 221 Whelan C made an order pursuant to s127(1) of the Workplace Relations
Act 1996 (C'wth). The order was directed against a number of parties including the
Automotive, Food, Metals, Eng ineering, Printing & Kindred Industries Union (AMWU) and
employees of the applicant whose employment was regulated by the Original Juice/AMWU
Agreement 1999. The order required that the employees cease strike action and cease
refusing to work in accordance with the Agreement. It also directed the union not to direct,
procure or encourage employees to engage in such action. The action included a picket
outside the applicants' plant. Despite the order, which was made on 30 May 2001 , the strike
action and picket continued and the employer applied to the Federal Court for an injunction
under s127(6) late on 31 May 2001. The employer had applied for a certificate under s166A on
28 May 2001 and the AIRC provided the certificate on 31 May 2001. The Federal Court
subsequently granted interlocutory relief to the employer under its accrued jurisdiction in
relation to the tortious acts allegedly committed as part of the picket.
209 On 1 June 2001 the application for an injunction to enforce the s127 order came before
Goldberg J. The applicant argued that the employees had not returned to work as required by
the order and that the AMWU was still invo lved in the industrial action . The AMWU argued that
the AIRC's original order was defective because it did not accurately identify who was bound
by the order and because an exclusion clause omitted the word 'not' leading to uncertainty.
Goldberg J was satisfied that the order was not unclear or ambiguous and found that in light of
the events at the plant, which included the continued strike action and the picketing which was
preventing deliveries to and from the plant , it was appropriate to grant an order under s127(6). 222
210 In ABB Australia Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia, 223 Weinberg J had to consider an application
for an injunction under s127(6) by ABB Australia and Worley Pty Ltd. These employers were
joint venturers providing services to Esso at the Longford plant. Th ere was a history of work
stoppages at Longford . Orders under s127(1) had been obtained in March 2002 and in June
2002 . The latter order was expressed to apply for three months and named persons that sha ll
stop engaging or threatenin g to engage in industrial action (refusing to attend for work as
normal at Esso's Longford site) . There was a day long work stoppage on 2 August 2002 and on
22 August 2002 there was a meeting of CEPU members on the site where they resolved to go
on strike for seven days. A union official had foreshadowed that the members had resolved not
to sign off on quality assessment documents and not to undertake other tasks which evidence
showed were part of 'customary practice' at the site. The evidence showed that the applicants
were losing $32 000 a day. Weinberg J granted the injunction on 27 August 2002 finding that
there was a serious question to be tried and that the balance of convenience favoured the grant of relief.
Strike pay
211 Under s187AA of the Workplace Relations Act 1996 (C'wth), strike pay is not permitted.
Employers are not to make payment to an employee in relation to a period when the employee
engages in industrial action . This prohibition will apply if:
I 96 Final Report of the Royal Commission into the Building and Construction Industry
(c) the employer or employee was or is a member of an organisation during that
period; or
(d) the employer was or is a constitutional corporation bound by an award, a certified
agreement or an AWA during that period; or
(e) the industrial action was taken, or is being taken, in connection with work regulated
by an award, a certified agreement or an AWA; or
(0 the industrial action was taken, or is being taken, in relation to an industrial dispute;
or
(g) the industrial action was or is of a kind referred to in paragraph (a), (b) or (c) of the
definition of 'industrial action' in subsection 4(1); or
(h) the industrial action was taken, or is being taken, in a Territory. 224
212 Section 187 AA (2) prohibits employees from accepting payment from an employer where the
employer is not permitted to make such payment under s187 AA(1 ). Organisations and their
officers, members and employees must not make claims for payment of employees in relation
to periods of industrial action .225 This prohibition extends to taking, organising or threatening industrial action to coerce the employer to make such a payment. 226
213 Contravention of these provisions is not an offence.227 However, in the event of a breach, the
Federal Court may make orders:
⢠imposing a fine on the person contravening of up to $10 000;
⢠that the person contravening compensate an employer;
⢠for injunctions and interim injunctions and other orders to stop or remedy the effects of
the contravention; and
⢠any consequential orders. 228
National Perspective Part 1 1 9 7
Notes to Regulatory Framework
6
8
Workplace Relations Act 1996 (C 'wth} , s3 (a), (b) , (c) , (d)(i), (e).
Workplace Relations Act 1996 (C'wth), s170L.
Workplace Relations Act 1996 (C'wth), s285B(1).
Workplace Relations Act 1996 (C'wth}, s191.
Workplace Relations Act 1996 (C'wth), s285A(1) .
Workplace Relations Act 1996 (C'wth} , s285A(1) , (2).
Workplace Relations Act 1996 (C'wth) , s285A(3) .
Workplace Relations Act 1996 (C'wth} , s285B(2).
Workplace Relations Act 1996 (C'wth), s285B(2). 10 Workplace Relations Act 1996 (C'wth}, s285D(2) . 11
Workplace Relations Act 1996 (C'wth}, s285D(2) . 12 Workplace Relations Act 1996 (C'wth) , s285B(3)(a) . 13
Workplace Relations Act 1996 (C'wth), s285B(3)(a)(i) -(i ii). 14 Workplace Relations Act 1996 (C'wth), s285B(4)(a) . 15
Workplace Relations Act 1996 (C 'wth) , s285B(4)(a). 16 Workplace Relations Act 1996 (C'wth}, s285B(3)(b). 17
Workplace Relations Act 1996 (C'wth), s285B(3)(c)(i) -(ii). 18 Workplace Relations Act 1996 (C'wth}, s285C(1) . 19
Workplace Relations Act 1996 (C'wth}, s285C(2) . 20 Workplace Relations Act 1996 (C'wth) , s285D(2) . 21
Workplace Relations Act 1996 (C'wth}, s285E(1)- (4). 22 Workplace Relations Act 1996 (C'wth), s285F(2). 23
An eligible court 1s defined by s285F(1) of the Workplace Relations Act 1996 (C'wth) to mean:
(a) the Federal Court of Australia: or
(b) a District, County or Local Court; or
(c) a magistrate's court.
24
Workplace Relations Act 1996 (C'wth}, s285F(3). 25 Workplace Relations Act 1996 (C'wth) , s285F(5). 26
Workplace Relations Act 1996 (C'wth}, s285A(3) . 27 Workplace Relations Act 1996 (C'wth}, s285G(2) . 28
Workplace Relations Act 1996 (C'wth) , s298A. 29 Workplace Relations Act 1996 (C'wth} , s298K(1) , (2); Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [1 0.39]. 30
Workplace Relations Act 1996 (C'wth}, ss298K(1), (2); 298L(2). 3 1
Workplace Relations Act 1996 (C 'wth} , s298L(1) . 32 Workplace Relations Act 1996 (C'wth} , s298X. 33
Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [1 0.43] .
34
Workplace Relations Act 1996 (C'wth}, s298V. 35 Workplace Relations Act 1996 (C'wth}, ss298T, 298U.
I 98 Final Report of the Royal Commission into the Building and Construction Industry
36
Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3'd edn, Federation Press, Sydney, [10.40]. 37 Workplace Relations Act 1996 (C'wth), s298P(3). 36
Workplace Relations Act 1996 (C'wth), s298B(2). 39 Workplace Relations Act 1996 (C'wth), ss298T, 298U . 40
Workplace Relations Act 1996 (C'wth), ss298T, 298U. 41 Workplace Relations Act 1996 (C'wth), s170NB(1 ). 42
Workplace Relations Act 1996 (C'wth), s170NC. 43 Workplace Relations Act 1996 (C'wth), s170NC. On 'coercion ' see National Tertiary Education Union v Commonwealth [2002] FCA 441 ; National Workforce Pty Ltd v Australian Manufacturing Workers' Union
(No 2) (1997) 76 IR 200 at 221 (Vic CA). And, more generally on s170NC, see Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3'd edn , Federation Press, Sydney, [6 .87]. 44 Workplace Relations Act 1996 (C 'wth), ss170ND, 170NG. 45
See the definition of 'industrial action' in s4(1) of the Workplace Relations Act 1996 (C'wth) . 46 Workplace Relations Act 1996 (C'wth), s4(1 ); see the definitions of 'industrial action' and 'industrial dispute'. 47
Workplace Relations Act 1996 (C 'wth), s4(1) ; see paragraphs (d)(iii) and (iv) of the definition of 'industrial action'. 48 Workplace Relations Act 1996 (C'wth), s4(1 ); see paragraph (d)(i) of the definition of 'industrial action'. 49 Workplace Relations Act 1996 (C'wth), s4(1 ); see parag raphs (e), (f), (g)(i) , (ii) of the definition of 'industrial
action'.
50 Workplace Relations Act 1996 (C'wth), ss170ML, 170MT. 51 Workplace Relations Act 1996 (C'wth), s170WC.
52 Workplace Relations Act 1996 (C'wth) , s170ML.
53 Workplace Relations Act 1996 (C'wth), s170MT(1). 54 Workplace Relations Act 1996 (C 'wth), s170MT(3).
55
Workplace Relations Act 1996 (C'wth), s170MU(1).
56 Workplace Relations Act 1996 (C 'wth) , s170MU(2). 57 Workplace Relations Act 1996 (C'wth), s127(2). 58 Workplace Relations Act 1996 (C'wth) , s127(5). 59 Workplace Relations Act 1996 (C'wth) , s187AD(1). 60 Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation and Others
(1980) 29 ALR 333 at 340.
6 1 Trade Practices Act 1974 (C'wth), ss45D, s45DA, 4506, 45E.
62 See Australian Competition and Consumer Commission v Maritime Union of Australia [2001] FCA 1549. 63 National Competition Council (NCC) 1999, Review of Sections 51 (2) and 51 (3) of the Trade Practices Act 1974 , Final Report, Auslnfo, Melbourne, March, p. 25.
64 National Competition Council (NCC) 1999, Review of Sections 51 (2) and 51 (3) of the Trade Practices Act 1974, Final Report, Auslnfo, Melbourne, March, p. 5.
65 National Competition Council (NCC) 1999, Review of Sections 51 (2) and 51 (3) of the Trade Practices Act 1974, Final Report, Auslnfo, Melbourne , March, p. 5; see also p. 27 .
66 Trade Practices Act 1974 (C'wth), s45DD.
67
Trade Practices Act 1974 (C'wth), s45DC.
68 Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, Federation Press, Sydney, 3'd edn, [13 .99].
National Perspective Part 1 i 99
69 Australian Competition and Consumer Commission 2002, Submission to the Royal Commission into the Building and Construction Industry, 30 July, exhibit 961, document 059.0082.0993.001.
70 Workplace Relations Act 1996 (C'wth}, s89A(2)(s) . 71 Australian Procurement and Construction Council 1997, National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059.
72
Workplace Relations Act 1996 (C'wth), s89A(2).
73 Austral ian Ind ustrial Relations Commission 2000, National Building and Construction Industry Award 1990, Clause 7, exhibit 171, document 032 0772 0888.0001 at 0022-0023. 74 Australian Industrial Relations Commission 2000, National Building and Construction Industry Award 1990,
Clause 4.13.1, exhibit 171, document 032.0772 0888.0001 at 0008. 75 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects , Labour Market Research Report, Auslnfo, Canberra, p. xxii. 7
6 Sutton, T9066-9073
77
Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Auslnfo, Canberra, p. xii.
78 See Sheldon, P. and Thornthwaite, L. 1996, 'Re-evaluating the Impact of Employer Associations on the Accord : An Analysis of Changes to Bargaining Structures , 1983-1993', in Fells, R. and Todd, T. (eds.), Current Research in Industrial Relations, proceedings of the 10th AssoCiation of Industrial Relations Academics of Australia and New Zealand Conference, Perth .
79
Workplace Relations Act 1996 (C'wth}, ss170LJ, 170LK.
80 Workplace Relations Act 1996 (C'wth} , s170LL. 81 Workplace Relations Act 1996 (C 'wth), s170MI(1).
82
Workplace Relations Act 1996 (C'wth} , s170MI(2) .
83 Workplace Relations Act 1996 (C 'wth}, s170LM. 84 Workplace Relations Act 1996(C'wth}, s170LT(1), (2), (5)-(6), (7), (8), (9), (10). 85
Workplace Rela tions Act 1996 (C'wth}, s170LT(1) .
86
Workplace Relations Act 1996 (C'wth), s170VPB(1)(a). 87 Victorian Building Industry Agreement 2000, exhibit 2A, document 007.0137.0535.0004. 88
Cuthbert Statement, Queensland Construction Sector - Statement of Intent, exhibit 0021, Attachment D, document 082.0026.0817.0129. 89 Atkins Statement, exhibit 180, Attachment 3- The Framework Agreement 2001 , being the Building Contractors Enterprise Agreement 200o-2003, document 054.0087.0178.0203. 90 Master Builders Australia Inc 2001 , Opening Submission by the Master Builders Australia Incorporated,
11 December, exhibit 6, paragraph 140(0. document 064.0681 .0226.0003 at 0038.
9 1
However, one multi -employer agreement applying to Victorian group training companies across various industries, including the build ing and construction indu stry, has been approved- see Australian Industrial Relations Commission (AIRC) 2000, Multi-Union Group Training Companies (Victoria) Collective Agreement 1999: M2738. 92 Workplace Relations Act 1996 (C'wth), s170LC(6). 93 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects , Labour Market
Research Report, Auslnfo, Canberra, p. 52. 94 Workplace Relations Act 1996 (C 'wth}, s3(c). 95 Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235; see also Hildebrand, D. 1996, 'Th e
Legal Status of Unregistered Collective Industrial Agreements', Australian Journal of Labour Law, vol. 9, no. 2, p . 177; and Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edn, Federation Press, Sydney, [6.195].
200 Final Report of the Royal Commission into the Building and Construction Industry
96
Department of Industrial Relations 1996, Enterprise Bargaining in Australia 1995, AGPS, Canberra, p. 209. 97 Workplace Relations Act 1996 (C'wth), s83BD.
98 Workplace Relations Act 1996 (C'wth), ss83BG, 83BH. 99 Rushton Statutory Declaration , exhibit 768, annexure A, document 01 1.0687.0464.0007. 100
Rushton Statutory Declaration , exhibit 768, annexure A, document 011.0687.0464.0007 at 0008. 101 Rushton Statutory Declaration , exhibit 768, annexure A, document 011.0687.0464.0007 at 0008. 102
Rushton Statutory Declaration, exhibit 768, annexure A, document 011.0687.0464.0007.
i03 Riggs Statutory Declaration, exhibit 1527, attachment 2, document 007.0527.0726.0015 at 0017-0018,
0020-0021; Rushton Statutory Declaration, exhibit 768, paragraph 8, document 01 1.0687.0464.0002. 104 ss178(5), Workplace Relations Act 1996 (C 'wth) , Regulation 9(3), Workplace Relations Regulations 105
Workplace Rela tions Act 1996 (C'wth), ss83BC, 83BE; 84(5) .
106 Rushton Statutory Declaration, exhibit 768, annexure A, document 011.0687.0464.0007; Copeland Statutory Declaration , exhibit 572, paragraph 37, document 098.0027.0256.0001.
107 Copeland Statutory Declaration , exhibit 572, paragraph 38, document 098.0027.0256.0001.
108 Rushton Statutory Declarati on, exhibit 768, paragraphs 9-1 0, document 011.0687.0464.0002. 109 Office of the Employment Advocate 2002 (online), Annual Report 2001 -2002, p. 7, [accessed 20 January 2003], http://www.oea.gov.au/docs/annual report 02.pdf
110 Office of the Employment Ad vocate 2002 (onli ne), Annual Report 2001-2002, p. 18, [accessed 20 January
2003], http://www.oea.gov.au/docs/annual report 02.pdf
111
Rushton Statutory Declaration, exhibit 768, paragraph 12, document 011.0687.0464.0002.
112 Marias Barrios Examination Documents, exhibit 596, document 045.0872.0147.0009.
113 Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction
Industry: Phase One, 15 May, exhibit 494, paragraph 105 , document 005.0151.0052.0002.
114 Copeland Statutory Declaration, exhibit 572, paragraph 129, document 098.0027.0256.0001.
115 Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction
Industry: Phase Two, 6 August, exhibit 494, document 100.0721.0253.0002 at 0021 .
116 Commonwealth Government 2002, Submission to the Royal Commission in to the Building and Construction
Industry: Phase Two, 6 August, exhibit 494, paragraphs 1.18-1.22, document 100.0721.0253.0002.
117 This is reflected in s141 of the Workplace Relations Act 1996 (C 'wth).
118 R v Kirby: Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254.
119 R v Isaac; Ex Parte State Electricity Commission of Victoria (1978) 140 CLR 615.
12o Workplace Relations Act 1996 (C'wth), s111AAA(1). 121 Workplace Relations Act 1996 (C 'wth), s8.
122 Workplace Relations Act 1996 (C 'wth) , ss4, 9(2).
123 Workplace Relations Act 1996 (C'wth), s16.
12 4 Workplace Relations Act 1996 (C'wth), s33 .
125 Workplace Relations Act 1996 (C'wth), ss42(1 ), 42(3), 42(4) , 42(7)(b).
126 Workplace Relations Act 1996 (C'wth), s45(2)
127 [2 000] HCA 47. 128 Coal and Allied Operations Pty Ltd v Austral1an Industrial Relations Commission [2000] HCA 47, paragraphs,
16- 18, 21 ; (2000) 99 IR 309 at 314-15.
129 Workplace Relations Act 1996 (C'wth), s88B.
130 Workplace Relations Act 1996 (C'wth), s89A
13 1 Workplace Relations Act 1996 (C'wth), s89A(6).
National Perspective Part 1 201
132 Workplace Relations Act 1996 (C'wth), s1 06. 1 33 Workplace Relations Act 1996 (C'wth), s152.
134 Workplace Relations Act 1996 (C 'wth), s 111 AAA. 1 35 Workplace Relations Act 1996 (C'wth), s170LN .
13 6 Workplace Relations Act 1996 (C'wth), ss170LE, 170LR.
1 3 7
Workplace Relations Act 1996 (C'wth), ss170LT, 178, 179.
1 3 8
Workplace Relations Act 1996 (C'wth) , s170LT(5)-(7) . 139 Workplace Relations Act 1996 (C'wth), s170LT(8). 14
o Workplace Relations Act 1996 (C'wth), s170LD and 170LX. 141 Workplace Relations Act 1996 (C'wth), s170LY. 142
Workplace Relations Act 1996 (C 'wth), s 170LZ. 14 3 Workplace Relations Act 1996 (C'wth), s89.
144 Re Northern Territory Electricity Commission (Employees) Award 1980 (198 1) 257 CAR 812, Print E6682
(N032); Re Clothing and Allied Trades Union of Australia, Australian Industrial Relations Commission, Print H8985, 21 July 1989. 145 R v Bain: Ex parte Cadbury Schweppes Australia Ltd (1984) 159 CLR 163; 51 ALR 469. 146
R v Holmes; Ex parte Victonan Employers' Federation (1980) 145 CLR 68. 147 Workplace Relations Act 1996 (C'wth) , Part VIII. 148
Workplace Relations Act 1996 (C'wth), s170N(2). 149 Workplace Relations Act 1996(C'wth), s127(1) . 150
Workplace Relations Act 1996(C'wth), s127(1). 15 1 Workplace Relations Act 1996(C'wth), s127(5) . 152
Workplace Relations Act 1996 (C'wth), s127(6) . 153 Workplace Relations Act 1996(C'wth), s127(7). 154
Transfield Services (Australia) Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, PR919758, Australian Industrial Relations Commission, 5 July 2002, Munro J, [21]. 155 Metal Trades Industry Association of Australia v Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union [1997] FCA 1355. 156 Coal and Allied Operations Ply Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred lndustnes Union (1997) 73 IR 311 at 316-320. 157
Workplace Relations Act 1996 (C'wth), s127(5) . 158 Workplace Relations Act 1996 (C'wth), s170MT(1 ). 159
[2002] FCA 1413. 160 [2002] FCA 1413, paragraph 34. 161
Federal Court of Australia Act 1916 (C'wth) , ss19, 32. 162 Workplace Relations Act 1996 (C'wth), s89 . 163
Workplace Relations Act 1996 (C'wth), s412(1) provides that the Federal Court has jurisdiction in relation to:
(a) applications that may be made to it under the Act:
(b) actions that may be brought in it under the Act;
(c) questions that may be referred to it under the Act;
(d) appeals which lie to it under s422 of the Act;
(e) penalties that may be sued tor and recovered under the Act; and
prosecutions that may be instituted tor offences against the Act.
202 Final Report of the Royal Commission into the Building and Construction Industry
164 Workplace Relations Act 1996 (C'wth}, s412(2) . 1 6
5
Workplace Relations Act 1996 (C'wth), s412(3). 166 Workplace Relations Act 1996 (C'wth}, s127A. 167 Workplace Relations Act 1996 (C'wth), s170CP. 168
Workplace Relations Act 1996 (C'wth}, s178. 1 69 Workplace Relations Act 1996 (C'wth} , s179.
17 0 Workplace Relations Act 1996 (C'wth), s208.
171
Workplace Relations Act 1996 (C'wth}, s209. 172 Workplace Relations Act 1996 (C'wth), s218. 173
Workplace Relations Act 1996 (C'wth}, s253M. 174 For example, see Workplace Relations Act 1996 (C'wth} , ss253ZC, 253ZG, 253ZJ and 253ZV. 175
Workplace Relations Act 1996 (C'wth}, s230. 176 Workplace Relations Act 1996 (C'wth), s258. 177
Workplace Relations Act 1996 (C'wth), Part IX, Division 8. 178 Workplace Relations Act 1996 (C'wth) , s261. 179
Workplace Relations Act 1996 (C 'wth}, s262. 180 Workplace Relations Act 1996 (C'wth), s266. 181
Workplace Relations Act 1996(C'wth}, s127(6). 182 Workplace Relations Act 1996 (C'wth), s170W. 18
3 Workplace Relations Act 1996 (C 'wth}, s 18 7 AC.
184 Workplace Relations Act 1996 (C'wth), s285F. 1 85 Workplace Relations Act 1996 (C'wth}, s294.
186 Workplace Relations Act 1996 (C 'wth), ss298K, 298M, 298N, 298P, 2980, 298R, 298S. 1 8
7
Workplace Relations Act 1996 (C'wth} , s46. 188 Workplace Relations Act 1996 (C'wth), s82. 1
89 Workplace Relations Act 1996 (C'wth}, s4 12(2) .
190 Workplace Relations Act 1996 (C'wth), s412(3). 191 Workplace Relations Act 1996 (C 'wth}, s347. 192
Workplace Relations Act 1996 (C'wth} , s166A(1 ). 193 Workplace Relations Act 1996 (C 'wth), s 166A(3). 194
Workplace Relations Act 1996 (C'wth}, s166A(5) . 195 Workplace Relations Act 1996 (C 'wth}, s166A(6).
196 Workplace Relations Act 1996 (C 'wth), s166A(1) 197 WorkplaceRelationsAct 1996(C'wth}, s166A(2). 198
Workplace Relations Act 1996 (C'wth}, s170WD 199 (1998) 79 IR 268. 200 [1999] vsc 40. 201
Patrick Stevedores No 1 Pty Ltd v Maritime Union of Australia (1998) 79 IR 268 at 271. 202 Patrick Stevedores No 1 Pty Ltd v Maritime Union of Australia (1998) 79 IR 268 at 271. 203 DiFelice, V. 2000, 'Stopping or Preventing lndustnal Action', Melbourne University Law Review, vol. 24,
p. 310 at 336. 204 (2000) 95 IR 207.
National Perspective Part 1 203
205 [2000] FCA 168, per Goldberg J.
206 DiFelice, V. 2000, 'Stopping or Preventing Industrial Action', Melbourne University Law Review, vol. 24, p. 310 at 336-339.
207 Australian Workers ' Union v Yallourn Energy Pty Ltd (2000) 95 IR 207 at 218.
208 Workplace Relations Act 1996 (C'wth), s170MT(2).
209 Australian Workers' Union v Yallourn Energy Pty Ltd (2000) 95 IR 207 at 216. 210 Australian Workers' Union v Yallourn Energy Pty Ltd (2000) 95 IR 207 at 216.
211 Australian Workers' Union v Yallourn Energy Pty Ltd (2000) 95 IR 207 at 218.
212 Australian Workers' Union v Yallourn Energy Pty Ltd (2000) 95 IR 207 at 223.
213 [2002] FCA 441 .
214 National Tertiary Education Union v Commonwealth of Australia [2002] FCA 441 at paragraph 116.
215 National Tertiary Education Union v Commonwealth of Australia [2002] FCA 441 at paragraphs 99-100,
citing Gyles J in Finance Sector Union v Commonwealth Bank of Australia (2000) 106 FCR 16. 216 Australian Paper Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and
Allied Services Union of Australia [1998] 321 FCA.
2 17
[2002] FCA 1413, paragraph 34
2 18 (1997) 76 IR 420. 219 Inner and Eastern Health Care Network v Health Services Union of Australia (1997) 76 IR 420 at 422-423.
220 Inner and Eastern Health Care Network v Health Services Union of Australia (1997) 76 IR 420 at 423.
221
[2001] FCA 675.
222 The Original Juice Co Pty Ltd v Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union
[2001 ] FCA 675, per Goldberg J.
223 [2002] FCA 1070. 224 WorkplaceRelationsAct 1996(C'wth), s187AA(1).
225 Workplace Relations Act 1996 (C'wth) , s187AB(1)(a).
226 Workplace Relations Act 1996 (C'wth), s187AB(1)(b).
227 Workplace Relations Act 1996 (C'wth), s187AA(3) , s187AB(4).
228 Workplace Relations Act 1996 (C'wth) , s187AD(1).
204 Final Report of the Royal Commission into the Building and Construction Industry
5 Industry Culture and Practice
The previous chapters of this volume have described the building and construction industry and that part of its regu latory environment that relates to workplace practice and conduct. In
the following sections I discuss the culture of the industry, the problems that have resulted from
that culture and why those problems are ongoing. My recommendations in respect of these problems are set out in the reform volumes (volumes 5 - 11 ).
Industry culture
2 The relationships between parties in the building and construction industry are not conducive
to an efficient, fai r and innovative industry. There are many points of tension within this industry
and many aspects of behaviour and culture have contributed to the breakdown in relationships between parties. This behaviour and cu ltu re encompasses commercial pragmatism, desire for
uniformity in employment terms and conditions, excessive pursuit of self interest, an industry
characterised by conflict, high levels of lawlessness and a breakdown in rights.
Commercial pragmatism
3 Throughout Australia commercial pragmatism is the response to much of the inappropriate
behaviour which is occurring in the building and construction industry.
4 The commercial pressure on all businesses is great. Clients face pressure from financiers to
guarantee the total cost and timing of projects. Governments face political and budgetary
pressure to complete projects within their announced budgets. In consequence, clients do not
want to be responsible for project risks. It is usual for them to contract, as far as possible, for
the head contractor for be responsible for such risks . Head contractors subsequently pass
these risks on to subcontractors. Businesses fear that any disruption to construction could
result in consequential losses affecting their profitability.
5 The average level of profitability in the building and construction industry is low, particu larly in
non-residential building construction and non-building construction. At 4.6 per cent, the average profit margin in the in dustry is much less than the national average for all industries of
9.3 per cent. 1 This drops to 0. 7 per cent for non -residential building construction and 4.3 per
cent for non-building construction. 2
National Perspective Part 1 205
6 For all of their economic and management strengths, head contractors and subcontractors are
immensely vulnerable to signifi cant economic loss caused by disruption and delay to the
construction process. This is well understood by unions. It results, commerciall y, in a short term
project profitability focus by those involved in projects- clients, governments, head contractors
and subcontractors. They do not consider the implications that the approach taken now will
have on the long term prosperity of the industry. In 1995, the Construction Industry
Devel opment Agency (C IDA) prepared a report based on survey information from building and
construction industry companies. Th at report found:
Most organisational and industry change efforts are sparked by a sense of crisis, without
which the pressures of day-to-day operations means improvement initiatives take a back
seat and are undertaken, 'when there is time'.
Many managers were found to be complacent and deluded themselves about how the1r
company stood against best practice, not an uncommon finding. 3
The project-to-project, short-term and financial focus of the industry continues to
threaten its ambition of improving its performance. 4
7 CIDA argued that:
Short-term time frames are a major concern to the industry because:
⢠companies looking at their survival on a day-to-day basis are unlikely to undertake
reviews of their business, except in the context of a crisis;
⢠similarly, managers are unlikely to pursue higher risk strategies involving longer pay
back periods. This includes investing in research and development, new
technologies, and entering export markets. All these strategies provide companies
and the industry with a competitive edge in the future;
⢠worthwhile and new initiatives (e.g. the implementation of company-wide traimng)
could be shelved because the time scale required to demonstrate the company
has benefited is longer, and managers tend to want quick fix solutions. 5
8 Following from this short term focu s, businesses fail to undertake planning and investment
even when it is in the industry's long term interests. The low levels of traini ng , for example,
illustrate how businesses ' short term fi nancial decisions can undermine the long term
availability of skilled workers.
9 There are many areas where businesses are taking a pragmatic approach that results in a narrow, short term, commercial view that is not necessarily in the best long term interests of the
industry. The prevalence of 'cheque book' indust ri al relations is a clear illustration of this.
10 Head contractors, in particular, are wi lling to succumb to the financial demands of unions to
buy industrial peace. This can include agreeing to substantial increases in wages and salaries , payin g strike pay or numerou s other contributions or donations that are demanded. The State
and Territory Overviews, found in volume 12, note many examples of such payments.
206 Final Report of the Royal Commission into the Building and Construction Industry
(a) In New South Wales union officials soug ht a substantial 'donation' from an em ployer to
help fund a union organiser's salary to reg ulate a sector of the industry. A union requi red
an employer to pay moneys to both union related and unrelated organisations in the form
of 'donations' in return for the agreement to settle an industrial dispute, when in reality
these so-called 'donations' were in fact penalties or fines imposed by the union. 6
(b) In Victoria head contractors and subcontractors made inappropriate payments to unions
and union -nomi nated funds because of demands by union officials. Union officials
demanded that employers make contribu tions to union fund s, linking a positive response
to industrial peace. 7
(c) In Queensland head contractors paid un ion membership fees for subcontractors'
employees to avert the risk of industrial action 8
(d) In Western Australia payments for casual tickets, 'specialised training ' and strike pay
were all made to unions with the expectation of buying industrial peace.9
(e) In the Northern Territory a subcontractor made payment for union membership for its
employees in order to gain uni on support for the award of a contract. 10
Self interest
11 In all sectors of the economy parties are motivated by their own self interest and pursuit of their
long term financial success. In the building and construction industry this focus on individualism
is extreme. Although some businesses foster long term relationships with certain contractors
and subcontractors, there are many oth er examples where the various parties demonstrate a
culture of individualism , and take a short term opportunistic approach in their dealings with
each other.
12 Cl ients seek to protect th eir self-interest by transferring industrial and other construction risks
to head contractors.
13 Head contractors display an emphasis on self interest when they capitulate to union demands
to avoid industrial unrest. Head contractors bear the cost of li qu idated damages if the project is
delayed due to industrial unrest. They requ ire subcontractors to ag ree to meet the cost of union
demands so they can avoid the potential cost of project delays, in disregard of the effects the
impositions may have on the long term viability of the subcontractor's business .
14 One illustration of the level of individualism in the industry is the high level of subcontracting. 11
Many individuals choose to work as indepen dent autonomous operators. The anecdotal
evidence and the statistics both indicate that there are more subcontracting businesses in the
bui lding and construction industry than any other. 12 Increasing specialisation is one reason for
the high level of subcontracting .
15 One of the strengths of subcontractors is their independence. Skilled workers often do not
want to work as employees and want to ru n their own businesses, seeing subcontracting as
rewarding effort and providing better fi nancial incentive. Buil ders contend that subcontracting is
a benefit to all parties. It reward s productivity, innovation and quality. It makes individuals
responsib le for their own well-being. 13 Unions arg ue that many workers become
subcontractors to avo id paying tax 14 or because they are req uired to by employers tryin g to
National Perspective Part 1 207
avoid paying them their proper entitlements. Whatever be the reason for the high level of
subcontracting, the result is that subcontractors have an interest only in a small segment of the
project. This results in a concentration by them on that aspect, a desire to complete their work
profitably, and a desire to do the work without disruption to progress. Their interest is not on the
project overall , but on their segment of it.
16 The motivation of those parties in the building and construction industry that believe terms and
conditions on a building site should be uniform has several elements of self interest. From the
unions' perspective, they desire uniformity of outcomes for members as a basic tenet of
collectivism . It also reinforces their own bargaining power and their abil ity to dictate outcomes
on building sites. Businesses that support uniformity see advantages in reducing the facets for
competition between subcontractors. The cost of an increase in employee entitlements can be
automatically passed up the contractual chain, as businesses know that their competitors
must bear sim ilar costs. Uniformity acts as a protective shield that denies businesses the
opportunity to gain a competitive advantage by being innovative in the way they remunerate
their employees.
17 There are extreme examples of self interest, exercised in disregard of the effect on others.
Phoenix companies epitomise the problem of a culture of se lf interest. Many, incl ud in g the
Australian Taxation Office (ATO), identified bu ilding and construction as one of the industries
most susceptible to phoenix company activity.
18 At its worst, offenders deliberately structure their operations to engage in phoen ix activity and
to avo id detection. They fail to pay their debts, act in a manner that intentionally den ies
unsecured creditors equal access to the entity's assets to later re-emerge as a simi lar business
control led by parties related to either the management or directors. 15 Such activity can cause recurrent losses to other businesses. Some operators design and plan their businesses to
profit at the expense of their cred itors.
19 In the case of Emerson Industries, large debts to the ATO, state revenue authorities and
workers compensation insu rers were al lowed to build up unchecked over a number of years
after previous compan ies had fai led, because inadequate checking was carried out by head contractors. Harkin, a formworker, restructured his activities so as to use various compan ies,
one after another, to move assets to new companies, leaving his old companies as shel ls with
large accumulated debts. Upon the failure of his labour supply company, he used its name as
a trading name for its successor. Eventual ly all the companies collapsed, except this successor
that held the assets. Its major shareholder was a family trust company. 16
20 Businesses seeking to use underpaid illegal migrant workers are clearly inappropriately
pursuing their own self interest.
21 Field operations conducted by the Department of Immigration and Multicultural and Indigenous
Affairs (DIMIA) have indicated that the majority of illegal workers are often paid less than leg al
entitlements; some 17 were not paying tax , either at the correct rate or at all; and some 18 we re
claiming social security benefits to which they were not entitled. 19 There is reason to suspect
that some illegal workers are inadequately trained , and thu s pose a safety risk to themselves
and others.
208 Final Report of the Royal Commission into the Building and Construction Industry
22 Such businesses are responsible for exploiting migrant labour and avoiding tax and compete
unfairly with law abiding businesses.
Conflict
23 The culture in that part of the industry subject to the Commission's terms of reference is
characterised by confrontation and conflict. There are examples of co-operati ve projects, for
example the Darwin to Alice Springs Railway, but these are notable as exceptions. 20 The level
of conflict varies between States and Territories . It is highest in Victoria and Western Australia,
evident in New South Wales and Queensland and less of an issue in the smaller States and Territories.
24 There are many examples of behaviour wh ich illustrate the cu ltu re of conflict in the bu ilding and
construction industry. A major example is union militancy, exemplified by the level of industrial
action. The traditional tender process that perpetuates head contractors and subcontractors
making decisions based on short term commercial priorities because of liability for li quidated
damages increases the damage that can be caused by unions that adopt a militant approach in support of industrial objectives .
25 The CFM EU, in particular, promotes itself as a 'militant union' 21 There is nothi ng wrong with
militancy if by that term is meant the strong advocacy of the rights of its members, and
pressing, wit hin the law, for improved conditions. The problem arises when by militancy is
meant a philosophy that the end justifies the means, that the law can be disregarded, that
rights of others can be trampled upon or ignored, that oppression is a va li d tool, and that the
power to cause loss is a weapon to be rout in ely used or threatened to achieve one's objective.
Such militancy is the first step towards anarchy. Might replaces right. Arrogance and inducing
fear become hallmarks of conduct. People are oblig ed to act against their will . Mob ru le
emerges. Such power leads to illegality, and unlawful payment of money to avert loss .
26 Through the use of industrial force and threats the unions often require subcontractors to sign
union-endorsed EBAs, employees to join the union and businesses to employ particular
people.
27 While industrial action is common, these threats are not restricted to industrial action. I have
found that union officials have made various threats against the businesses of individuals they
wish to press, and in some cases against the individuals themselves. For instance:
⢠in New South Wales I found that there was harassment of employers by a union organiser
by making unfounded al legati ons, here regard ing victimisation and racism; 22
⢠in Western Australia there was a willingness by a union and its officials to make threats of
violence and harm and to damage property to achieve its in dustrial objectives; 23
⢠in Tasmania there was use of threats to a subcontractor that if it did not sign a union
endorsed enterprise bargaining agreement the subcontractors would not be able to do
any more commercial work; 24 and
⢠in Victoria there was threatening and intimidating conduct by union officials .25
28 In practice militant union behaviour has been illustrated by:
National Perspective Part 1 209
⢠a high level of industrial disputes;
⢠the methods used to get subcontractors to sign EBAs and ensure their employees are
members of the union;
⢠the methods used to collect outstanding workers' entitlements;
⢠demarcation disputes;
⢠demands on businesses to make payments to union related and unrelated organisations;
⢠the destruction of public and private property; and
⢠the abuse of rights designed to protect workers' health and safety to achieve industrial
goals.
29 The last of these is discussed separately in volume 6 of this report, Reform - Occupational
Health and Safety.
30 In that part of the building and construction industry under the Commission's Terms of
Reference industrial action is common.
Of the 698 Industrial disputes in Australia during 2000, 221 (32%) affected the construction industry ... These disputes involved (either directly or indirectly) 58,300
construction industry employees and resulted in the loss of 108,800 working days. This
represents 23% of the total number of work1ng days lost due to all industrial disputes in
Australia in 2000. 26
31 Between 1996 and 2000 working days lost in the building and construction industry accounted
for between 23 and 40 per cent of the total working days lost nationwide. In contrast build ing
and construction accounted for between seven and eight per cent of total employment during
that period .
32 The number of working days lost for each thousand employees in the building and construction
industry was significantly above the national average. Building and construction ranked among
the four industry sectors with the highest levels of disputation. In the last five years, the only
industry with a higher level of industrial disputation was mining, due to very high levels of
industrial disputes within coal mining. 27
33 Unions are aggressive in the way they get contractors to sign EBAs and ensure their
employees are union members.
34 Conflict in the form of demarcation disputes among unions is still a feature of the industry. 28
35 Overall, the militant approach of unions results in absence of a co-operative approach to
construction, an attitude of distrust, and a failure to resolve disputes through negotiation and
arbitration in favour of threats and use of industrial action. In practice unions seek to perform
the ro le of industrial police, enforcing their own interpretation of appropriate industrial
standards. Conflict exhibits itself in an early resort to industrial action rather than an attempt at
the site level to resolve problems as they arise. This approach is in part driven by the need to
demonstrate the strength, usefulness and necessity of unionism. The CFMEU, in particula r,
seems to regard co-operation with contractors as a sign of weakness.
21 0 Final Report of the Royal Commission into the Building and Construction Industry
Lawlessness
36 The rule of law has been supplanted in the building and construction industry by a culture of
lawlessness. Participants in the industry instinctively succumb to the exercise of industrial
muscle in the interests of commercial expediency and survival. They prefer to capitulate to
unlawful or otherwise inappropriate demands or to allow unlawful or otherwise inappropriate practices to continue, rather than resort to the law to enforce their rights . Insisting on legal
rights risks , at best, raising the ire of other participants in the industry and at worst, making a
martyr of oneself and putting one's business and livelihood at risk.
37 A culture of lawlessness pervades every level of the industry. Among its many manifestations, it
is evident in head contractors who agree to appoint union nominees as site safety or induction
officers, knowing that those nominees will use their position to flout freedom of association and
freedom of bargaining laws on their sites. They both condone and encourage such conduct. It
is evident in subcontractors insisting that all of their employees join the union, regardless of the
wishes of the employees, in order to keep the peace and ensure workflow. It is evident in
workers who engage in industrial action without regard to their employment obligations. It is
evident in unions and their officials who demand that every contractor on a site have a union
endorsed EBA or that every worker on a site be a union member. It is evident every time a
pariicipant in the industry engages in threatening or intimidatory conduct with the intent of putting illegitimate pressure on another participant in the industry. It is evident in the actions of
businesses that evade paying taxation, workers compensation and rightful employee
entitlements. It is evident in failure to adhere to proper OH&S standards. And it is evident in the
failure by parties, particularly the CFMEU , to adhere to agreements made.
38 There was much evidence of unlawful behaviour. It is discussed in volumes 13 to 21 reporting
on the hearings in each State and Territory. The overview for each State and Territory, found in
volume 12, includes a schedule of findings of unlawful conduct. These schedules are extensive
and clearly illustrate the extent of unlawful conduct in this industry. In addition conduct that
might constitute criminal conduct is contained in the confidential volume (volume 23) of this
report.
39 Civi lised standards of the kind which would be expected by ordinary Australians have too often
evaded workplace relations in the building and construction industry. This is a matter for which
every participant bears some responsibi lity.
Negotiation of rights
40 Important aspects of the industry affecting all participants are controlled by the decisions of
large head contractors and employer and employee organisations. For instance, the Victorian
Building Industry Agreement (VBIA) was negotiated by representatives of the Master Builders
Association of Victoria, and other employer associations, the Building Industry Group of
Unions, and the Victorian Trades Hall Counci l. It specifies a range of terms and conditions including site allowances, superannuation, long service leave, workcover, redundancy, rostered
days off and procedures for in clement weather and for workplace health and safety, and is
backed up by a union-endorsed EBA that specifies levels of remuneration.
National Perspective Part 1 211
41 There was no involvement by individual subcontractors and their employees. Yet head
contractors require the agreement and the EBA to be adopted by subcontractors on their sites.
The terms and conditions in the EBA then apply to all of the wo rk carried out by the subcontractor and its employees, regard less of the project.
42 In many areas in this industry the righ t of choice is being constrained. Smaller participants are
being dictated to by larger businesses and organisations. Examples include:
⢠the negotiation of terms and conditions of employment;
⢠the decision to join a union; and
⢠the decision on whom to employ and the type of workforce that will be used.
43 Pattern bargaining leads to the terms and conditions of employees of small subcontractors,
wishing to work on major building sites, being determined by mechanisms outside the control
of those employers and employees.
44 In reality, the employees of businesses that wish to work on major CBD building sites do not
have a choice. The 'one size fits all' approach of pattern bargaining impedes productivity,
flexib ility and in many cases the individual aspirations of workers. It assumes that all employees have the same wishes in relation to hours of work, wage structures and other conditions of
employment. It assumes that the unions know best what is in the interests of and what the
desires are of all employees, including those who have chosen not to join the union . It ign ores
the possibility that different levels of remuneration depending upon skil l and productivity,
operate as an incentive to employees to achieve increased productivity and quality of work. It
assumes, wrongly in my view, that those who are more productive or work harder than others
should not be better rewarded. Rewarding skill, application and productivity does not infringe
any notion of fairn ess : indeed , it maintains the notion of fairness. It is in the best interests of
employees to be afforded the opportunity to enhance their earning capacity if th eir
performance justifies it. Examples of th e results of pattern bargaining not being equitable and contrary to the wishes of employees and employers are outli ned in volume 5 of this report ,
Reform - Estab lishing Employment Conditions .
45 The Workplace Relations Act 1996 (C'wth) explicitly promotes employers and employees
negotiating at an enterprise level. Section 3(d)(i) sets out enterprise bargaining as an object of the Act.
The prinCipal object of this Act is to provide a framework for cooperative workplace
relations which promotes the economic prosperity and welfare of the people of Australta
by. ..
(d) providing the means:
(ij for wages and conditions of employment to be determined as far as possible
by the agreement of employers and employees at the workplace or
enterprise level, upon a foundation of minimum standards; and
(!I) to ensure the maintenance of an effective award safety net of fair and
enforceable minimum wages and conditions of employment; and ...
21 2 Final Report of the Royal Commission into the Building and Construction Industry
46 In the building and construction industry these objectives are being denied by pattern
bargaining .
47 While the Workplace Relations Act 1996 (C'wth) provides for freedom of individuals or
businesses to choose whether they will or will not join an industrial association it does not
prevent a range of practices which, while not requiring union membership, can have the effect
of coercing people to join a union, or result in their employer signing them up as union
members without their knowledge. Four instances are:
⢠the arrangements made by head contractors with unions before the start of a major
project that, in the interests of industrial peace on that project, the head contractors in
fact require all subcontractors coming on site to have union-endorsed EBAs;
⢠union-endorsed EBAs that encourage union membership, or the requirement that most
or all employees be union members as a precondition to the union signing such an EBA;
⢠the pressure on head contractors and subcontractors to sign a union-endorsed EBA;
and
⢠the leverage and information the unions obtain from the EBA process.
48 Union-endorsed EBAs in the building and construction industry often contain clauses that
encourage union membership. In Queensland, for example, the Statement of Intent required
that the company signing it should establish procedures so that all reasonable steps were
taken to ensure that eligible employees, including subcontractors' employees, were financial
members of the CFMEU or the BLF. The Statement of Intent also provided that where an
employee working on the site was found not to be a financial unionist, the company, and where
appropriate the subcontractor, was to be notified immediately and given a reasonable
opportunity to comply with the union encouragement clause . This provision of the Statement of
Intent is contained in substantially similar terms in the industry pattern EBA.
49 There was evidence of instances where unions have had access to private information about
individuals which has been used to encourage union membership. In some cases, unions
obtained access to detailed information about workers through industry superannuation fund
records . Union involvement in site inductions gives them the power and opportunity to push for
all employees to become union members. In addition, subcontractors may pay union fees for
their employees without subsequent reimbursement from their wages, and without informing
employees that they have been joined into a union.
50 Arrangements such as these make it very difficult for an individual to exercise any real choice,
at least on major CBD sites. It is virtually impossible for an employer to operate in an
environment where there is not considerable pressure on it to ensure its employees are
members of the union.
Summary
51 The various components of the culture in the building and construction industry are interrelated
and reinforce each other. Combined they create an environment in which many unlawful and
inappropriate practices and conduct have become entrenched.
National Perspective Part 1 2 i 3
52 The commercial pressures facing businesses make aggressive militancy by unions a high ly
effective method of achieving their ends. Project-based work means that for significant periods
a large proportion of businesses ' incomes are dependent on non-disruption of a small number of other businesses.
53 When profitability is put at risk, businesses act in their own self interest. Often this can extend
to acting unlawful ly. Disregard for the law is further reinforced by unions using whatever tools
are available to maintain their position of power and to expand their membership. Th e most
successful tool is commercial pressure.
54 The resu lt is an industry under siege. There is considerable tension between the parties. They
do not co-operate or develop united strategies to promote the future of the industry.
55 Unions use the obl igation to protect and pu rsue the interests of their members to justify the
appropriation to themselves of many aspects of business decision making. Th is strategy reinforces the power of the union and promotes its own organisational goals.
Problems in the industry
56 The culture of the bu ildin g and construction industry has affected its efficiency, fairn ess and the capacity to innovate. Obviously, the breakdown in rights and lawlessness are problems in
themselves. Other aspects of the culture have resu lted in many inflexible practices an d
impediments to productivity, inappropriate behaviour, particularly by union officials, a lack of
leadership among building and construction businesses and a range of national issues that
have been identified by the Commission.
Inflexible practices
Awards and agreements
57 Many of the constraints on productivity result from rigidities entrenched in the National Building
and Construction Industry Award 2000 or the inflexibility in pattern bargaining and associated
demands by the unions. 29
58 Even in an era of award simplification and the circumscription of allowable award matters30 th is
Award is highly prescriptive. It is the repository of at least 21 allowances and 41 special rates
that are in the nature of allowances.3 1 It also imposes severe limitations on the scheduling of
rostered days off (RDOs) , crib time, overtime, special time, shift rates and weekend work.
59 The various inflexible practices and impediments to produ ctivity are discussed in detail in
volume 8, Reform- National Issues Part 2, of this report. Most sign ifi cantly, they arise from the:
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current plethora of all owances and special rates;
rigid ities in relation to hours of work;
high incidence of industrial stoppages;
lack of flexibility in industrial ag reements; and
constraints on employment arrangements .
21 4 Final Report of the Royal Commission into the Building and Construction Industry
60 All these examples prevent employers and employees from negotiating working arrangements
that suit their circumstances. In effect there are key aspects of bu ilding and construction
businesses where productivity improvements are impossible because the status quo is locked in.
61 Despite the rigidities in the Award the large number of certified agreements in the building and
construction industry should provide an avenue for more flexible arrangements to be
negotiated by individual businesses. Over the past two years more bu ilding and construction
industry agreements have been certified under Part VIB of the Workplace Relations Act 1996
(C'wth) than in any other industry32 Thi s flexibility has not fully eventuated. Many of these
agreements still include complex sets of allowances and special rates.
62 The sheer number and complexity of these allowances makes it obvious that it is
administratively costly for businesses to calculate their workers' rightful remuneration . This
increases the risk of error, particularly among small businesses. It is difficult for employees to be
aware of all of their entitlements, making it easier for unscrupulous employers to get away with
underpaying their workers.
63 Certified agreements have not been used as a vehicle to improve productivity. They frequently
refer to 'efficiencies and productivity offsets' as being the justification for improved wages and
conditions 33 Rarely do they specify what those 'efficiencies or productivity offsets' are. Even
less frequently are stated empirical measurement or performance indicators by which such
efficiencies or productivity offsets could be measured. In one example the improved payment
was dependent on achieving milestones or key performance indicators . The payments were
made even though the performance milestones were not met. 34
64 Wh ile the Award provides for some limited flexibility in start and finish times and the timing of
RDOs, industrial practices do not allow this flexi bility to operate. Excessive hours should be
avoided as they place an unreasonable burden on employees, affect health and increase the
risk of accidents at work. Within these constraints, however, there should be flexibility to meet
the demands of projects and the preferences of employees. In many cases this flexibility is not
being achieved.
65 Mr Daniel Grollo, Managing Director of Grocon Pty Ltd (Grocon), raised the issue of the
flexibility of start and finish times on Saturdays on the Queen Victoria site in Melbourne.
Workers arrive on site for work to start at 7 am. The Melbourne City Council does not permit
work to commence until 8 am. Workers are paid for the additional hour without having to
work35 Grocon has been unable to reach agreement with its employees and the CFMEU for
the working day to start at 8 am.
66 Similarly there is often very little flexibility regard ing when RDOs can be taken. I heard evidence
of some flexibility. I also heard evidence of unions refusing to allow substitution. I received
submissions in which it was contended there were circumstances where workers would agree
to rea llocate RDOs, but would be blocked by a union. 36 In New South Wales the flexibility to
bank and alter RDOs was more common than in Western Australia and Victoria.
67 As the timing of days off is not driven by the needs of the project, but is fixed by a calendar
agreed by the unions and head contractors during the preceding year, there is a risk that even
longer hours wil l be necessary if project stages need to be met with in a restricted timeframe.
Na tional Perspective Part 1 2 '1 5
68 Overall , there are considerably more days off in the building and construction industry than in
most other industrie s. In Victoria in 2003 under the Victorian Building Industry Agreement,
RDOs, fixed and general annual leave, public holidays and picnic days mean that workers have
57 days or over 11 weeks leave. Yet in many cases employees work a six day week, the sixth
day of which is paid at overt ime rates, to compensate in part for thi s excessive leave .
69 In conjunction with a large number of scheduled days off employees work large amounts of
overtime. In May 2000 about 43 per cent of building and construction industry employees were
paid overtime. This was the highest of all industries and nearly twice the national average of
23 per cent. A relatively hig h proportion of income is earned through overtime. Thirteen per
cent for the building and construction industry was again the highest for all industries and over
twice the national average 3 7
70 This is confirmed by anecdotal evidence. In Victoria the standard number of hours is 56 per
week comprising a cycle of four ten hour days followed by two eight hour days. On large scale
projects workers are usuall y engaged for somewhere between 50 and 58 hours each week
with working days ranging from eight to twelve hours per day38 Th is equates to between
1 0 and 18 hours overtime.
71 Campaigns to reduce the number of standard hours do not lead to a reduction in the number
of hours worked each week. For example, the introduction of the '36 hour week' in Victoria:
(a) has not res ulted in the weeks actually worked being shorter. It was never intended to do
so;
(b) has resulted in increased overtime payable during the weeks actually worked; and
(c) has resulted in an increased nu mber of days not worked.
Th ere are obvious ways in which the working week could be rationalised to the advantage of
both employers and employees, but such methods have not been discussed because of the
en trenched rigidities and culture.
Stoppages
72 Work stoppages are common in the building and construction industry. I am not concerned
about lawful stoppages . Unlawful stoppages, however, are often used as an in dustrial tool to
persuade businesses to comply with union demands. I have identifi ed problems with :
⢠inflexibility in the inclement weather provisions;
⢠abuse of OH&S procedures to achieve other industrial goals; and
⢠excessive industrial disputes.
73 The Award provides for work to stop if abnormal cli mate conditions such as rai n, hail , sn ow,
cold, high wind, severe dust storms or high temperature make it unreasonable or unsafe for
employees to continue to work. Em ployees are paid for time off due to inclement weather.
7 4 I have received evidence of inclement weather claims being used for industrial purposes. For
example, in 1997 a roving shop steward for the Construction, Forestry, Mining and Energy
Uni on employed by Wycombes Pty Ltd , threatened to close down the Bun nings site at Cori o
21 6 Final Report of the Royal Commission into the Building and Construction Industry
because of in clement weather. It was not raining. However, the shop steward held out a
cigarette, spat on it and told a concrete contractor who did not have a union-endorsed EBA
that the spittle on the cigarette was sufficient to justify closing the site down on the grounds of
inclement weather .. He ordered the contractor's employees to go to the site sheds. The
contractor then signed a union- endorsed EBA. 39
75 In several cases union organisers and site delegates acted as arbiters of what amounted to
inclement weather and acted upon their own assessment. They arrived on a site and ordered
workers to the shed or to go home. In some cases meetings were conducted and workers
voted to sit in the sheds or return home.
76 Definitions of inclement weather were often interpreted contrary to the definitions in
agreements or award, and contrary to common sense. What was considered inclement
weather often depended on the part icular union organ isers, and in some cases whether they
were pursuing an industrial agenda against a head contractor or subcontractor on a project 40
77 Flexibility has been included in in clement weather provisions in awards to enable work to
continue in areas unaffected by inclement weather but union organisers do not allow that
flexibility. While the incidence of this practice appears to be far less prevalent than in the 1980s, 41 I heard eviden ce of electricians be ing ordered to cease work when the outside
temperature was in excess of 35°C whi le the area in which they were working was below 30°C.
In Victoria, this practice is entrenched by clause 26 of the VBIA, which provides that all work on
a site will cease wh en the local temperature reaches 35°C whether or not workers are exposed
to the temperature unless they are working in an air-conditioned space 42
78 There was extensive evidence of stoppages for claimed occupational health and safety
reasons.
79 I recognise the importance of occupational health and safety in an indu stry characterised by
dangerous work. Workers in the building and construction industry are, on average, twice as
likely to be kil led at work and 50 per cent more likely to be injured at work than workers in other
Australian industries43 It is totally unacceptable that any bui lding and construction worker
should be seriously injured or ki lled while at work.
80 However, many stoppages were not necessary. They were often instigated by union officials
who were ill placed to judge the need for a stoppage. Frequently, safety committees and safety
officers were not involved in decisions to close sites or portions of sites.
81 The approach of union organisers to safety issues was frequently idiosyncratic . There was
much evidence su pporting the view that the frequency and rigour of a safety inspection
depended upon collateral industrial matters being negotiated with a head contractor or other
subcontractors on a site. In these cases, frivolous safety matters were raised in order to cause
delay. Stop work meetings were called , wh ich inevitably stopped productive work even if
workers ultimately elected to continue work.
82 Stoppages on one site were sometimes linked to safety issues on a different site. The most
prominent example is the Victorian practice of an industrywide 24 hour stoppage in the
commercial sector following a death on a building site in Victoria 44 These statewide stoppages
National Perspective Part 1 2 1 7
inflict economic damage on the majority of contractors who have been complyi ng wi th
occupational health and safety obligations and have nothing to do with the incident at hand 45
83 ThBre was evidence that occupational health and safety is used to circumvent s187 AA of the
Workplace Relations Act 1996 (C'wth). That provision prohibits an employer from paying an
employee for a period during which the employee was engaged in industrial action. In contrast,
stoppages for occupational health and safety are paid stoppages 4 6 When parties are in
dispute over industrial matters, stoppages are frequently called for minor safety issues to justify
payment for lost time 47 It was rare to hear evidence of an in dustrial dispute in which safety
issues were not raised, even though it was obvious the true issue was an industrial one. The
Nambour Hospital dispute is a clear example.48
84 Over the last six years the level of industrial disputation in the building and construction industry
has been at least twice and sometimes nearly five times the national average. 49 More detail is
provided in attachment 6. Because of the complexity of the causes and impact of industrial
disputes it is difficult to measure their impact on productivity across the industry. Even in an
industry with as much time lost as building and construction, thi s is on ly a small part of the total
hours worked. However, lost tim e does have a significant impact on continuity of work and thus productivity on the affected project. so
85 As a result , the indirect effects are likely to be the most significant. The potential for industrial
action adds an additi onal commercial risk to an already risky in dustry. It exacerbates existing
problems such as the volatility in businesses' cas h flows . This risk is bu ilt into the cost of
bui lding and construction projects. 5 1
86 It can affect the reputati on of a particular State or of Australia as a whole as a good place to
invest.
87 It was found that in Victoria unl awfu l industrial action had forced a contractor to cease doing business in Victoria or to determine not to enter the Victorian market. Another business is
reviewin g its investment decision. 52 Both business income and employment opportunities are
thereby lost to the State. 53
Employment arrang ements
88 There was much evidence before the Commission that the unions direct businesses as to
whom they can employ and how they can engage their workforce. In particular they discourage
the employment of:
⢠non-union membe rs;
⢠contractors;
⢠casual workers; and
⢠workers engaged through labour hire companies except those companies approved by the union.
89 They encourage the employment of union-endorsed workers , particularly in the key positions of
site delegate and OH&S officer. In some cases unions have used threats or industrial action to achieve their preferred employment arrangements.
21 8 Final Report of the Royal Commission into the Building and Construction Industry
90 Many groups are concerned about union control over employment arrangements. The
evidence before me indicated that many of these concerns are justified.
91 In New South Wales, for example, a union through an organiser sought to act as the controller
of who should or should not be in the industry54 Similarly, problems were found in Victoria, 55
whi le in Western Australia the union required businesses to engage unnecessary labour56
92 Such restrictions impede productivity as the unions, rather than management. are responsible
for making management decisions. The requirement for businesses to employ and pay
individuals who ostensibly work for the union and undertake very little, if any, construction work
is of particular concern. Businesses are unable to choose the employees and employment
arrangements that best suit their circumstances. 57
93 The evidence I heard included the following examples.
⢠Unions require particular individuals to be employed in key positions - for example the
induction officer, workplace delegate or occupational health and safety officer. These
employees are paid by the employer, often to undertake union business. Many of them do little, if any, building work. 58
⢠Unions have a list of unemployed workers. At the beginning of a new project builders are
obliged or coerced to engage employees from the list. Employers who do not agree to use these workers may not be allowed to work on site. 59
⢠Uni ons have preferred labour hire companies and businesses are required to engage
people from th e preferred companies. If a business a non-preferred company then
the workers may not be allowed to work on site or the project may be subject to industrial action. 60
⢠Unions oppose the use of part time labour and encourage employers to engage people
as employees rather than subcontractors or as temporary labour hire.61 The unions also
have preferred subcontractors 62
Behaviour ot union officials
94 There are many examples of inappropriate behaviour by union officials . Such behaviour occurs
in many different forms of activity. There was no evidence of senior union officials in the CFMEU
seeking to control or stop such behaviour.
95 A few examples of such behaviour will suffice:
⢠Threatening book inspections if the subcontractor did not enter into an EBA with the
CFMEU:
Ken oss Contractors Pty Ltd case study (ACT) : Kenoss Contractors was subjected to a
campaign by organ isers of the CFMEU to have it enter into a union-endorsed EBA. In late
1999, Mr Peter Primmer, a CFMEU organiser, said to the General Manager of Kenoss
Contractors, 'I'll make sure you never get that job ... unless you sign an enterprise
agreement' , and then gave him a notice demanding an inspection of time and wages
records. Between 22 October 2001 and 26 November 2001 Kenoss Contractors
National Perspective Part 1 2 i 9
received twelve separate notifications from the CFMEU of its intention to have officials
attend on sites on which Kenoss was working to conduct inspections.
⢠Threatening book inspections unless a subcontractor enrolled its employees as uni on
members:
Fineline Painting Pty Ltd case study (NSW): In late I 998 Mr David Kelly, a CFMEU
organiser, visited the Milton Water Treatment Works Project on which Fineline was
engaged, and demanded to know why Fineline's employees were not members of the
CFMEU. When Mogg said he was not interested in joining his employees to the CFMEU ,
Kelly said that he was going to carry out a wage book inspection, find a breach and
cause problems for Fineline.
⢠Threatening OH&S inspections if the subcontractor did not agree to the union 's
demands:
Grindley Constructions Pty Ltd case study (NSW): On 6 October 2000 Brcic, a CFMEU
organiser, attended a Grindley Construction site while a dispute was current The site
diary notes record him as saying, ' .. . if the demands were not met, he would carry out a
safety in spection and would find faults that would close the site ... '.
⢠Repetitive entry to a site aimed at causing disruption on a project so as to force a
subcontractor to enter into an EBA with the union:
Kenoss Contractors Pty Ltd case study (NSW): As part of a campaign to have Kenoss
Contractors sign a union-endorsed EBA, King, a CFM EU organiser, entered sites on which
the company was engaged more than 9 times between I 0 June 2000 and 12 July 2000.
On many of these occasions he spoke with the men and disrupted work on site.
⢠Requiring 'donations' to be paid to the CFMEU or bodies associated with the union:
Payments to the CFMEU case study (WA) : This case study details the practice in
Western Australia of the payment by most major contractors of amounts to the CFMEU in order that the uni on permit the presence of non-union labour on site . The claim for
payment is supported by the explicit or implicit threat that, without payment, industrial
action wi ll follow.
Right Group Pty Limited case study (NSW): Right Group made a $25 000 'donation' to
the Korean Federation of Construction Trade Unions. The payment was made after
Mr Andrew Ferguson had alleged that Right Group had been employing illegal immigrant labour and had been paying its employees cash in hand. Ferg uson drafted a note which
was signed by a director of Right Group, which asserted that the payment had been
made 'without duress' and in the hope that the money would be 'of value in assisting th e
KFCTU to improve wages and conditions of building workers in South Korea'.
⢠Union officials adopting the role of policeman of practices in the industry, and imposing or
threatening to impose fines:
Union matters case study (NSW) : The CFMEU suspected Royal Tiles Contractors Pty
Ltd, Deemah Marble & Granite Pty Ltd, Stonetech (Holdings) Pty Ltd and Saba Bros
Ti ling Pty Ltd of having evaded their obligations to pay certain entitlements to an illeg al
220 Final Report of the Royal Commission into the Building and Construction Industry
immigrant worker who had died in Sydney. The CFMEU organised for work bans to be
imposed on sites involving the four companies 'until all related matters have been
resolved '. The dispute was re solved with each of the companies making separate
'donations' of $25 000 to the deceased worker's widow.
⢠Union officials seeking to act as regulators of sectors in the industry:
Alkene Asbestos Removal case study (NSW): In June 2000 Mr Craig Bates , then the Assistant Secretary of the CFMEU in New South Wales, asked a contractor, Alkene
Asbestos Removal Pty Ltd, to pay $10 000 as a contribution to the wages of an
organiser, so that the organiser could police the asbestos industry. Bates said he was
going to ask other asbestos removal contractors for a similar contribution.
⢠Union officials ignoring legal requirements by using industrial pressure to force payments
to workers rather than a liquidator
Herscheii-Stent Pty Ltd case study (Victoria) : In May 1999 Herscheii-Stent went into
liquidation, owing its employees some moneys in respect of entitlements. As a result of a
demand by two CFM EU organise rs, Grocon Lim ited paid $30 000 in retention moneys it
held against Herscheii-Stent to the CFMEU, despite instructions from the company's
liquidator that moneys owed by Grocon to Herscheii-Stent were to be fully accounted for to the liquidator.
Lack of accountability
96 The behaviour discussed above illustrates a lack of accountability by unions and their officials .
Used appropriately the right of entry and book inspections have a legitimate role in protecting
workers. Used inappropriately, particularly when accompanied by abusive or aggressive
behaviour, such inspections create many problems for the industry.
97 It is not the function of unions to usurp the role of government to police and, where appropriate,
regulate sectors of the industry. Union officials have no mandate from the public to do so, and
no body of union members can confer such a mandate upon officials.
98 The behaviour of union official s reinforces a culture of conflict and prevents negotiation that
could lead to improvements in workplace practices. It is disruptive to individual businesses an d
often to a whole site . Such disruptions can delay projects or require longer working hours to
make up time . Yet neither officials nor their union are held accountable for their actions.
99 Such behaviour breaches the rights of individuals and of businesses .
Lack of leadership
1 00 With a few exceptions, such as when State-based taskforces were in operation in New South
Wales and Western Australia, nobody has been able to change the inappropriate behaviours in
the building and construction industry. There is a general acceptance of what is considered to
be 'commercial real ity'.
1 01 There are very few examples of large businesses, major clients, or even governments taking the initiatives necessary to address the problems in the industry. Periodicall y, a head contractor
will try to negotiate alternative arrangements with the unions . Usually this attempt fails when the
National Perspec tive Part 1 221
objectives of the head contractor are undermined by the union reaching an agreement with one
of the contractor's competitors .
102 Lar-ge private sector companies and their representative organisations believe it would be
commercial suicide for an individual company to attempt to change the culture and practice in
the building and construction industry. When Grocon recently sought to do so, Kingham on
behalf of the CFMEU, suggested the attempt cou ld cause the company great fin ancial loss to
the extent that its bankers might become involved . As a result, head contractors and
subcontractors concede to union demands, even when they are legally entitled to do
otherwise. 63
1 03 Wh ile the current attitude of head contractors may be understandable it wi ll need to change for
the cu lture and practices in the building and construction industry to improve. The Commission
can only make recommendations that will improve the tools available to businesses to protect their rights . Businesses will need to be proactive, professional and eth ical in their dealings with
all parties in the industry to generate lasting change. One might have expected that the ACA
and its members, professing to uphold the highest ethical standards might, at the least, have agreed as a group to require adherence to the law, and agreements entered into. However,
their individual self-interest seems to predominate.
104 Similarly, governments have oft en accepted 'commercial reality' instead of insisting on
adherence to the law or ethical business standards. They have made various attempts to
change the cu lture and practices in the industry but these efforts have not generated lasting
resu lts. There is potentially a conflict between the long term policy objectives of the government
to improve the culture and performance of the industry and the short term focus of the
government as a major client wishing to get its projects finished on time and on budget.
Different government departments are responsible for different roles . The problems the
Commonwealth has had in implementing the National Code of Practice for the industry
illustrates that differing practices in various departments, each acting in accordance with its
own priorities, can resu lt in inconsistent and divergent outcomes.
1 05 These conflicting objectives are further complicated by the political consequences of major
government projects being embroiled in costly industrial disputation and the close links
between political parties and the unions or major builders.
106 Currently, businesses that attempt to generate change do so on their own , in an environment
where others are willing to concede to union demands. Given the nature of competition
between building companies and the risk that confronting th e unions wi ll damage a head
contractor's reputation with clients, it is relatively easy for the unions to withstand and outlast
such efforts. As a result the current culture and practices have become deeply embedded in participants' attitudes.
National issues
107 The Commission identified many national issues creating problems in the building an d
construction industry. These are discussed in volumes 7 to 9 of this report . Some of these, for
example freedom of association, illegal migrant labour, inflexible practices, entry and
222 Final Report of the Royal Commission into the Building and Construction Industry
inspection, phoenix companies and unlawful and inappropriate payments are discussed
elsewhere in this volume. A few additional examples are provided in thi s section.
108 The security of payments is a major problem for subcontractors. As the bu ilding and
construction industry operates under an hierarchical chain of contracts, non-payment of one
subcontractor can affect payments to other subcontractors or suppliers down the contractual
chain. The financial failure of any one party in the contractual chain can cause a 'domino effect'
on other parties. Many of the smaller construction compan ies hold few assets - hen ce if the
firm becomes insolvent there are few assets to se ll to meet outstanding debts.
109 Cash fl ow is the lifeline of these smal l businesses. Default by a head contractor or a
subcontractor in making payments due has serious consequences on those awaiting payment fo r work done or goods supplied .
110 The natural risks in the industry are exacerbated by some principal contractors employing
tactics aimed at reducing, delay in g, or avoiding the payment of progress claims of
subcontractors, in order to boost the pri ncipal contractor's liquidity or profit margin.
11 1 The security of payment problem in the building and construction industry is exacerbated by
the absence of an effective adjudication and enforcement mechanism in relation to disputes
over progress payments, and the high cost and long delay in pursui ng payment claims through the court system.
112 A further problem in the industry is that managers are inappropriately devolving their
management respo nsibilities. The many significant risks and decisions on building and
construction projects need to be managed at the appropriate level in the hierarchy of project
management.
113 In many cases managers have surrende red management decisions to unions. Unions control
who can be employed by requi ring employees to be union members and specific individuals to
take key roles on many building sites. They control th e term s and conditions of employment
through pattern bargaining. Unions restrict which businesses co ntractors can deal with by
requiri ng all subcontractors to have union- endorsed EBAs, use preferred labour hire
companies or engage specific crane hire companies.
114 Yet another problem is that commercial risks are being inappropriately passed on to
subcontractors who are ill equipped, and can ill afford, to manage the responsibility. 64
115 If risks are inappropriately passed from head contractors to subcontractors or unions, or from
sen ior management to inadequately supported middle man agement in the head contracting
business then the fo llowing may occur:
⢠Management may be restricted in pursuing productivity improvements.
⢠In effect the workplace may be regulated by an industrial organisation without
accountability to the general community, and with a narrow sectional interest.
⢠Head contractors may be locked into a relationship with unions that reinforces union
power.
National Perspective Part 1 223
⢠Subcontractors may suffer financial losses because they are responsib le for risks that are
better dealt with at the head contractor leve l.
⢠Time delays and poor safety may occur because people who are ill -equipped to deal with
issues are forced to manage them.
⢠The senior management of the head contractor may distance itself from the management
of the project and not take responsib ility for wh at occurs on site. Thi s can include site safety and the making of in appropriate and unlawful payments, such as strike pay.
116 Inadequate focus on and investment in training are leading to sk il ls shortages in the industry.
Without access to trai ning, a hig hly skilled, flexible workforce cannot be maintained.
117 Lack of trai ning raises other concerns in relation to occupational health and safety. Inadequate
trai ning, especially in relation to new technologies and machinery, increases the risk of injuries
and accidents on site.
Scope to improve performance
118 Th ere is significant scope to improve the performance of the building and construction industry.
Identification of the problems makes clear the potential for improvement if these problems can be solved .
11 9 The Commission looked at many projects. The worst cases clearly illustrate the high cost of
failing to achieve appropriate workplace practices and conduct. 65 Materially identical projects
in New South Wales and Victoria took different periods to construct, and had materially
different costs principal ly be cause of poor work practices in Victoria.
120 In recent years the level of productivity growth in build ing and constru ction has fall en behind
other sectors of the economy. Since 1981 the rate of growth in various measures of
productivity has been less than the market average 66 This is due, in major part, to the
entrenched culture and work practices in the industry.
12 1 It has been argued in some submissions that the Australian bu il ding and construction industry
is performi ng well internationally an d, therefore, there is little justification for major industry
reforms.67 It is true that a number of international studies have concluded that the Australian
building and construction industry is among the better performers internationally (see annexure
4, volume 4, National Perspective Part 2, of this report). But using this as an excuse not to act
is shortsighted. The studies do not show that the industry is operating efficiently. Indeed, the
fact that on vario us productivity measures , the industry has fallen behind the market average in Australi an industry indicates that signi fi cant ineffi ciencies remai n.
122 All international comparisons should be treated with caution because of the difficulty in
obtaini ng data that is comparable between countries. The international studies look on ly at
labour productivity because the difficulties in obtaining data limit the validity of broader
measures for comparing productivity. Partial productivity comparisons can be misleading. If
labour is relatively expensive in one country, construction firms in that country will tend to use
more capital to reduce the need to use expensive labour. The impact of this on labour productivity comparisons wi ll be that the country with the expensive labour will appear to be
224 Final Report of the Royal Commission into the Building and Construction Industry
highly productive. In the results presented it is difficult to identify the reasons underlying
Australia's ranking relative to other countries.
123 Continued improvements in performance in the Australian building and construction industry
are important for two reasons :
⢠the increasing gl obal competition in construction services; and
⢠the aggressive attempts of other countries to make their own building and construction industries more internationally competitive.
124 Annexure 4, volume 4, National Perspective Part 2, of this report discusses two examples, the
United Kingdom and Singapore, where governments are pursuing major reform programs to
improve the performance of the building and construction industry in their countries.
125 International competitiveness attracts international investment. Reform is especially important
for Australia given its location in one of the world's most dynamic economic regions. This poses
special competitive challenges, risks and opportunities for both Australia generally and the
building and construction industry specifically.
Reasons for continuing problems in the building and construction industry
126 There are many problems in the building and construction industry. Some of the gains to the
economy and other industries from improving the performance of building and construction are
illustrated in modelling in annexure I , volume 4, National Perspective Part 2, of this report . For
example there are significant benefits to the whole economy, the bui lding and construction industry and workers within the industry from pay in.creases that are accompanied by
productivity gains.
127 The problems in this industry are entrenched. Similar problems have been identified for many
years and while some have improved others have not. The industry is still characterised by
conflict, self interest and lawlessness. This section discusses why these problems are
contin uing despite various government initiatives to address them 68
Industry history and practice
128 The problems in the bu ilding and construction industry are not new. A History of Recent
Industrial Relations Events in the Australian Building and Construction ln dustry69 briefly notes
the industrial relations history between 1970 and 1990. Over that period the main industry
union was the Builders Labourers ' Federation (B LF). There were significant periods of chronic
industrial disputation, convictions for corruption and the eventual deregistration of the BLF.
Mr Brian Boyd, then an organiser with the BLF, later detailed in his book, Inside the BLF: A
Union Self-destructs, the use of builders labourers' indu strial power to seek to avoid the
General Secretary's corruption charges and the ensuing criminal trials:
The first phase of the industrial campaign to stop the consequences of the Royal
Commission bribes allegations going to court occurred from the latter part of 1980 to
December 1984. The second phase was during the actual County Court trial, February to
June 1985, when various activities were deliberately encouraged by Gallagher in an
attempt to have the trial aborted. The general idea at this point was to create an adverse
National Perspective Part 1 225
atmosphere and generate a level of media coverage that would have the prospect of 'a
fair trial' declared to have been prejudiced.
Now the objective of the third phase is to 'convince' the powers that be it is not worth
their while to re-prosecute Gallagher. 70
129 In 1 992 the Gyles Royal Commission described the environment in New South Wales as
'nothing less than industrial anarchy in which any pretence of the rule of law or the application of principle has been abandoned'?1
130 In Victoria in 1 994:
The [Economic Development] Committee [found} that an atmosphere of uncertainty and
fear of retribution operates within the Victorian build1ng and construction industry,
crea ting a culture that accepts inefficient and corrupt practices as the norm. 72
131 This cu lture has been strong enough to survive several attempts at reform . The most effective
attempts were the State Government taskforces but when these initiatives were withdrawn the
industry soon returned to its old practices. I heard evidence that illustrated that unions took the
absence of the taskforce as an indication that they could take more extreme action . For
instance, the Site Manager of Doric Construction Pty Ltd told the Commission in Perth that
when a union representative was seeki ng to hold a site meeting without providing 24 hours
notice the union rep resentative said 'the taskforce are gone and I am coming on site for a
coffee' . 73
132 Pattern bargaining has further entrenched the existing culture and practices by:
(a) encouraging an average outcome across the industry that does not provide for
innovation and change;
(b) developing agreements that have been negotiated by a small group of establish ed
industry players who accept the cu rrent cu ltu re as inevitable;
(c) encouraging and requiring the adoption of ag reements reinforcing a mandated uniform
approach;
(d) maintaining the control and domination by unions because of their ability to control the
bargaini ng process;
(e) imposing barriers on movement between sectors in the industry; and
(fj preventing employees and employers negotiating with each other.
133 A glass ceiling exists below the top level of commercial work in the industry, which severely
restricts the entry of potential partici pants who might otherwise compete for work in this sector
of the industry, particularly at subcontractor level. 74 Once a subcontractor signs the union
endorsed EBA its terms and conditions apply to its whole business. The higher cost structure that results means that the subcontractor cannot compete on smaller projects against non
EBA subcontractors. 75 Conversely, subcontractors without a union -endorsed EBA and thus
with a lesser cost structure, are not permitted to compete for the more major works.
134 Transfield argued that pattern bargaining results in :
226 Final Report of the Royal Commission into the Building and Construction Industry
forcing smaller and specialist subcontractors to execute Pattern Agreements, so that
such subcontractors experience dramatic increases in all areas in which they operate.
This often results in subcontractors declining to bid for work on large projects where a
Pattern is a necessary condition to access and work on the site. This has the effect of lessening competition in the industry. 76
135 Similarly, in Tasmania the Building Industry Specialist Contractors Organisation (BISCO
Tasmania) stated that:
By far the most damaging result of any agreement made between head contractors and
unions is there [sic} ability to overturn subcontractors Enterprise Agreements that have
been previously negotiated and ratified by the Industrial Court. 77
136 The culture and practices described in the previous sections have become the industry norms.
There is little momentum for change because:
⢠parties accept and expect the current standard of behaviour; and
⢠incumbents are more comfortable dealing with the environment they know, than facing
the risk of change.
The economic structure of the industry
137 Given the economic structure of the industry it is not possible to rely on market pressure to
rectify the deficiencies in industry culture and practice.
138 In most industries, there is a range of competitive pre$SUres that ensure that the industry
operates efficiently - minimising costs (subject to the quality of the product or service
produced) and providing remuneration to business owners and employees that reflects the
value of their work compared with the value of similar work in other industries.
139 In the building and construction industry several of these competitive pressures are weak or
non-existent.
140 In most industries such competitive pressures come from one or more of the following sources:
⢠imports;
⢠export markets;
⢠similar products produced in Australia;
⢠other producers in the industry;
⢠competition within the labour force; and
⢠investment capital markets.
141 International competition from im ports and exports results in pressures on domestic producers
to improve their productivity. Imports achieve this by bringing products into Australia that
compete directly with Australian produced products. Businesses that rel y heavily on exports
need to keep their costs internationally competitive , otherwise they wil l lose their overseas
customers.
National Perspective Part 1 227
142 Another aven ue that puts pressure on firms to work hard to improve all levels of their business
is competition from competing projects. Many services, for instance cinema entertainment, are
not imported or exported. However, there are many other products and services, such as
videos, television and alternative forms of entertainment that ensure that the owners and
managers of cinemas operate their businesses as efficiently as possible.
143 Within an industry itself, competition among producers will ensure that they improve
productivity in those areas under their control. Often thi s wi ll inc lu de both management and
labour costs. For competition between businesses to improve labour productivity business
owners must be able to influence the terms and conditions under wh ich they employ people. In
practice, in most industries this is possible subject to a minimum set of employment conditions.
Even when only one union covers an industry labour arrangements can be relatively flexible
because there is a choice between union and non -u nion employees and contract workers.
144 Overall, these factors work together to put pressure on businesses to ensure that they have
high levels of productivity. Otherwise, they wil l become uncompetitive and lose business. These
factors also work to ensure that labour and other supp liers improve their productivity. If the
productivity of employees is low, employers will either choose to use other sou rces of labour or
they wi ll go out of business, result in g in people losing their jobs.
145 In the building and construction industry there is no international competition. While it is
possible for an overseas company to come to Australia to tender for a project, the on ly import
is project man agement. Because it is not possible to import the fin ished road or bui lding the ful l
price is not subject to import competition . Si mi larly, Australian firms can sell their services
overseas, but again they are only exporting the project management component of the building
or constructi on project.
146 In additio n, there are few products produced in Australia that provide an alternative to a
build ing or piece of infrastructure. There is virtually no competition from alternative products
and services .
14 7 There is competition among producers in the building and construction industry and this is
likely to be reflected in some parts in the industry operating very efficiently. However, as discussed in the following section, the type of competition is not uniform. In addition, the
incidence of pattern agreements in non -residential building, particularly in the capital cities, and
the difficulties facing companies looking to employ people under alternative terms and
conditions, means that the competition among producers in this sector tends not to influence
the terms and conditions of employment.
148 Whi le there is some indirect competitive pressure exerted through the capital markef8 its
effectiveness in the building and construction industry is muted. The public sector accounts for
nearly 40 per cent of the building and construction activity within the Commission's terms of
reference and the public sector is not subject to the same funding constraints as private
investors. The capital market responds to project returns and, as discussed later, often higher
build ing costs can be passed on to the end user of the building. Therefore, higher costs do not
necessarily affect the return on project capital.
149 Overall, because of the lack of competitive pressure from external forces such as exports,
imports or alternative Australian produced products there is little pressure on individual
228 Final Report of the Royal Commission into the Building and Construction Industry
employers to attempt to break ranks and run the risks of trying to change labour arrangements
to improve productivity. The incentive is for each business to try and improve productivity in
those areas where it has control and accept as given any labour or other costs when it knows
that its competitor? will also face such costs.
150 The Gyles Royal Commission noted that there are few incentives for businesses to focus on improving the productivity of labour.
Another feature of the industry is the relative lack of import competition. Buildings
themselves, in the main, will not be imported. Transport makes it difficult to import many
building materials. The nature of our immigration system and industrial relations systems rules out importing labour from overseas for individual projects. It is difficult enough to
bring labour in from other States of Australia. It would be a brave overseas contractor
who confronted industrial relations in the commercial sector in competition with local
builders. This, coupled with the monopoly of labour in the commercial sector by the
unions and the high concentration of ownership in building materials and certain
specialised contractor sectors, indicates that most clients are at the mercy of the system.
Neither head contractors nor consultants have any particular reason to resist cost
increases . Ultimately they are all rewarded by adding a fee or a margin to cost or charging a fee which is based on cost. 79
Barriers to establishing a building and construction business
151 The previous section discussed the factors that red uce overall competitive pressure s on the
building and construction industry. The type of within the industry is affected by
how freely businesses can move into the industry or between sectors within the industry.
152 Most of the building and construction industry is highly competitive. It is characterised by a
large number of small specialised subcontractors. These businesses own very little plant and
equipment and they can readily move in and out of the industry. This competition makes it risky
for subcontractors to refuse to work under the terms and conditions set by head contractors.
Except during a building boom or for very specialised projects the head contractor will have a
choice of subcontractors.
153 The competitive environment for large head contractors is more complex. There are a number
of well established international businesses operating as head contractors in Australia. Many
have a proven track record and competition is strong. It is difficult for new head contractors to
establish themselves. In particular, new entrants need to get onto client tendering li sts. Pre
qualification based on the expertise and the track record of head contractors, and sometimes
the major subcontractors, is now common for tendering on larger projects. Head contractors
must have demonstrated an ability to manage and co-ordinate projects. Because th ere are
only a few major contractors capable of undertaking major projects they tend to develop strong
links with major clients. These relationships make it difficult for other contractors to win
contracts away from the established businesses. As both relationship contracting (a lliances,
partnering , and negotiated tenders) and pre-qualification become more rigorous and
widespread in the industry, the difficulties for new firms seeking projects with the major clients
will increase.
National Perspective Part 1 229
154 The MBA Inc argued that the need to develop a relationship with the union further restricts the ability for new head contractors to become established.
The fact that only a limited number of contractors are capable of managing large projects
is pnmarily due to their commercial resilience which allowed them the necessary time to
develop working relationships with the unions ... This historical legacy in itself limits new
players from developing the capability to compete in the large project market. 80
155 The combination of competition within a group and the existence of a group that is difficult for
outsiders to break into generates an environment that perpetuates many of th e problems identified previously.
⢠The commercial pressure of competition encourages head contractors to adopt a commercially pragmatic approach to industrial relations.
⢠Clients have a choice of head contractors so that no individual business is willing to affect
its reputation by marring its industrial relations record.
⢠Head contractors are willing to overlook productivity issues when their competitors face
the same cost structures. There is little risk that an outside business with an innovative
approach could move in and undercut the incumbents.
156 In effect it reduces the incentives for the large businesses operating on major projects to
attempt to break ranks and run the risks of trying to change labour arrangements to improve productivity.
Failure of existing remedies
157 There are several existing mechanisms that should address the problems identified previously
in this volume. Despite the industry history and practice and the economic structure of the
industry, if these mechanisms worked effectively they should mitigate these problems. This is
not happening. For a range of reasons they have failed to deliver the desired outcomes (see attachment 7).
158 For instance, theoretically, the AIRC's role in mediating disputes should be able to address
many of the problems associated with a history of union militancy and unlawful strike action. In
practice, however, the responses of the AIRC are too slow to effectively deal with disputes and
the directions of the AIRC are often ignored.
159 The Code has not been as influential in changing the culture within the building and
construction industry as hoped. The Commonwealth Government made the following comments regarding the Code:
⢠support for the Code from the industry has been limited. There has been a negative
reception from unions;
⢠awareness of the Code amongst Commonwealth Departments and agencies
needs to be improve[d];
230 Final Report of the Royal Commission into the Building and Construction Industry
⢠oversight and monitoring of the Code and its implementation are bureaucratic and
overly focussed on contractual issues rather than changing the behaviour of industry parties on site. 81
160 There are problems in implementing the Code because:
⢠industry guidelines have been developed for only two of the eight principles contained in the Code;
⢠the implementation guidelines are not sufficient to requ ire notification of breaches of the
Code;
⢠the Code Monitoring Group is ineffective;
⢠government departments have acted inconsistently with the Code because there are
inadequate measures to permit proper monitoring of the application of the Code;
⢠client departments are concentrating on contractual outcomes rather than
implementation of the objectives of the Code; and
⢠the Commonwealth has sought to pass compliance obligations contractually to head
contractors without supporting the contractors seeking to implement them .
161 The stated objective of the OEA is that when a breach of the Workplace Relations Act 1996
(C'wth) occurs , it will seek voluntary compliance from the offender before resorting to any other
dispute resolution mechanism. Whi le in some cases in the building and construction industry
this approach has been successful , in others the OEA has been unable to deal with problems
in this in dustry. Its performance appears to be inhibited by · many factors including :
⢠the CFMEU has an explicit policy of not co-operating w ith the OEA;
⢠the investigators have difficulty obtaining and collecting information in the building and
construction industry because the constraints on their powers do not take into account
the culture of lawlessness and intimidation that operates in this industry;
⢠the OEA policy of voluntary compliance means that much of its activity is confidential and
its activities are not sufficiently visible to act as a deterrent; and
⢠the OEA does not have the resources to develop the expertise and focus necessary to deal with the difficult environment in the building and construction industry.
162 Th e Commission received evidence throughout Australia that in the building and construction
industry parties that are subject to an order or direction from an industrial tribunal often breach
those orders or directions and usually with impunity.
163 The reasons for this are many and varied. Sometimes, another party that could seek redress for
non-compliance with an order or direction elects not to do so in the interests of resolving the
dispute and allowing the project to proceed. Sometimes such a party has no practicable option
but to allow the project to proceed because of an ongoing need to deal with the other party to
the dispute.
164 The Commission received consistent evidence that many participants regard the AIRC as an
uncertain and unsatisfactory forum for regulating industrial disputation because of:
National Perspective Part 1 231
⢠its primary function being to settle disputes by conciliation and compromise, rather than
enforcement of rights;
⢠the legal and commercial impediments to a party electing to pursue legal rights; and
⢠the absence of any material consequences when a claim is rejected.
165 The inability of the AIRC to enforce its orders compounds the problem. A number of examples
are provided in attachment 7 where the AIRC processes failed to resolve disputes. This
supports the conclusion that the AIRC processes are not working in the building and construction industry.
1 66 Employers have found the remedies avai lable at law to be cumbersome, slow and costly to
pursue, as well as diffic ult to achieve because they are governed by evidentiary requirements in
ci rcumstances where participants are often unwilling to give evidence voluntarily because of
fears of reprisals.
167 Because industrial action often takes the form of short stoppages, the timeframe fo r seeking
orders that industrial action stop or not occur under s127 of the Workplace Relations Act 1996
(C'wth) and having them enforced by the Federal Court is too prolonged to enable this to be an
effecti ve remedy against industrial action. Unions well understand the practical delays any
employer faces in seeking to challenge their actions in tribunals or courts and know that by
adopting tactics such as short strikes they can damage the employer commercial ly without risking legal repercussions.
1 68 The costs to employers of enforcing their rights un der the Workplace Relations Act 1996
(C'wth) where unlawful industrial action was occurring are prohibitive. A simple proceeding
comprising an application to the AIRC under s166A coupled with an interlocutory application to
the Federal Court wou ld easi ly cost $30 000 to $60 000 in legal fees and management time.
These costs are disproportionate to the maximum fines provided for under the Workplace
Relations Act 1996 (C'wth) of $2000 for individuals and $10 000 for unions in respect of any
breach of a penalty provision in Part VIB of the Act. The Workplace Relations Act 1996 (C 'wth) does not normally allow the recovery of costs nor does it allow for the awarding of damages.
Hence, the consequences faced by the unions from acting unlawfully are relatively minor in
comparison to the cost to businesses of seeking to take legal action to enforce their rights.
169 Con tractors and subcontractors are concerned furth er that if they take action in the Federal
Court they will be subject to reprisals by all unions. Th e basis for this concern is illu strated in the
attitude Mr Wi lliam Oliver, the th en Acting Victorian Building Uni ons Divisional Bran ch Secretary
for the CFMEU Construction and General Division , expressed during his dealings with Saizeriya
Australia Pty Ltd after it used th e secondary boycott provisions in the Trade Practices Act 1974
(C'wth) . This example is presented in detail in attachment 7.
232 Final Report of the Royal Commission into the Building and Construction Industry
Notes to Industry Culture and Practice
ABS 2002 (8142.0.55.002 Summary of Industry Performance 2000-2001, May 2002).
ABS 1999 (Pri vate Sector Construction Industry, 1996-97: Australia, Cat. no. 8772.0).
Construction Industry Development Agency 1995, Measuring up or Muddling Through: Best Practice in the Australian Non-Residential Construction Industry, March, Sydney, document 072.0009.0780.0001 at 0015, based on IBM Consulting Group and the London Business School, Made in Europe: A Four Nations Best Practice Study.
Construction Industry Development Agency 1995, Measuring up or Muddling Through: Best Practice in the Australian Non-Residential Construction Industry, March, Sydney, document 072.0009.0780.0001 at 0016.
Construction Industry Development Agency 1 995, Measuring up or Muddling Through: Best Practice in the Australian Non-Residential Construction Industry, March, Sydney, document 072.0009.0780.0001 at 0016.
Volume 13, Hearings - New South Wales Part 1, case studies on Alkene Asbestos Removal Pty Ltd, and Betaform Constructions Pty Ltd.
Volume 15, Heanngs- Victoria Part 1, case studies on Anzac Day 1999, and Kessaris and Dawson; Volume 16, Hearings- Victoria Part 2, case study on Shaun Hughes.
Volume 18, Hearings- Queensland Part 2, case study on Townsville.
Volume 21, Hearings- Western Australia Part 2, case studies on The Accounts of the Construction, Forestry, Mining and Energy Union of Workers, the Construction Skills Training Centre Inc and the Construction, Forestry, Mining and Energy Union, Construction and General Division, Western Australian Divisional Branch, and on 240 StGeorge's Terrace Perth.
10
Volume 19, Hearings- South Australia, Tasmania, Northern Territory and ACT, Northern Territory case study on Casuarina Shopping Centre. 11 Section 3.5 of this volume discussed the level of subcontracting in the building and construction industry.
12 ABS 2002 (Forms of Employment: Australia, Sept 2002, Cat. no. 63"59.0); ABS 2002 (6291.0.40.001 Labour Force (SE) Self Employed - Australia - Quarterly - Labour Force - Own Account Workers -Australia, Aug 2002, Cat. no. 6291.0).
13 Hansen Yuncken Pty Ltd 2002, Letter to the Royal Commission into the Building and Construction Industry - Working arrangements, tax evasion, phoenix companies and underpayments of workers compensation , premiums and workers entitlements, 11 July, exhibit 1337, document 069.0521.0279.0031.
1 " Sutton, T14766/ 5-9.
15 National Intelligence and Analytical Service, Australian Securities Commission 1996, ASC Research Paper 95/01 , Project One: Phoenix Activities and Insolvent Trading , Public Version, Australian Securities Commission, Brisbane, pp. 12-13.
16 Volume 8, Reform- National Issues Part 2, Phoenix Companies. 17 The proportion was not identified by the review. 18 Again, the review did not identify the proportion. 19 Department of Immigration and Multicultural Affairs 1999, Review of Illegal Workers in Australia: Improving
Immigration Compliance1n the Workplace, Canberra, exhibit 1540, document 007.0030.0519.0001 at
0012.
2o Volume 19, Hearings- South Australia, Tasmania, Northern Territory and ACT, case study on Alice Springs
to Darwin Railway.
2 1 Construction, Forestry, Mining and Energy Union (online), Welcome to CFMEU Construction Victorian
Branch [accessed 3 February 2003], http://www.cfmeu.com.au/construction/states/vic
22 For more information see volume 13, Hearings- New South Wales Part 1, case study on Alkene Asbestos
Removal Pty Ltd.
National Perspective Part 1 233
23
For more information see volume 20, Hearings- Western Australia Part 1, case study on Bluewater Apartments. 24 For more information see volume 19, Hearings- South Australia, Tasmania, Northern Territory and ACT,
Tasmanian case study on Kellaway Wall and Ceilings Pty Ltd.
25 For more information see volume 15, Hearings - Victoria Part 1, case study on Graham Andrews Builders Pty Ltd.
26 ABS 2002 (Australia Now, Construction, Industrial Disputes, Jan 2002). 27 ABS 2002 (Industrial disputes, Aug 2002: Australia, Cat. no. 6321.0). 28 See for example volume 19, Hearings - South Australia, Tasmania, Northern Territory and ACT, South
Australian case study on Chadwick Construction Technology Pty Ltd; volume 13, Hearings- New South Wales Part 1, case study on Rescrete Industri es Pty Ltd.
29
Pattern bargaining was discussed in section 4.6. The award and its coverage were discussed in section 4.5. 30 See Workplace Relations Act 1996 (C'wth), s89A. 31 These are set out in detail in volume 8, Reform- National Issues Part 2. 32
Departmen t of Employment and Workplace Relations 2002, Agreement Making in Australia, Workplace
Agreements Database. 33 Atkins, T3214/18-33. Typically, 1n relation to the prescription of wage increases an agreement certificate under s170LJ would read: 'In recognition of the efficiencies and productivity measures contained herein the
following increases shall be available to all employees covered by this agreement. .. ' 34 Volume 16, Hearings- Victoria Part 2, case study on The Federation Square Project.
35 Grollo, D. 2002, 'Back to the future: Grocon's New Direction', Speech to the Property Council of Australia, 12 November, Melbourne, exhibit 2008, document 095.0025.0988.0001 at 0004. 36 Master Builders Australia Incorporated 2002, Submission to the Royal Commission into the Building and
Construction Industry in reference to discussion paper 3, 17 June, exhibit 771, documen t 067.0160.0974 0002 at 0012. 37 ABS 2001 (Employee earnings and hours, May 2000: Australia, Cat. no. 6306.0) . 38 Richardson T 4922/2-12; Trohear T5670/5-11; Williams T5429/21-27; James T2666/41-T2667 /3. 39 Carter Statement, exhibit 676, paragraph 31, document 066.0765.0087.0001; Carter, T2567/20-43. 4
° For example volume 20, Hearings- Western Australia Part 1, case study on Doric Group Holdings Pty Ltd; volume 15, Hearings -Victoria Part 1 , case study on City Link. 41 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market
Research Report, Auslnfo, Canberra, p. xxvii. 42 Victorian Building Industry Agreement 2000, exhibit 2A, document 007.0137.0535.0004 at 0032; T11967 /1 0-18. Meadows Statement, paragraphs 245-6, exhibit 1093, document 090.0148.0428.0001. 43
National Occupational Health and Safety Commission (onl ine), National On li ne Statistics Interactive (NOSI)-a Workers' Compensation Statistics Database [accessed 17 February 2003], http://nohsc.info.au.com 44 Ol1ver, T336/4-45.
45 Cross Statement, exhibit 5, paragraphs 98-99, document 010.0422.0350.0001. 46 Cross Statement, exhibit 5, paragraph 95, document 010.0422.0350.0001. 47 Volume 6, Reform- Occupational Health and Safety, Misuse of safety issues for industrial purposes. 48
Volume 18, Hearings- Queensland Part 2, case study on The Nambour Hospital Dispute.
49
ABS 2002 (Unpublished data, Construction, Industrial disputes, 2002; Industrial Disputes Australia, Aug 2002: Cat. no. 6321.0). 50 Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Auslnfo, Canberra, page 34; Volume 13, Hearings- New South Wales, case study on Bitz
Excavations Pty Ltd, HMAS Albatross Project.
234 Final Report of the Royal Commission into the Building and Construction Industry
51
Australian Industry Group 2002, Royal Commission into the Building and Construction Industry Submission by the Australian Industry Group, 28 March , exhibit 441, document 016.0672.0673.0001_001 at 0007.
52 Volume 16, Saizeriya Case Study.
53
For more information see volume 15, Hearings- Victoria Part 1, case study on Monarch Group Pty Ltd. 54 For more information see volume 13, Hearings- New South Wales Part 1, case study on Ingleside Bricklaying . 55
See for example volume 15, Hearings - Victoria Part 1, case study on National Gallery of Victoria. 56 For more information see volume 20, Hearings -Western Australia Part 1 , case study on Floreat Forum. 57
Volume 13, Hearings- New South Wales Part 1, case study on Buildcorp (Australia) Pty Ltd. 58 For example, volume 13, Hearings - New Soutr, Wales Part 1, case study on Bovis Lend Lease Pty Ltd on Head Contractors' strategies; volume 16, Hearings- Victoria Part 2, case study on The Victorian State
Netball and Hockey Centre . 59 Volume 20, Hearings- Western Australia Part 1, Bui lding proJect at 166 Murray Street, Perth; Bukarica, T11200/28-35; T11967/ 21-30.
60
Volume 14, Hearings - New South Wales Part 2, case study on labour hire. 61 Volume 19, Hearings- South Australia, Tasmania, Northern Territory and ACT, case study on Timbercraft Pty Ltd .
62
Volu me 13, Hearings- New South Wales Part 1, case study on cranes. 63 For example volume 20, Hearings- Western Australia Part 1, case study on Payments to the Construction, Forestry, Mining and Energy Union. 64
Grocon Pty Ltd 2002, Royal Commission 1nto the Building and Construction Industry Statement of Behalf of Grocon Pty Ltd, p. 26, exhibit 830, document 048.0949.0311.0094 at 0119-0120. 65 For example volume 16, Hearings- Victoria Part 2, case study on Woolworths OP1-0P2. 66
See annexure 1, volume 4, National Perspective Part 2, of this report. 67 Construction, Forestry, Mining and Energy Union 2002, Further Submission to the Royal Commission into the Building and Construction Industry, exhibit 1807, document 029.0348
0978.0001 at 0003- 0005. 68 See annexure 2 on recent reviews, in volume 4, National Perspective Part 2, of this report. 69 See annexure 5, volume 4, National Perspective Part 2, of this report.
70
Boyd, B. 1991, Inside the BLF· A Union Self-destructs, p. 234. 71 Gyles, R.V. OC 1992, Royal Commission into Productivity in the Building and Construction Industry in New South Wales: Final Report, Volume 7, Sydney, p. 18, exhibit 556, document 092.0709.0033.0002 at 0031. 72
Economic Development Committee 1994, Inquiry into the Victorian Building and Construction Industry, Third Report to Parliament: Productivity, April, Melbourne, p. 9.
73
Perrott Statutory Declaration, exhibit 935, paragraph 18, document 007.0686.0547.0001. 74 Overview of Private Meetings Held between the Honourable TRH Cole RFD QC and participants in the building and construction industry, exhibit 442, paragraphs 11-12, document 088.0525.0010.0001. 75
Master Builders Australia Inc 2002, Submission to the Royal Commission into the Building and Construction Industry in response to discussion paper 3, 17 June, exhibit 771 , document 067 .0160.097 4.0002 at 0006. 76 Transfield Pty Ltd 2002, Submission to the Royal Commission into the Building and Construction Industry,
July, exhibit 820, paragraph 6. 1.8, document 057.0166.0542.0001 at 0014-0015. 77 Building Industry Specialist Contractors Organisation (BISCO Tasmania) 2002, Submission to the Royal Commission into the Building and Construction Industry in reference to discussion paper 3, 24 June, exhibit 773, document 017 0101.0834.0003 at 0005.
National Perspective Part 1 235
78
Construction, Forestry, Mining and Energy Union 2002, Submission to the Royal Commission into the Building and Construction Industry in response to discussion paper 3, 3 July, exhibit 825, document 001.1819.1805.0003 at 0003: 'Projects developed in Australia therefore must be competitive in terms of cost and investment returns otherwise Australian and overseas investors will look elsewhere to place their money'.
79 Gyles, R.V. QC 1992, The Royal Commission into Productivity in the Building and Construction Industry in New South Wales: Final Report, Volume 7, Sydney, p. 5, exhibit 556, document 092.0709.0033.0002 at 0022.
80 Master Builders Australia Inc 2002, Submission to the Royal Commission into the Building and Construction Industry in response to discussion paper 3, 17 June, exhibit 771, document 067.0160.0974.0002 at 0004.
81 Commonwealth Government 2002, Commonwealth Submission to the Royal Commission into the Buildmg and Construction Industry- Phase Two, 6 August, exhibit 494, document 100.0721.0253.0002 at 0067-0068.
236 Final Report of the Royal Commission into the Building and Construction Industry
Attachment 1
Financial Analysis of Principal Employer and Employee Associations
National Perspective Part 1 237
238 Final Report of the Royal Commission into the Building and Construction Industry
1 Introduction
The fo llowing financial analysis provides indications of the financial strength of the various
employer and employee associations that play a ro le in the bui lding and construction industry.
2 The analysis does not provide consolidated accounts in accordance with relevant accounting
standards . Instead it uses figures drawn from financial returns provided to the State-based
industrial relations commissions and the Australian Industrial Registry of the Australian
Industrial Relations Commission, and as required by other bodies in accordance with State and
Commonwealth legislation.
3 The methodology adopted combines financial information for associations that in some cases
are separate for operational purposes, but can be viewed as one legally and in other cases
associations that are separate entities under law but are strongly affiliated. This methodology
has been adopted to reflect the cumulative financial strength of each association.
4 While the analysis focuses on information relating to the building and construction industry, it
includes every known branch, division and chapter for each employer and employee
associations. In some cases these separate units may not be related to the buil ding and
construction industry but have been included within the analysis as they are part of a principal
building and construction industry association . In other cases it is not possible to hig hlight
financial information relating to the building and construction industry for associations that deal
with many industries. In these cases the financial data provided reflect the information included
in the association 's consolidated accounts.
5 Where possible all income that has not been earned through membership subscriptions,
contributions or entrance fees has been identified separately and classified as non-core
income. In some cases a total income to total assets ratio, expressed as a percentage, has
been provided. Liabilities, being a total of non -current and cu rrent liabilities, have been outlined.
In some cases a total liabilities to net assets ratio in both per cent and times formats has been
provided. All liabilities have been included in these ratios.
6 Within the text values have been rounded to the nearest $1 00 000 excepting figures below
$1 mi llion which are as provided. In tabular form all figures are rounded to the nearest $1000.
Al l combined figu res and ratios have been calculated using actual values and not rounded
figures.
7 Combined figures for both liabilities and assets do not exclude loans between branches,
chapters or divisions of the same association unless otherwise noted. More broadly, the
National Perspective Part 1 239
Commission has not, for the purposes of this analysis, examined financial relationships with
controlled entities or other associated parties , excepting those trusts examined duri ng hearings .
8 It is important to note that different associations and even branches or divisions within
associations adopt different accounting methodologies and vary in adherence to accepted
accounting standards. In some instances this may have an impact on the actual financial
position of the association. For example , in many instances buildings an d land are valued at
cost as opposed to an appropriate market value.
9 The limitations of examining associations, particularly unions, which are replicated at State level
shou ld be acknowledged. There may be instances of overlap between associations that have
not been bought to the attention of the Commission. It cannot be discounted, excepting where
identical accounts are prepared at State and Federal level, that additional overlap, not cited in
the following analysis, exists.
1 0 Conversely, excepti ng those matters raised during the heari ngs in relation to trust funds, only
repo rted assets, liabil ities and in come provided in lodged accounts have been considered. The
extent to wh ich there are ad ditional bank accounts or assets held by associations which have
not been reported in lodged accounts or are held by related parties not required to lodge accounts within a particular jurisdiction has not been exam ined in this analysis.
2 40 Final Report of the Royal Commission into the Building and Construction Industry
2 Employee Associations
11 A number of unions have coverage of employees in the building and construction industry. The
major unions, as a consequence of their coverage of segments of the industry and trades within the industry, are :
⢠the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union also
referred to as the Australian Manufacturing Workers ' Union (AMWU).
⢠the Australian Workers ' Union (AWU);
⢠the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and
Allied Services Union commonly known as the Communications, Electrical and Plumbing Union (CEPU); and
⢠the Construction, Forestry, Mining and Energy Union (CFMEU);
The Australian Manufacturing Workers Union
12 The AMWU represents persons employed in the metals and engineering sectors of the industry
and tradespersons who undertake work of that nature. The AMWU is organised into a number
of divisions which reflect the nature of the work performed by members within those divisions.
13 The division of the AMWU with the most involvement in the building and construction industry
is the Metal and Engineering Division . That division does not lodge discrete accounts with the
Australian Industrial Registry of the Australian Industrial Relations Commission.
14 Each AMWU State council incorporates the relevant divisions within that geographic region .
Each State council receives remittances from the National Council to meet yearly expenditure.
In the financial year ending 30 September 2000 no State council retained an operating surplus
in excess of $100 000. 1 For this reason the AMWU National Council accounts are the most
relevant. An overview of the accounts of the National Council is presented in table 1 .
Total assets
15 The National Council accounts recorded total assets of $57.6 million for the year ending
30 September 2001 .2 A significant portion of the total assets was accounted for by land
and buildings held by the AMWU. The notes to, and forming part of the accounts,
recorded property at cost, and after depreciation , of $38.3 million for the year ending
30 September 2001 3
National Perspective Part 1 2 4 I
Liabilities
16 The National Council recorded total liabilities for the year end ing 30 September 2001 of
$20.3 million of which a significant portion was as a consequence of bank bills payable and
contri butions to hardship, political and other funds . 4
Net assets
17 For the year ending 30 September 2001 the National Council's net assets totalled
$37.3 million .5 The accounts show that over $5 million was transferred from the National
Council General Fund to the respective State councils during the period .6 The total debt to
equity ratio was 55 per ce nt or 1 .83 times .
Income
18 The National Council General Fund received income of $35.9 million for the year ending
30 September 2001 ? Th is income comprised approximately $30.2 million in membership
contributions and a further $5 .7 mi llion, or 19 per cent , from other sources. 8 The latter figure
mainly comprised income derived from rent ($4.8 mill ion) 9 The AMWU income to assets ratio
was 62 per cent.
Table 1 AMWU National Council General Fund ($'000), as at 30 September 2001 10
Total Assets Total Liabilities Net Assets Total Income
57 613 20330 37 283 35 903
The Australian Workers Union
19 The AWU represents employees working on a range of projects in the building and construction industry. The majority of AWU members, in the bui lding and construction industry,
are engaged on civil construction projects such as tu nnels, bridges and road making.
Federally registered association
20 The federally reg istered AWU consists of a number of branches and a national office. The
majority of these branches operate on a geographical basis. An additional number of branches
are specific to particular sectors within industry. There is no branch of the AWU which
exclusively represents people engaged in building and construction.
Total assets
21 The federally registered AWU recorded cumulative total assets of $27.9 million for the year
ending 30 June 2001. 11 The National Office recorded total assets of $9 .1 million for this
period.12 This was followed by the Greater New South Wales Branch with $5 .1 mi lli on for the
same period . 13
Liabilities
22 Cumulative total liabilities for the financial year ending 30 June 2001 for the federally registered
AWU eq ualled $15.6 million.14 The National Office's liabilities for the period of $8.5 million 15 was
2 42 Final Report of the Royal Commission into the Building and Construction Industry
far in excess of those of any geographically based bran ch . However, approximately $2.4 million in mostly non-current liabi lities is accounted for by loans from bran ches. 16
Net assets
23 For the year ending 30 June 2001 the cumulative net assets of the fe derally regi stered AWU
totalled $12.3 mi llion H The Queensland Branch and the Greater New South Wales Branch
recorded net assets of $3.8 million and $4.6 million respectively for the period . 18 The total debt to equity ratio for the federally registered union was 128 per cent or 0. 78 times.
Income
24 The combined income for the National Office and all the branches of th e federally registered
AWU was $29.2 mill ion, which included $2.4 mi llion in non-core income for the year ending
30 June 2001 w Of the income earned by the branches $2 .8 million was remitted to the
National Office 20 The income to assets ratio, excluding the National Offi ce subscription income of $2.8 million, was 95 per cent.
25
Table 2 Financial Position of AWU as at 30 June 2001 21
Total Assets Total Liabilities Net Assets Total Income
27 903 15 646 12 258 29 227
State unions
26 There are State unions registered under the name of the AWU. Mostly the State union and the
State branch of the federally registered union within a particular State are id entical. Queensland
was the only instance where financial · returns lodged with the State industrial relations
commissi on provide for separate accounts. This is detailed below.
27 In Queensland, membership subscriptions received by the State union, called the Australian
Workers' Union of Employees, Queensland (AWU Q), are forwarded in their enti rety to the State
branch of the federa lly reg istered AWU 22 In additi on the AWU 0 generates other income
not forwarded to the State branch of the federally registered AWU. 23 For the year ending
30 June 2001 over $1 million in non-core income was earned by the AWU Q 2 4
28 Additionally, the AWU Q held $1.4 million in net assets with total assets of $1 1.7 million for
the year ending 30 June 2001 .25 The AWU Q recorded total liabilities for the period of
$10.3 mill ion. 26
Combined assets, liabilities and income
29 The combined financial position for the AWU Q and the federally registered AWU is
summarised in tab le 3 below. Combined net assets exceeded $13.6 milli on with total income
of approximately $30.3 million . Table 3 is exclusive of significant loans between the AWU 0 and
the Queensland Branch of the AWU.
National Perspective Part 1 2 43
Table 3 Financial Position of Combined AWU as at 30 June 2001 27
Total Assets Total Liabilities Net Assets Total Income
34 718 21 101 13 617 30 358
Communications, Electrical and Plumbing Union
30 The CEPU is made up of three broad divisions. The first is the Communications Division, wh ich
has no direct representation of employees in the building and construction industry. The
Plumbing Division an d Electrical Division represent em pl oyees performing speciali st trade work
in the building and construction industry.
Communications Division
31 The Communications Division has 14 divisions which report separately to the Australian
Industrial Registry. For the financial year ending 31 March 200 1 combined net assets for the
Communications Division equall ed $22 .9 milli on 28 The combined total assets for the
14 divisions , including the national offi ce, referred to as the Divisional Conference, is
$29.2 million with total liabilities of $6.4 million for the year ending 31 March 2001. 29
Electrical Division
32 The Electrical Division operates branches in each of the major Australian States. In New South
Wale s, Queensland and South Australi a, the traditional title of Electrical Trades Uni on or 'ETU '
has been retained for organisations operating under the relevant state industrial relation s
leg islation. With the exception of the El ectrical Trades Union of New South Wales (ETU NSW) ,
each State union appears to mirror the local branch of their federally registered counterpart.
Total assets
33 The El ectrical Division cumulative total assets for the year ending 31 December 2000 was
$35.7 mi llion 30
Liabilities
34 Th e El ectrical Division's combined total liabi lities for th e period ending 31 December 2000
amounted to $11.4 million 3 1 The ETU NSW had total liabi lities of $1.8 million for this period. 32
A break down of liabi lities by branch is provided at tab le 4.
Net assets
35 Cumulative net assets for the Electrical Division for the year ending 31 December 2000 totalled
$24. 3 million. 33 An overview of total assets and net assets for each branch of the Electrical
Division is provided at table 4.
36 The total debt to eq uity ratio for the CEPU Electrical Division was 4 7 per cent or 2.14 times.
Income
37 For the year ending 31 December 2000 income generated totalled $11 .9 million excluding the
$1 .4 million received in sustentation fees by th e National Offi ce of the Electrical Division 34 The
2 44 Final Report of the Royal Commission into the Building and Construc tion Industry
ETU NSW recorded income of $3.9 million of which $860 102 was transferred to the New
South Wales Branch of the Electrical Divi sion 35 The in come to assets ratio, excluding the National office sustentation fees, was 33 per cent.
Table 4 Electrical Division Overview ($'000), as at 31 December 2000
National36 NSW37 Vic. 38 Qld39 SA4o WA41 Tas.42 Total43
Total Assets 2728 8777 13 799 5857 2252 1771 495 35 680
Total Liabilities 1683 4175 2292 1781 232 853 356 11 372
Net Assets 1045 4603 11 506 4076 2020 918 140 24 306
Core Income 1373 860 3590 2815 657 1164 287 10 746
Total Income 1647 1394 449 7 3353 785 1253 327 13 257
Funds and Trusts
38 The Electrical Division makes use of a number of discrete funds created for the benefit of their
members. These arrangements typically include a distress and mortality fund or simi lar. The
moneys included in these funds, as recorded in the respective financ ial statements, have been included in table 4, except for $1 .4 mi llion deposited in the Distress, Mortality and Train in g Fu nd
Trust controlled by the Victorian Electrical Division, which was not recorded in the appropriate
financial returns for the Victorian Electrical Division 44
State Unions
39 At State level a number of State reg istered unions mirror the CEPU Electrical Division or
incorporate a State branch of the federal union . In one instance there was a disparity between
the accounts of the State union and State branch of the CEPU Electrical Division.
40 The ETU NSW held total assets as at 31 December 2000 of $7.9 million and net assets of
$6.1 million 45 As noted earlier the ETU NSW recorded income of $3.9 million of which
$860 102 w as transferred to the New South Wales Branch of the Electrical Division 4 6
Plumbing Division
41 The Plum bing Division represents plumbi ng workers in the bui ldi ng and construction ind ustry.
The Plumbing Division operates a national office and branches in all States and the ACT.
42 Th e National Office of the Plumbing Division financial year ended 30 June 2001 and not
31 March 2001 as is the case with the seven jurisdictional branches 47 For this reason figures
provided for the Plumbing Divisi on as a whole are indicative only. The breakdown of assets,
liabilities and income for each rep orting entity is provided in table 5.
Totai assets
43 The Plumbing Division had total assets of $6. 3 million for the financial year end ing
31 March 2001 48 The bulk of this amount, $4 .2 million was held by the Victorian Branch 49
National Perspective Part 1 2 45
Liabilities
44 For the year ending 31 March 2001 the Plumbing Division recorded total liabilities of
$2. 1 million 5° The Queensland Branch recorded the most liab ilities at $4 19 051, 51 while the
Tasmanian Branch's liabi lities of $207 93452 exceed total assets by 24 times. The South
Australian, Western Australian and Tasmanian branches of the Plum bing Division liabilities
exceeded assets by $164 962, $192 929 and $207 934 respectively53
Net assets
45 The combined net assets of the Plumbing Division for the comparative period totalled
$4.2 mi llion 54 Th is was largely as a resu lt of the Victorian Branch. The Victorian Branch
financial accounts record net assets of $3.9 mill ion for the financial year ending
31 March 2001 55 In comparison, the National Office, New South Wales Division and
Queensland Division each recorded net assets of about $250 000. 56 The total debt to equity
ratio for the Plumbing Division, for the period, was 51 per cent or 1.97 times.
Income
46 The Plumbing Division, excluding the National Office, received $3.2 million in membership
contributions and entrance fees in the year ending 31 March 2001. 57 The National Office received contributions of $686 00058 Other income for the Plumbing Division totalled
$1.2 million with combined income being $4.4 million. 59
Table 5 Plumbing Division Financial Overview ($'000)
National60 NSW61 Vic.62 Qld63 SA64 WAss ACT66 Tas. 67 Tota l
Total Assets 626 532 4225 646 136 48 103 9 6325
Total Liabilities 362 263 294 419 301 240 36 217 2132
Net Assets 264 269 3931 226 (165) (193) 62 (208) 4186
Core Income 686 561 1728 522 129 162 74 20 3882
Non-core Income 16 162 845 51 112 11 12 0.5 1210
Combined assets and liabilities
4 7 A consol idated financial overview for the three Divisions of the CEPU is provided at table 6.
These figures are only indicative as a consequence of the disparate reporting periods. On the
basis of the combined figures net assets were $51.3 million, with total assets of $71.2 mi lli on
and total liabilities of $19.9 million.
2 46 Final Report of the Royal Commission into the Building and Construction Industry
Table 6 CEPU Financial Overview ($'000)
Communicationsss Electrical6 9 Plumbing70 Combined
Total Assets 29 226 35 680 6325 71 231
Total Liabilities 6373 11 372 2132 19 877
Net Assets 22 853 24 306 4186 51 345
The Construction, Forestry, Mining and Energy Union
48 The CFMEU represents workers engaged in a wide range of industries. The Construction and
General Divis ion of the uni on represents the largest cross-section of persons in the building and
construction industry. In addition to the Construction and General Division there exists a Mining
and Energy Division and a Forestry and Forest Products Division.
49 Two transitional divisions, th e Federated Furn ishing Trades Society Union Division and the
FEDFA and Fireman's Association (FEDFA) Division, have merged with the aforementioned
divisions to varying degrees over the past few years . The latter has direct involvement in the
building and construction industry.
50 Of particular interest is the financial strength of the Construction and General Division and to a
lesser extent the FEDFA Division. The Construction and General Division is examined below
with reference to the entire association. Combined figures, .which include all five divisions, 71 are
accurate to the extent that appropriate financial records are available for each division and its
branches during the year ending 31 December 2000. 72
51 The Construction and General Division has a National Office and State branches. The
exceptions are th e Northern Territory where no separate branch exists, an d Queensland where
the two branches work collaborative ly. A ninth branch, the Clay and Ceramics Industry
Divisi onal Branch, is also part of the Construction and General Division.
Assets
52 The Construction and General Divisi on had total assets for the year ending 31 December 2000
of $54.9 million .73 The New South Wales Branch held total assets for the period of
$22.3 mill ion 74 followed by the Victorian Branch with $10 million. 75 The Clay and Ceramics
Industry Divisional Branch had the least assets during the period, with a total of
$193 268 before liabilities. 76
Li abilities
53 The Construction and General Division had total liabilities of $10 million for the financial year
ending 31 December 2000 n The New South Wales Bran ch at $3 .1 million reported the most
liabilities. 78
National Perspective Part 1 2 4 7
Net assets
54 The federally registered Construction and General Division had combined net assets of
$44.8 million for the year ending 31 December 2000? 9 The FEDFA and Fireman's Association
Division, Victorian Divisional Branch held net assets of $1 .4 million during this period .so It
appears the FE DFA branches in al l other jurisdictions had by year ending
31 December 2000 merged, at least fin ancially, with the Construction and General Division or
similar.
55 Th e combined net assets of the federal ly registered CFMEU was $71 .I million fo r the year
ending 31 December 2000e1 This included the Mining and Energy Division with $20.4 million 82
and the Forestry and Forest Products Division with $4.4 million .S3 The total debt to equity ratio
for the Construction and General Division was 22 per cent or 4.45 times.
Income
56 Th e Construction and General Division recorded total income from membership subscriptions
for the year ending 31 December 2000 of $22 .1 mil li on .S4 Of this $389 262 was provided to the
CFMEU, National Office in capitation fees from the Construction and General Division National
Office.S5 The Construction and General Division National Office received around $2.5 million
from the State branches. 86
57 The New South Wales and Victorian Branches recorded the highest income from subscriptions
at $6.5 milli on 87 and $5.8 mi llion 88 respectively. The combined income from subscriptions for
the two Queensland Branches was sl ig htly less than $5.4 million.S9
58 The Construction and General Division 's combined non-core income for the year ending
31 December 2000 was $9.5 million 90 The New South Wales Branch earned $4.3 million91
and the Victorian Branch $3.1 million92 in non-core income. The Tasmanian Branch generated
the least non-core revenue at $68 551 93
59 Cumulative income for the Construction and General Division was $31.6 million for the year
ending 31 December 2000. The income to assets ratio for the Construction and General
Division was 57 per cent.
2 48 Final Report of the Royal Commission into the Building and Construction Industry
Table 7 CFMEU, Construction and General Division Financial Overview ($'000)
Total Total Net Core Non-core
Assets Liabilities Assets Income Income
National94 8827 1197 7630 2450 445
NSW95 22 343 3056 19 288 6531 4306
Vic 96 10 007 1750 8257 5765 3117
Old L97 4222 734 3488 1984 222
Old W98 3729 1340 2390 3455 382
SAgg 542 113 430 724 129
WA 1oo 2263 1274 989 2466 373
ACT1 01 2405 182 2223 495 386
Tas. 102 374 251 123 249 69
Clay1 03 193 186 8 476 22
Total 54907 10082 44825 24 595 9451
State unions
60 At State level a number of State registered unions operate !hat mirror the CFMEU Construction and General Divi sion or incorporate a State branch of the federal union. In one instance there
exists a disparity between the accounts of the State union and State branch of the CFMEU,
Construction and General.
61 The Construction , Forestry, Mining and Energy Union of Workers 104 had net assets of $10.7 milli on and recorded income of $1 .3 mill ion for the year ending 31 December 2001 w 5
National Perspective Part 1 249
250 Final Report of the Royal Commission into the Building and Construction Industry
3 Employer Associations
62 A number of employer associations represent the interests of employers in the building and
construction industry. There are, in addition , a number of trade associations which also
represent employer interests nationally or on a State basis. For the purposes of this analysis the
Commission has only identified employer associations with national significance, either on the
basis of their combined sectoral representation or their operations across Australia. The
principal employer organisati ons are:
⢠Th e Australian Industry Group (AIG);
⢠The Civil Contractors Federation (CCF);
⢠Th e Master Builders Associations (MBA);
⢠The National Electrical and Communications Association (NECA); and
⢠Employer Plu mbin g and Allied Industry Associations.
Australian Industry Group
63 The AIG represents employer groups across a range of industries. Th is includes members in a
number of sectors in the building and construction industry throughout Australia.
64 Total assets for the AIG were $54.2 million , with total liabilities of $17.2 million for the fin ancial
year ending 30 June 2001.106 The AIG's consolidated and audited accounts record ed net
assets of $37 million for the year ending 30 June 2001.107 The total debt to equity ratio was 46
per cent or 2.16 times.
65 Total income was $32.7 million with membership contributions and fees accounting for
$14. 2 million 108 or 43 per cent. The in come to assets ratio for the period was 60 per cent.
Table 8 Australian Industry Group Overview ($'000), as at 30 June 2001 109
Total Assets Total Liabilities Net Assets Total Income
54 217 17 174 37 043 32 654
National Perspective Part 1 2 51
Civil Contractors Federation
66 In broad terms th e CCF represents contractors working on civil and eng ineering projects. The
CCF operates Branches in all States and Territories. The Northern Territory Branch is currently
inactive and the Tasman ian Branch has not provided financial retu rn s to the Australian Industria:
Registry for some years. Smaller Branches have been excluded from this analysis.
67 For the year ending 30 June 2001 the cumulative net assets of the CCF were approximately
$1 .1 million .110 The Victorian and Western Australian Bran ches had assets in excess of
$300 000,111 while the National Office's liabilities exceeded assets during this period.112
68 The CCF had total assets for th e year ending 30 June 2001 of $3 .1 million with total liabilities of
$2 million. 113 The total debt to equity ratio was 185 per cent or 0.54 times.
Table 9 Civil Contractors Federation Financial Overview ($'000}, as at 30 June 2001
National114 NSW11 5 Vic. 116 Qld 117 SA118 WA 119 ACT120 Total
Total Assets 274 540 1318 353 201 422 8 3108
Total Liabilities 276 372 923 143 196 107 n/a 2018
Net Assets (2) 168 395 209 5 315 8 1098
The Master Builders Associations
69 Master Builders Australia Incorporated is a national organisation with affili ates in every State.
The individual Master Builders Associations, referred to here collectively as the 'MBA',
represent employers in most areas of bui ldi ng and construction.
Total assets
70 For the year ending 30 June 2001 total assets for the MBA, excluding the Master Bu il ders
Australia Incorporated , exceeded $38.3 million. 121 Total assets for the Master Builders
Association of Victoria were $10.8 million, 122 with the Master Builders Association of Tasmania holding total assets of $2.7 million for the period. 123 The Master Bui lders Australia Incorporated
held assets of $1.7 million for the year endi ng 30 June 1999. 124
Liabilities
71 The Master Builders Australia Incorporated reported liabilities of $525 008 for the year ending
30 June 1999. 125 The MBA had total reported liabilities for the year ending 30 June 2001 of
$15.5 million .126
72 As at 30 June 2001 the Master Builders Association of Victoria had the greatest liabi lities at
$6 .2 million, 127 as compared with the Western Australian, ACT and Tasmania associations
whose liabilities at the time were all below $1 milli on .128
252 Final Report of the Royal Commission into the Building and Construction Industry
Net assets
73 The cumulative net assets of the MBA for the corresponding period, once again excluding the
Master Bu ilders' Australia Incorporated, were $22.8 million. 129 This ranged from slightly more
than $500 000 "for Master Builders Association of New South Wales 130 to more than
$5.2 million for the Queensland Master Builders Association, Industrial Organisation of
Employers. 131 The total debt to equity ratio was 68 per cent or 1.47 times. Th e latest records
for the Master Builders Australia Incorporated indicated net assets of $1.16 million for the year ending 30 June 1 999 _132
In come
7 4 The total cumulative income arising from membership subscriptions for the year ending
30 June 2001 was $10.9 million.133 A further $27 million in other income was generated during
the same period. 134 This ranged from $11 .9 million for the Master Builders Association of
Victoria135 to sl ightly more than $800 000 for the Master Builders Association ofTasmania. 136
75 Total combined income for the associations, excluding Master Builders Australia Incorporated,
was $37.9 million. 137 Twenty-nine per cent of this income was derived from membership
subscriptions. The income to assets ratio for this period was 99 per cent.
Table 10 Financial Overview ($'000) of Master Builders Associations, as 30 June 2001
NSW1 38 Vic .1 39 Qld140 WA141 SA1 42 N 'cstle143 ACT144 Tas. 145 Total
Total Assets 4112 10816 6421 2802 5636 2855 2937 2704 38 283
Total Liabilities 3604 6231 1154 560 1146 1703 804 270 15 473
Net Assets 508 4585 5267 2241 4490 1152 2133 2434 22 810
Core Income 2460 2998 2927 620 1037 357 343 196 10 938
Non -core Income 2150 11 902 2188 2162 2565 4 11 6 1099 807 26 989
National Electrical and Communications Association
76 NECA is the nat ional representative of the electro-technical contracting industry. NECA
represents the interests of electrical and communications contractors, from employers and
business people to technicians in a range of industries including bu ild ing and construction.
77 NECA operates Chapters within each jurisdiction, with the exception of the Northern Territory.
Excluding Western Australia and Queensland , which have the relevant exemptions, each
Chapter reports to the Australian Industrial Registry. In Western Australia the Electrical
Contractors Association of Western Australia (ECA WA) , and in Queensland the NECA
Queensland, Industrial Organisation of Employers (NECA Queensland) both report to the
relevant State industrial registry. In New South Wales separate accounts are prepared for th e
State-registered Electrical Contractors Association (ECA NSW). The ECA NSW operates in
National Perspective Part 1 253
affiliation with the New South Wales Chapter. Each of these organisations, and the National
Office, has been included in the following analysis .
Total assets
78 NECA's combined total assets, including State associations and the EGA WA severance
scheme, were $22.3 million 146 for the year endin g 30 Ju ne 200 1.147 No separate trust existed
for the severance scheme 148 and as such it has been in cluded in the accou nts of the EGA WA
79 Total assets for the New South Wales Chapter, including the EGA NSW, were $6.8 million for
the same period .149 The EGA WA accounted for $5.3 million of the total figure of $22.3 million ,
which included $1.1 mi llion for the severance scheme. 15° Close to $20.2 million in total assets
was recorded in the balance sheets of the New South Wales Chapter, EGA WA. NECA
Queensland and Victorian Chapter. 151
Liabilities
80 NECA had com bined total liabilities for the corresponding period of $11.9 mi lli on. 152 A
sign ificant portion, nearly $10.9 mi llion, was attributed to the accounts of New South Wales
Chapter, EGA WA, NECA Queensland and Victorian Chapter in descending order. 153
Net assets
81 For the year ending 30 June 2001 consolidated net assets for NECA totalled $10.4 million. 154
The $10.4 million figure included $60 328 in net assets for the severance scheme managed
by the EGA WA 155 The total and net assets for each individual chapter have been detailed in
table 11.
82 The total debt to equity rati o for NECA was 114 per cent or 0.88 times.
Income
83 Total income from membership subscriptions for the year ending 30 June 2001 was
$3.2 mi llion. 156 The National Office received income from Chapters and affil iates of
$480 130. 157 The latter figure was not included in the $3.2 million. An additional $9.9 million
was received by NECA, including the National Office, in other income. 158 The bulk of this
income, $5.4 mill ion, was generated by NECA Queensland. 159
84 Th e consolidated income for NECA was $13.6 million for the year ending 30 June 2001. 160 This
rep resented an income to assets ratio of 60 per cen t.
254 Final Report of the Royal Commission into the Building and Construction Industry
Table 11 NECA Financial Overview ($'000)
National161 NSW1 62 Vic.1 63 Qld1 64 SA165 WA 166 ACT167 Tas. 168Total
Total Assets 1003 6785 4333 3757 1050 5301 89 23 22341
Total Liabi lities 880 3484 1723 2011 110 3675 24 6 11913
Net Assets 122 3300 2610 1746 940 1626 66 17 10428
Core Income 480 916 729 815 274 364 40 39 3657
Non -core Income 1187 1689 752 5357 298 587 24 22 9916
Employer Plumbing and Allied Industry Associations
85 Unlike other industry sectors there exists a distinct lack of co-operation between some of the
associations that represent employers in the plumbing and allied industry. The main
associations are:
⢠The Master Plumbers and Mechanical Services Association of Australia (MPMSAA)
based in Victoria;
⢠The Master Plumbers and Mechanical Contractors Association of New South Wales
(MPMCA);
⢠Master Plumbers Association of Queensland (MPAQ)
⢠Master Plumbers and Mechanical Services Association of South Australia (M PMSASA);
and
⢠Master Plumbers and Gasfitters Association of Western Australia (MPGAWA).
86 While there is a degree of co-operation and joint marketing between some of these
organi sations the level of collaboration does not occur to the same extent as with comparative
employer associations. Therefore it is appropriate to deal with each association separately.
⢠The net assets of MPMSAA for the year ending 30 June 2001 were $3 milli on as provided
in financial records lodged with the Australian Industrial Registry. 169
⢠The net assets of MPMCA for the year ending 31 December 2001 were $3.5 million as
recorded in accounts lodged with the State industrial reg istry. 170
⢠The MPAQ financial accounts recorded net assets of $1.7 million for the year end ing
30 April 2001 H 1
⢠The MPMSASA for the year ending 30 Ju ne 2001 had slightly more than $1 million in net
assets. 172
⢠The Commission has been advised the MPGAWA has not provided financial accounts to
the State registry in recent years.
87 Further details, as available, have been summarised in table 12 below.
National Perspective Part 1 255
Table 12- Financial Overview ($'000) Plumbing and Allied Industry Associations
MPMSAA173 MPMCANSW174 MPAQ175 MPMSASA176
Total Income 6492 1202 958 968
Total Assets 3894 3737 2462 1107
Total Liabil ities 870 217 751 56
Net Assets 3024 3520 1711 1051
256 Final Report of the Royal Commission into the Building and Construction Industry
Attachment 2
ACA members
National Perspective Part 1 257
258 Final Report of the Royal Commission into the Building and Construction Industry
Head Contractors
Abigroup Contractors Pty Ltd
Barclay Mowlem Construction
Limited
Bauld erstone Group
Bovis Lend Lease Pty Limited
Clough Group
Activities [In this table, 1 billion= 1000 million]
Abigroup Contractors performs civil, building, water treatment,
networks and telecommunications functions . It completed over
$3.6 billion worth of construction over the past I 0 years.
Abigroup Contractors' projects can be either public or private
and are usually worth between $1 million and $450 million. It
has offices in Victoria, New South Wales, Queensland, South Australia and the ACT. 177
Barclay Mowlem Construction is a multi-disciplined
construction and engineering company operating building, rail,
civil and marine and engineering groups.178 The company
operates in Australia, Papua New Guinea and South East Asia.
In 2001 Barclay Mowlem Construction had an estimated
turnover of $55 1 million , of whi ch the building group
contributed $115 million. On I April 2002 the company
employed 305 people in its building group. 179
Baulderstone Group has fou r integrated business units -transport and infrastructure, building, international and business
services. 180 It is a construction company with annual revenue of
about $1.1 billion. 181 Baulderstone undertakes major building
and infrastructure . projects, such as Colonial Stadium and the
National Gallery of Victoria'Redevelopment.
Bovis Lend Lease commenced operations in Australia in 1951
and operates in New South Wales, Victoria, Queensland, South Australia, Western Australia and the ACT. 182 Its skills are in four
main areas - construction, design and engineering , design
management and procurement management. Bovis Lend
Lease operates in 38 countries spanning six continents and has
7500 employees worldwide.183
The Clough Group is a multidisciplinary engineering,
construction, operations and maintenance contractor that
operates in the international oil and gas, minerals, infrastructure
and property industries. 184 It consists of Clough Limited and Clough Engineering Limited , and has five divisions - offshore,
hydrocarbon facilities, minerals and infrastructure, PT Petrosea
Tbk and services. 185
National Perspective Part 1 259
Henry Walker Eltin
John Holland Group Pty Ltd
Leighton Holdings Li mited
Leightons Contractors Pty Ltd
MacMahon Holdings Lim ited
Multiplex Constructions Pty Ltd
Henry Walker Eltin operates in the mining, engineering and
environmental sectors in Australia, New Zealand, Africa, South
America, Jamaica and Indonesia. It has three divisions -contracting, transport services and engineering and
infrastructure. 186 Its annual revenue at 30 June 2001 was
$1 .2 bi llion, with a net profit of $17.2 million . At that time it
employed 2956 people. 1B7
John Holland was first established in Victoria in 1 949. It is
part of Leighton Holdings. John Holland operates in bui lding,
civil engineering, process and industrial eng ineering, facilities
management, operations and maintenance, rail construction
and maintenance and telecommunications services .
John Holland's annual national turnover for 2001-02 was $730
million, and it employs over 1500 people. 188
Leighton Holdings is the parent company of Australia's largest
project development and contracting group. It was founded in
Victoria in 1 949 and has grown from a small , privately owned
civil engineering firm into a group that includes Thiess, Leighton
Contractors, Leighton Asia , John Holland and Leighton
Properties. 189 It operates in the engineering and building
construction sector, contract min ing , environmental services ,
operation and maintenance of infrastructure and facilities and
telecommunications services sectors.
Leighton Contractors is a construction contractor and project
developer. It was the original company within the Leighton
Holdings Group. It currently has $900 mi llion worth of
contracts 190 and has between 150 and 200 waged
employees.191
MacMahon Holdings' core businesses are in mining and ci vil
engineering . The total revenue for 2001-02 was $485 million
including joint ventures, and the net profit was $7.1 million. 192
Multiplex is a construction and development company. Since its
inception on 31 July 1962 it has worked on a range of projects
including Sydney's Stadium Australia. It is Australia's largest
private construction and development company, turning over
more than $1 billion in annual revenue. It has offices in eve ry
Australian mainland State and Territory, as well as London, New
Zealand, Dubai , Singapore and Malaysia.193
260 Final Report of the Royal Commission into the Building and Construction Industry
Thiess Pty Ltd Thiess is a part of the Leighton Holdings Limited Group and is an
engineering and integrated services provider. It operates in the
building, civil en gineering , mining, process engineering, oil and
gas, environmental and utilities services, telecommunications
and facilities operations and maintenance. 194 Thiess had a
turnover of $2 .3 billion in 200 1-02 and employs over 9000 people. 195
Transfield Construction Pty Ltd 196 The Transfield Group of companies provides engineering,
United Group Lim ited
construction, equipment operation and maintenance services in
the road and rail infrastructure , water and waste water, power
and electric ity, mineral process and resources, oil, gas and
petrochemical, urban estate development and defence
sectors. 197 The Group 's turnover in 2000-01 was $1.8 billion. It
owns over $150 million in infrastructure assets and operates
and maintains assets valued at over $3 billion. 198
Transfield has been involved in projects such as the Sydn ey
Harbour Tu nnel, Melbourne City Link, Northside Storage
Tunnel, Eastern Gas Pipelin e, Graham Farmer Freeway,
Bri sbane Airport Rai l Link and Sydney Airport Rail Link.199
Th e United Group Limited is a mechanical and electrical
engineering, fabrication, maintenance and construction
company that operates in the power supply and distribution,
water and waste water processes, mining and mineral
processing, oil gas and liquified natural gas,
telecommunications and heavy haulage railway, an d commuter
transport equipment sectors. It has facilities in 25 locations and
35 site operati ons throughout Australia and overseas,
employing more than 3200 people. 200 In 2002 it reported
earnings of $16.3 mi lli on and revenue of $722.6 million 201
Walter Construction Group Limited Walter Construction Group Lim ited has building and
engineering divisions located in New South Wales, Victoria and
Queensland. It operates in Australia, New Zealand and the Asia
Pacific region 202 The Walter Construction Group building
division contracts in the com mercial and residential high-rise,
correctional , health and other high -technology facilities,
industrial and retail development sectors. The civil engineering
division operates in the areas of water and civil infrastructure,
road bui lding, and the resource and processing sector.203 Its
annual turnover for 2001 was $594 million .204 The net profit was
$0.6 million. The bu ilding division turnover was $357.2 million ,
an d the engineering division turned-over $167.4 million 205
National Perspective Part 1 261
262 Final Report of the Royal Commission into the Building and Construction Industry
Attachment 3
Union Governance and Objects
National Perspective Part 1 263
264 Final Report of the Royal Commission into the Building and Construction Industry
Construction Forestry Mining Energy Union
Governance
The governance structure of the CFMEU has national and divisional elements.
2 In relation to the national structure, the CFMEU Rules provide that the supreme governing body
of the union is the National Conference, which is convened every two years. 206 It consists of all
of the members of all of the union's Divisional Executives 207 Its powers include:
⢠taking steps to carry out all or any of the objects of the union;
⢠deciding the general policy of the union;
⢠imposing penalties on officers , members, representatives, committee members or
delegates for knowingly refusing to comply with the union Rules, or decisions of the
National Conference or the National Executive;
⢠settling disputes between Divisions;
⢠establishi ng Divisions; and
⢠making, altering and rescinding any of the Rules of the union.208
3 The National Executi ve has 'the care, control, superintendence, maintenance and
administration in all respects of the affairs, business , national funds and property of the Union
and has the same powers as the National Conference '.209 1t consists of the National Executive
Committee and the Divisional Branch Secretary of each Divisional Branch of each Division 210
4 The National Executive Committee consists of the National Principal Officers - the National
Secretary of the CFM EU, Divisional Secretaries of the Construction and General Division , the
Forestry, Furni shing, Building Products and Manufacturing Division, Mining and Energy
Division, the full time elected Officers of each Division , two Divisional Assistant Secretaries for
the Forestry, Furnishing, Building Products and Manufacturing Division, and two Divisional
Assistant Secretaries of the Construction and General Division (if not otherwise included) 211
The National Executive Committee sha ll , 'subject to the review of its actions by the Nati onal
Executive , have the care, control, superintendence, management and administration in all
respects of the affairs, business, national funds of the Union '.212
5 As part of the National structure, th ere are State Branches of the union in all States and the
ACT. 213 The State Branches co-ordinate Divisional Branches at a State or Territory level. They
deal with matters affecting on ly that State and more than one Division, and any other matter
that Divisions or Divisional Branches agree should be dealt with by the State Branches.214
6 A Branch is bou nd by the decisions of the National Conference, National Executive, and , in
matters relating affecting one Division on ly, a Divisio nal Executive. Branch Offi cers are bound by
decisions of the National Executive Committee. 215
7 The supreme governing body of a State Bran ch is the State Conference, which is convened
every two years .216 It consists of all of the members of the Divisional Branch Management
Committees for every Divisional Branch of the Union within the State or Territory covered by the
Branch217
National Perspective Part 1 265
8 The State Executive exercises all of the powers of the State Conference, subject to the State
Conference's review.218 It consists of the full time elected officers (State President, Senior Vice
President, Secretary, Assistant Secretary) of each Divisional Branch within the Branch area. The
President of each Divisional Branch (if not otherwise a member of the State Executive) is a
member. Where a Division has more than one Divisional Branch in an area, the Division
determines its representation 2 19
9 The State Branch officers are th e State Secretary, Assistant Secretary, President, Senior Vice
President, Vice President, Assistant Secretary and members of State Executive 220
1 0 In relation to the Divisional Structure of the Construction and General Division , the CFMEU
Construction and General Division and Construction and General Divisional Branches Rules
(C FMEU Construction and General Division Ru les) provide that the supreme governing body of
the Division is the Divisional Conference. 221 It consists of delegates, including full time Divisional
officers elected as delegates. The number of delegates to be elected from each Divisional
Branch depends on the number of members in the Branch. 222 It meets every two years. 223
11 The Divisional Conference powers include:
⢠taking steps to carry out all or any of the objects of the union as they relate to the
Division;
⢠deciding the general policy of the Division;
⢠im posing penalties on officers, members, representatives, committee members or
delegates for knowingly refusing to comply with the CFMEU Construction and General
Division Rules , or decisions of the Divisional Conference, Divisional Executive , or any
Divisional Branch;
⢠settling disputes between Divisional Branches;
⢠establishing Divisional Branches of the Division;
⢠making, altering and rescinding any of the Rules of the Construction and General Division
or any Branch of the Division ;224 and
⢠having and exercising all the powers of the Divisional Executive 225
12 The Divisional Executive consists of one Divisional President , three joint Divisional Senior Vice
Presidents, th ree Divisional Vice Presidents, Divisional Secretary, two Divisional Assistant
Secretaries, and such Divisional Branch Secretaries who are not elected to any of the
aforementioned positions on the Divisional Executive. 226
13 The Divis ional Executive exercises 'care, control, superintendence, management and
administration in all aspects of the affairs, business, Divisional funds and property of the
Division and have and exercise all of the powers of the Divisional Conference'. 22 7
14 The Principal Officer of the Division is the Divisional Secretary. 228
15 The supreme governing body of each Divisional Branch, except for the Queensland
Construction Workers Divisional Branch, is the Divisional Branch Council, which is convened by
each Divisional Branch Management Committee at least every two years .229
266 Final Report of the Royal Commission into the Building and Construction Industry
16 The Queensland Construction Workers Divisional Branch has the Divisional Branch
Management Committee as its highest governing body, and it meets not less than three times per year. 230
17 The Divisional Branch Council for each State and the ACT is separately specified , each
consists of at least the Divisional Branch President, Secretary and Assistant Secretary
(members of the Divisional Management Committee), and a number of councillors, which vary in number from Branch to Branch.231
18 The Divisional Branch Council's powers include:
⢠taking steps to carry out all or any of the objects of the union;
⢠directing the policy of the Divisional Branch;
⢠amending, adding to the Rules (subject to Rule 16); and
⢠directing the Divisional Branch Management Committee to carry out any of the provisions
of the Rules or the performance of any duties. 232
19 The composition of the Divisional Branch Management Committee for each Divisional Branch is separately specified in the Rules. 233 The Committee's responsibilities include:
⢠carrying out duties as directed by the Divisional Branch Council;
⢠control and supervision of all officers;
⢠dealing with applications for membership, claims for tool and funeral benefit, and grants
from contingent funds;
⢠make provision for the registration of members for employment;
⢠convening and conducting general meetings of the members;
⢠calling meetings necessary for the proper administration of the Divisional Branch;
⢠imposing penalties on Divisional Branch officers, councillors , members, committee
persons or delegates for knowingly refusing to comply with the Rules or decisions of the
Divisional Branch Council or Management Committee;
⢠suspending, expelling or dismissing from office Divisional Branch officers, council lors,
members, committee members or delegates; 234 and
⢠appointing shop stewards or delegates.235
20 The Victorian Divisional Branch has a Divisional Branch Executive Committee, which consists of the Divisional Branch President, three Vice Presidents, Secretary and Assistant Secretary.
This Committee meets at least fortnightly, and has the care, control, superintendence,
management and administration of the affairs, funds and property of the Divisional Branch in
between meetings of the Di vi sional Branch Management Committee. The Executive
Committee's actions are reviewable by the Management Committee. 236
National Perspective Part 1 267
Objects
21 CFM EU sees its core responsibilities as the wages, working conditions and safety of building
workers. 237
22 The objects of CFMEU are:
1. To uphold the right of combination of labour, and to improve, protect, and foster
the best interests of the Union and its members, and to assist them to obtain their
rights under industrial and social legislation;
2. To regulate the conditions under which all members of the Union may be
employed;
3. To affiliate to, federate with, amalgamate with, or otherwise combine with any trade
or industrial Union, or association, or association of Trade Unions or any other
organisation having objects similar in whole or in part to the objects of this Union,
4. To establish a fund for the assistance and support of Trade Unionists and to carry
out the foregoing objects;
5. To establish a funeral and other benefit funds;
6. To establish Branches, Divisions, Divisional Branches, Sub-branches, Districts or
Sections of the Union throughout the Commonwealth of Australia;
7. To further any scheme that has for its object the establishment of Labor Research
and Information Bureaux, and to assist in the establishment and maintenance of
Labour and Trade Union newspapers and wireless broadcasting and television
stations, and to invest in shares in such newspapers and radio and television
stations;
8. To constitute, conduct, carry on and manage clubs in the interests of members;
9. To pay affilia tion fees to and assist financially or otherwise any bona fide labour or
Trade Union Organisation or Association;
10. To establish and manage a Union Journal or Journals;
11. To hold, purchase, lease, sell, mortgage or otherwise deal in property;
12. To enter into contracts and agreements for the purpose of furthering directly or
indirectly any one or more of these objects;
13. To raise money by levies and/or other means for the purpose of carrying on the
objects of the Union;
14. To render legal and other assistance to members for the recovery of wages or
compensation for injuries, to protect the Interests of the trade in all its Branches,
and to assist other trades by any legal method;
15. To obtain such other objects as the National Conference or National Executive shall
from time to time determine;
16. To organise the education of workers;
268 Final Report of the Royal Commission into the Building and Construction Industry
1 7. To establish a fund from which to provide retiring allowances to fulltime officers and
employees of the Union, its Divisional or Divisional Branches;
18. The advancement of members intellectually, morally and socially and to do all
things which, in the opinion of the Union, is in the interest of members including
donations to political parties, the achievement of compulsory unionism, preference
in employment, retrenchment, promotion, demotion and transfer in employment,
the production and distribution of newspapers, journals and the like;
19. To achieve such other objects as may be lawfully adopted by any Division of the
Union;
20. To raise political levies, donate to and/or affiliate with political parties and to partake in conciliation and/or arbitration systems in the States and for that purpose to have
Branches, divisions or divisional branches in the States. 238
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Governance
23 The CEPU is governed by the National Council which has 'exclusive power to deal with matters
affecting more than one division and the general control and conduct of the business',
incl uding determining and implementing policy; making, amending and rescinding Rules
(subject to Rule 21 ); and resolving disputes between divisions 2 39
24 Members of the National Council include the Divisional Secretaries of the Electrical and
Plumbing Divisions; 12 delegates, one from each Divisional Branch of the Electrical and Plumbing Divisions; two delegates from the two largest Electrical Division Branches; and the
two Assistant Divisional Branch Secretaries from the Victorian and New South Wales Branches
of the Plumbing Division. 240
25 The National Executi ve exercises the powers of the National Council in between National
Council meetings, subject to some restrictions relating to making, amending and rescinding
Rules and processing disciplinary charges against union members 241
26 The National Executive Officers are the National President, National Vice President, National
Secretary, and National Assistant Secretary. 242 There are also 12 National Executive members
representing each of the Divisions , including three from each of the Electrical and Plumbing
Divisions. 243
27 The Electrical and Plumbing Divisions each have a Divisional Council. The Electrical Division
Divisional Council controls the Division. 244 Its powers include: auth orising the formation of
El ectrical Division Branches; deciding on the policy of the Division in all matters affecting the
members; electing, suspending or removing officers of the Division; settling disputes between
electrical Division Branches and Divisional Sub-Branches and sections; and making, amending
and rescinding rules of the Division 245
National Perspective Part 1 269
28 The Electrical Division Divisional Council consists of the Divi sional Secretary and delegates from
each branch of the Division.246 The number of branch delegates selected from each Bran ch
depends on membership size. 247
29 Between meetings of Electrical Division Divisional Council, the Divisional Executi ve is in charge
of the business of the Division. The Executive consists of the Divisional President, Divisional
Vice Presidents, Divisional Secretary and members elected from the Divisional Conference
delegates. 248
30 Each Divisional Branch is governed by the:
⢠Divisional Branch Conference;
⢠Di vi sional State Council; and
⢠Divisional Branch Executive .
31 The Divisional Branch President, Vice President, Secretary and Treasurer are President, Vice
President, Secretary and Treasurer of the Conference, Council and Executive. These office
holders are the Divisional Branch Officers. 249
32 The Divisional Branch Conference has the power to recommend the alteration of Divisional
Branch rules in accordance with Rule 3, and to formulate Divisional Branch policy250 A
Divisional Branch conference is held at least every alternate year. The number of delegates who
are elected by their respective Divisional Sub-Branches is determined with regard to numbers
of financial members.251
33 Each Divisional Branch has a Divisional State Council. The government of the Divis ional Branch vested in the Council, subject to the Powers of the Divisional Branch Conference252 The
number of Divisional State Councillors elected by their respective sections is determined with
regard to numbers of financial members. 253 Secti ons are constituted either by the following
groups, on a geographical basis, or as determined by the Divisional Branch State Council:
⢠members employed in the general trade;
⢠members employed by supply authorities;
⢠members employed by the transport industry;
⢠members employed in the manufacturing industry;
⢠members employed as salaried officers;
⢠members employed in the radio, television and electronics and communications
industries;
⢠members employed in the electrical contracting industry; and
⢠in Western Australia, members employed in the foundry industry. 254
34 Divisional Sub-Branches may be formed, and may be determined by the Divisional State
Council. 255
35 The Divisional Branch Executive consists of the Divisional Branch President, Secretary, and one member from each of th e sectio ns as represented on the Divisional State Council. 256 The
270 Final Report of the Royal Commission in to the Building and Construction Industry
Officers of a Divisional Branch are the President, Vice President, Treasurer, Divisional Branch
Secretary, Assistant Secretaries, Organisers and Trustees.257
36 The Divisional Branches, subject to powers conferred on the Divisional Council and Divisional Executive, have the power to make rules and by-laws for the management of the Divisional
Branches and any of its divisional sub-branches or agencies.258 These rules and by-laws have
no effect until endorsed by the Divisional Executive or Divisional Council.
37 The Plumbing Division Divisional Council exercises the supreme control vested in the Division's
members on their behalf. 259 The Plumbing Division Divisional Council's powers are similar to
those of the Electrical Division Divisional Counc il .260
38 The Plumbing Division Divisional Council Officers are the Divisional President, Divisional Deputy President, General Secretary and Assistant General Secretary, who are elected by an d from the
members of the Divisional Counci1 261
39 The Divisional Executive of the Plumbing Division has all the powers of the Divisional Council between meetings of the Divisional Council. 262 The Divisional Executive consists of the Federal
Vice Presidents and each Officer of the Divisional Council 2 63
40 The business of each Branch and Sub-Branch of the Pl umbing Division is , subject to the review and control of a Special or General Meeting of the Branch, conducted by a Committee of
Management. The Committee consists of the Branch President , Vice President, Secretary,
Assistant Secretary, two Branch Trustees, Branch Organisers, and not more than nine other
Committee members.264
41 Each Branch has the power to make such Rules 'as may be deemed necessary for the better
working and control of the Branch, always providing such Rules are not inconsistent with the
Rules of the Union '.265 Eac h Branch may formulate Sub-Branch Rules 266
Objects
42 The objects of the CEPU are:
3. 1 To enrol in the Union persons eligible to be members.
3.2 To advance the interests of members and secure a proper classification structure
with appropriate rates of pay
3. 3 To ensure adequate training is available for members including the maintenance of
the principles of the apprenticeship system.
3.4 To ensure that award rates of pay and other provisions adequately reflect the
training and skills of members.
3.5 To advance and protect the vocational interests of members including seeking and
maintaining representation of all relevant authorities, committees and bodies.
3. 6 To provide legal protection for members with respect to industrial and work injury
related matters where deemed necessary
3. 7 To assist members in the event of unemployment, sickness, injury, mortality or
industrial dispute.
National Perspective Part 1 2 71
3.8 To establish Divisions, Branches and Sub Branches of the Union and organise
members into Divisions, Branches and Sub Branches throughout Australia.
3.9 To publish a union journal, newspaper or other media.
3. 10 To advance the living and working conditions of workers and their families, and to
assist kindred Unions and other bodies having these objectives.
3. 11 To affiliate to, federate with, amalgamate with, or otherwise combine with any
trade, industrial union or association or any political party or any other organisation
having objects similar in whole or in part to the objects of this Union.
3. 12 To hold, purchase, lease, mortgage, sell or otherwise deal in property.
3. 13 To make financial provision for the carrying out of these objectives.
3. 14 To uphold the right of combination of labour, and to improve, protect and foster the
best interests of the Union and its members, and to assist them to obtain their
rights under industrial and social legislation.
3. 15 To secure preference of employment for unionists.
3. 16 To establish and maintain an employment bureau for members.
3. 1 7 To contribute to any charitable institution that the members may decide.
3. 18 To constitute, conduct, carry on and manage clubs, holiday and rest centres of
members.
3. 19 To co-operate and maintain social contact with members, other unions, labour
bodies and socially responsible organisations both in Australia and overseas.
3.20 To be involved, whether on a Divisional basis or as the whole union, in socially
responsible citizen actions.
3.21 To assist in the establishment and/or maintenance of labour newspapers and other media.
3.22 To bring about the socialisation of production, distribution and exchange and the
development and protection of effective enterprises.
3.23 To promote the policy of equality of status and opportunity for all members.
3.24 To adopt, promote and implement family friendly policies for union employees and
officials.
3. 25 To increase the number of women employed by the union.
3. 26 To ensure there is equal employment and career path opportunity for female union
employees.
3.27 To increase the number of female members.
3.28 To encourage the participation by women in union activities and decision making bodies.
272 Final Report of the Royal Commission into the Building and Construction Industry
3.29 To pursue such other objects as the Council and/or the various Divisions or
Divisional Branches shall from time to time determine being consistent with the
express wishes of the membership as determined by these Rules.
3.30 To establish Trust Funds for the benefit of the Members. 267
Australian Workers' Union
Governance
43 The highest deliberative body of the AWU is the National Conference, which is held every two
years. 268 Its powers include:
⢠taking steps to carry out all or any of the objects of the union;
⢠deciding the general policy of the union and taking steps to enforce the carrying out of such policy;
⢠dealing with and deciding any matter submitted to it by any Branch of the union;
⢠making, altering, amending or rescinding Rul es for the union and any Branch;
⢠establishing or closing Branches, Sub-Branches, or Districts of the union;
⢠confirming, overruling or otherwise dealing with decisions of the National Executive; and
⢠exercising all or any powers of the National Executive. 269
44 Below the level of the National Conference is the Nationa! Executive that, subject to review of
its actions by the Conference, 'has the care, control, superintendence, management and
administration in all respects of the affairs, business, funds and property of the Union' 270 Its powers include:
⢠interpreting and enforcing the general policy of the union as decided by Conference;
⢠deciding questions of policy not covered by Conference decisions;
⢠controlling and conducting the business and affairs of the union while the National Conference is not in session;
⢠establishing or closing any Branch of the union;
⢠ensuring that officers, committeemen, delegates, members and Branches carry out the
Rules , decisions and policy of the union;
⢠taking action in accordance with the Rules to secure the satisfactory working of any
Branch, Sub-Branch or District; and
⢠appointing, controlling and dismissing National Organisers. 271
45 Branches are represented at the National Executive by their Branch secretary. If the Branch has
more than 11 000 members, the Branch is entitled to an additional delegate. 272
46 The highest authority of any Branch is the Branch Executive, except in the case where Districts
have been formed, and in that case, the Delegate Meeting convened by the Branch is the
National Perspective Part 1 2 7 3
highest authority. When the Delegate Meeting is not in session , then the Branch Executive is
the highest authority in such Branches.273
47 The Branch Executive 'has general control and conduct of the business of the Branch, and acts on its own behalf in all matters', subject to the Rules and decisions of the National
Conference and Executive.274
48 A Branch Executive may form Local Committees in any town or district to perform such
advisory functions as the Branch Executive determines.
49 For those Branches with Districts, the Branch Delegate Meetings are held annually, and are attended by the President and Secretary of the Branch , the District Secretaries, and delegates
elected by the members of the various Districts.275
Objects
50 The objects of the AWU include:
⢠To uphold the rights of combination of labour and to improve, protect and foster the best
interests of its members and to assist them to obtain their rights under industrial and
social legislation;
⢠To regulate and protect the conditions of labour, the relations between workers and
between workers and employers. To regulate conditions on the conduct of trade,
business or industry of the members;
⢠To promote the general and material welfare of the members;
⢠To provide legal assistance in defence of members' rights where deemed necessary;
⢠To endeavour by political action to secure social justice;
⢠To establish and maintain a union newspaper;
⢠To establish one union for Australian workers;
⢠To uphold the authority of constitutional government and the Constitution of the
Commonwealth of Australia and the States and to oppose the growth of doctrines and
groups or organisations of persons incorporated or unincorporated which in the opinion
of the National Executive advocate, assist or encourage the overthrow by force or
violence of the established Government of the Commonwealth of Australia;
⢠To affiliate to, federate with, amalgamate with , or otherwise combine with, any trade or
industrial union or association, or association of trade unions or any other organisation
having objects similar in whole or part to the objects of this union. To establish joint
organisation and joint finance with other trade unions as a step towards amalgamation;
⢠To establish a fund for the assistance and support of trade unionists and to carry out
these objects;
⢠To assist in the establishment and maintenance of labour and trade union newspapers
and electronic media facilities and to invest in shares of such newspaper and electronic
media facilities;
2 7 4 Final Report of the Royal Commission into the Building and Construction Industry
⢠To constitute, conduct, carry on and manage clubs in the interests of members;
⢠To raise money by contributions, levies and commercial investments for th e purpose of carrying out the objects of the union;
⢠To establi sh funeral and other benefit funds;
⢠To establish Branches of the union throughout the Commonwealth of Australia;
⢠To contribute financially and otherwise to political objects, so as to bring about the election of Federal and State Labor Governments;
⢠To protect the trade objects of members by any legal method;
⢠To inform members and potential members as to matters of interest and concern either industrially, politically or socially;
⢠To assist members with both trade union and vocational training;
⢠Generally to improve the conditions and promote the interests of members of the union
industrially, politically and socially and to do all things as are conducive to the attainment
of the above objects and which industrial organisations of employees may lawfu lly do. 276
Australian Manufacturing Workers Union
Governance
51 The government of the AMWU is entrusted to a National Conference, which meets every two
years . The National Conference consists of the National Council, metals and engineering
members delegates and delegates from each of the Divisions. The metals and engineering
members delegates are nominated and elected from metals and engineering members of the union in each State. 277
52 Any metals and engineering financial member resident in the Northern Territory, and qualified in accordance with the Rules, may be nominated by five other metals and engineering members
in the Northern Territory to be a delegate to the National Conference. The elected delegate
becomes part of the Queensland State Delegation 278
53 The National Conference is the supreme governing body of the AMWU, and its powers include:
⢠taking all steps to carry out all or any of the objects of the union;
⢠deciding th e general policy of the union and taking steps to enforce the carryi ng out of
such policy;
⢠imposing penalties in accordance with the AMWU Rules;
⢠making, altering , amending or rescinding the AMWU Rules or adopting new Rules;
⢠confirm ing, over-ruli ng or otherwise dealing with any decision of the National Council; and
⢠exercising all or any of the powers of National Council. 279
National Perspective Part 1 2 7 5
54 There is a National Council that is comprised of the National President, the National Secretary,
the State Secretaries from each State, Divisional representatives and metals and engineering
delegates 280 The metals and engineering delegates are:
⢠the Assistant National Secretary (Metals and Engineering Members);
⢠the National Organiser(s) (Metals and Engineering Members);
⢠the Assistant State Secretaries (Metals and Engineering Members) of the States of
Victoria, New South Wales and Queensland;
⢠one delegate representing all States other than Victoria, New South Wales and
Queensland; and
⢠one rank and file delegate (a member who has not been elected and does not hold a full
time office in the union) 281
55 The National Council is the Committee of Management of the Union, and operates subject to
the National Conference and the AMWU Rules. It has 'the care, control, superintendence, and
management in all respects of the affairs, business, funds and property of the Union'. Its
powers include:
⢠interpreting the Ru les , and interpreting and enforcing the general policy as decided by the
National Conference;
⢠determining matters of policy not covered by Conference decisions;
⢠controlling and conducting the business and affairs of the union while the Conference is
not in session;
⢠ensuring that officers and Committees of the union carry out the rules, decisions and
policies of the union and impose penalties in accordance with th e Rules; and
⢠control and supervise the work of the National Officers of the union. 282
56 The National Officials of the AMWU are the National President, National Secretary, Assistant
National Secretaries (from the metals and engineering members and from the Divisions),
National Organisers (metals and eng ineering members); and Assistant Secretary and National
Organisers from each Division . 283
57 Below the National Council is the National Administrative and Budget Committee, which is
made up of the National President, National Secretary, Assistant National Secretary and
Federal Secretary of each Divis ion; Assistant National Secretary (metals and engineering
members), each State Secretary and a Printing Division representative 284
58 The Committee is responsible for the union's administrative affairs in accordance with Rules
and policies of National Conference and National Council between meetings of those bodies. It
refers any matters relating to the union's rules, po licy or organisation to the National
Conference or National Council and develops draft budgets for the National Council 's consideration and monitors and administers the implementation of the National Council 's budgets. 285
2 7 6 Final Report of the Royal Commission into the Building and Construction Industry
59 In each State, there is a governance structure which primarily mirrors the national structure with
a few regional variations. There is a State Conference, the members of which include: the State
President; State Secretary and Assistant State Secretaries; and metals and engineering
delegates and the Division 's delegates to the State Conference. In the case of metals and
engineering delegates, there is one delegate for every 500 members, except in Tasmania where
there is one delegate for every 250 members. 286
60 The State Conference meets every two years and has similar powers to the National
Conference, but only within its particular State. 287
61 Below the State Conference is the State Council, which includes the State President, State
Vice-President, State Secretary and Assistant State Secretaries, metals and engineering
delegates from the State Conference, and delegates from each of the other Divisions . The
metals and engineering delegates are made up of organisers and rank and file members, the numbers of which vary from state to state. 288
62 The State Council serves as the executive body of the State Conference, and it generally
directs the work of the union in the particular State 289 Its duties include supervising and
directing the work of all full time Officers, District Committees and other union Committees; and
authorising the appointment of or election by members of shop stewards 290 It has the power
to establish District Committees, Trade and Section Committees. 291
63 There is a State Administrative Committee that acts as the Administrative Committee of the
State Conference and the State Council and administers the affairs of the union in accordance
with the policies of the National Conference, National Co.uncil, State Conference and State
Council. 292
Objects
64 The objects of AMWU include:
⢠The control of industry in the interests of the community;
⢠The organisation of all workers qualified for membership, the development of the most cordial relations with other unions in the industry with a view to bringing into existence of
one union for the foundry, engineering, ship-building and kindred trades , and the
obtaining and maintaining of just and proper hours of work, rates of wages, and
conditions of labour;
⢠The negotiation and settlement of differences and disputes between the members of the
union and employers by collective bargaining and agreement, withdrawal of labour or
otherwise;
⢠Generally to promote the welfare of the members of the union;
⢠The provision of legal advice and assistance to members where necessary or expedient;
⢠The furtherance of political object as provided by these rules;
⢠The advancement of the interests of women and non-English speaking background
workers in the workplace and within the Union through the development of equal
opportunity and affirmative action policies .293
National Perspective Part 1 277
278 Final Report of the Royal Commission into the Building and Construction Industry
Attachment 4
State Tribunals
National Perspective Part 1 279
280 Final Report of the Royal Commission into the Building and Construction Industry
The Legislative Framework of the Tribunals
New South Wales
The Industrial Relations Commission of New South Wales is established under s145 of the
Industrial Relations Act 1996 (NSW). It consists of a President, a Vice- President, Deputy
Presidents and Commissioners. 294 All but the Commissioners are Presidential Members.
2 The Commission's functions are to: set remuneration and other conditions of employment;
resolve industrial disputes; hear and determine other industrial matters; inquire into and report
on, any industrial matter or other matter referred to it by the Minister; and any other functions
conferred on it by the Act or any other New South Wales Act or law295 In th e exercise of its
functions the Commission must take into account the public interest and, for that purpose,
must have regard to the objectives of th e Industrial Relations Act 1996 (NSW), and the state of
the economy of New South Wales and the likely effect of its decision on that economy. 296
3 The Commission may be constituted by one member or by a Full Bench of at least three members. A Full Bench must include at least one Presidential Member and at least one Commissioner. 297
4 The President may designate particular members as regional members for different regions of
the State. The President must designate particular Deputy Presidents to deal with matters
relating to general award reviews or discrimination in the workplace. 298
5 The Governor of New South Wales may appoint a Presidential Member to be a Member of the
Commission in Court Session. 299 Th e Members of the Commission in Court Session are
judicial members of the Commission . The Commission in Court Session is established as a superior court of record and is a court of equivalent status to the NSW Supreme Court and the
NSW Land and Environment Court300
6 Broadly speaking, the Commission in Court Session exercises the judicial functions of the Commission conferred under the Industrial Relations Act 1996 (NSW) 301
7 The Commission 's procedures and powers are described in Chapter 4, Part 5 of the Act 302
8 The Commission is not bound to act in a formal manner; is not bound by the rules of evidence and may inform itself on any matter in any way it considers just; and must act according to the
substantial merits of the case without regard to technicalities or legal forms 303
9 The Commission is empowered to summons witnesses, compel examination on oath or affirmation, compel production of documents and direct that a witness be prosecuted for perjury.304
10 A party is entitled to be legally represented, save that at conciliation proceedings the
entitlement requires leave of the Commission .305
11 The Commission has power to order that a secret ballot be taken of any group of employees in
order to find out their opinion about an industrial matter.306
12 The Commission has power to order costs. Except when the Commission is in Court Session ,
costs can only be awarded where the application is frivolous or vexatious, or where
proceedings are instituted without reasonable cause, or where proceedings are brought for a
National Perspective Part 1 28 1
breach of an industrial instrument (defined in s8 to mean an award, an enterprise agreement, a
public sector industrial agreement, a former industrial agreement, a contract determination or a
contract agreement), or where proceedings are brought for the recovery of money for breach of an industrial agreement,307
Victoria
13 In 1996 Victoria referred many of its industrial relations powers to the Commonwealth, pursuant
to the Commonwealth Powers (Industrial Relations) Act 1996 (Vic). In turn, the Commonwealth
enacted the Workplace Relations and Other Legislation Amendment Act (No. 2) 1996 (C'wth)
that, among other things , extended the operation of various Commonwealth provisions to
Victoria, including enterprise bargaining provisions. This extension is now reflected in Part XV of
the Workplace Relations Act 1996 (C'wth).
14 Accordingly there is no Victorian industrial relations commission. In Victoria, subject to the
Workplace Relations Act 1996 (C'wth), industrial matters are heard and determined by the
Australian Industrial Relations Commission. Only Victoria has referred its industrial re lations
power to the Commonwealth.
Queensland
15 Chapter 8 of the Industrial Relations Act 1999 (Old) provides for the continued existence of the
Industrial Court of Queensland and the Queensland Industrial Relations Commission. 308
16 The Queensland Industrial Relations Commission comprises the President, the Vice-President,
a Commissioner's Administrator and at least six other Commissioners.309
17 The Commission's jurisdiction is set out in s265. It is:
The Commission may hear and decide the following matters -
(a) all questions of law or fact brought before it or that it considers expedient to hear
and decide for the regulation of a calling ['calling' defined to mean the craft,
manufacture, occupation, trade, undertaking or vocation or a section of any of
those activities'};
(b) all questions-
(i) arising out of an industnal matter; or
(ii) involving deciding the rights and duties of a person in relation to an industrial
matter; or
(iii) it considers expedient to hear and decide about an industrial matter;
(c) an industrial dispute, referred to the Commission by a member [of the Commission]
who has held a conference under this Act at which no agreement has been
reached;
(d) all appeals properly made to it under this or another Act;
(e) all matters committed to the Commission by this or another Act.
18 'Industrial matter' is defined in the Act as:
2 82 Final Report of the Royal Commission into the Building and Construction Industry
a matter that affects or relates to -(a) work done or to be done; or
(b) the privileges, rights or functions of-
(i) employers, employees; or
(ii) persons who have been, or propose to be, or who may become, employers
or employees; or
(c) a matter (whether or not an industrial matter as defined in this section) that the
court or commission considers has been, is, or may be a cause or contributory
cause of an industrial action or industrial dispute. 310
19 'Industrial dispute' is defined to mean:
(a) a dispute, including a threatened or probable dispute, about an industrial matter, or
(b) a situation that is likely to give rise to a dispute about an industrial matter. 311
20 The jurisdiction of the Industrial Court of Queensland is established under s248 of the Act. That
section provides:
(1) The Court may-
(a) perform all functions and exercise all powers prescribed for the Court by this
or another Act; and
(b) hear and decide cases stated to it by the commission; and
(c) hear and decide an offence against this Act, other than an offence for which
jurisdiction is expressly conferred on [an industrial magistrate of the Industrial Magistrates Court]; and
(d) hear and decide appeals from an industrial magistrate's decision in
proceedings for-(ij an offence against this Act; or
(ii) recovery of damages, or other amounts, under this Act; and
(e) exercise the jurisdiction and powers of the Supreme Court [of Queensland} to
ensure, by prerogative order or other appropriate process-(i) the commission and magistrates exercise their jurisdictions according
to law; and
(ii) the commission and magistrates do not exceed their jurisdictions.
(2) In proceedings, the court may-
(a) make the decisions it considers appropriate, irrespective of specific relief
sought by a party;
(b) give directions about the hearing of a matter.
National Perspective Part 1 283
(3) The court's jurisdiction is not limited, by implication, by a provision of this or another
Act.
21 The President of the Court is also the President of the Commission .312
South Australia
22 Section 7 of the Industrial and Employee Relations Act 7 994 (SA) provides for the various
industrial authorities which administer industrial relations in South Australia.
23 The Industrial Relations Commission consists of two Divisions: the Industrial Relations Division
and the Enterprise Agreement Division .313
24 The jurisdiction of the Commission is conferred by s26 of the Act which provides:
The Commission has-
(a) jurisdiction to approve enterprise agreements regulating remuneration and other
industrial matters; and
(b) jurisdiction to make awards regulating remuneration and other industrial matters;
and
(c) jurisdiction to resolve industrial disputes; and
(d) jurisdiction to hear and determine any matter or thing arising from or relating to an
industrial matter; and
(e) other jurisdiction conferred by this Act.
25 The Commission has jurisdiction to inquire into, and report and make recommendations to the
Minister on, a question related to an industrial or other matter that is referred to the
Commission for inquiry by the Minister. 314
26 The Commission consists of the President of the Commission, Deputy Presidents of the
Commission and Commissioners. Each is appointed for a term of six years, and may be
reappointed for one further term of six years.3 15
27 Before a person may be appointed (or reappointed) as the President, or Deputy President or a
Commissioner of the Commission, the Minister must consult confidentially about the proposed appointment with a panel consisting of -(a) a nom1nee of the United Trades and Labor Council; and
(b) a nominee of the South Australian Employers' Chamber of Commerce and
Industry; and
(c) a nominee of the House of Assembly appo1nted by resolution of that House; and
(d) a nominee of the Legislative Council appointed by resolution of the Council; and
(e) the Commissioner of Public Employment. 316
28 For the purposes of the consultation, the Minister must inform the members of the panel of all
persons short -listed for appointment. 317
284 Final Report of the Royal Commission into the Building and Construction Industry
29 All members of the Commission enjoy security of tenure 3 18 A Commissioner must be
appointed as an Industrial Re lations Commissioner or as an Enterprise Agreement Commissioner or both319
30 Section 34(5) provides for an equal number of Industrial Relations Commissioners with
employee or employer associated interests.
An Industrial Relations Commissioner must be a person of standing in the community
with experience in industrial affairs either through association with interests of employees or through association with interests of employers and the number of Industrial Relations
Commissioners of the former class must be equal to, or differ by no more than one from,
the number of Industrial Relations Commissioners of the latter class (part-time
Commissioners being counted for the purpose of this subsection by reference to the
proportion of full-time work undertaken).
31 Section 37 of the Act allows a member of the Commission, with the Minister's approval, to be
appointed as a member of 'an industrial authority under the law of the Commonwealth or another State' . The defi nition of industrial authorities would include the Australian Industrial
Relations Commission and State industrial tribunals. There are presently four Commissioners
and one Deputy President. All hold appointments as members of the Australian Industrial
Relations Commission under the Workplace Relations Act 1996 (C 'wth).
32 The Industrial Relations Court of South Australia is a court of record. 320 The Court is empowered to:
⢠interpret an award or enterprise agreement;
⢠hear and determine questions of law referred to it by the Industrial Relations Commission
of South Australia;
⢠hear and determine jurisdictional or other questions about the valid ity of determinations
of the Commission;
⢠make declaratory judgments;
⢠hear and determine monetary claims of the kinds described in that section; and
⢠to make injunctive orders against a person who contravenes or fai ls to comply with the
Act, an award or an enterprise agreement made under the Act. 321
33 Section 16 of the Industrial and Employee Relations Act 1994 (SA) provides:
The Court's judiciary consists of-
( a) the Senior Judge of the Court; and
(b) the other Judges of the Court; and
(c) the industrial magistrates.
34 The Senior Judge is the principal judicial officer of the Court and is responsible for the
administration of the Court. The Senior Judge is a District Court Judge assig ned by the
Governor of South Australia to be Senior Judge of the Industrial Relations Court or a person
eligible for appointment as a District Court Judge appointed by the Governor to be Senior
National Perspective Part 1 285
Judge of the Industrial Relations Court. Other judges of the Court are assigned or appointed by the Governor in like manner322
35 An industrial magistrate is a magistrate under the Mag1strates Act 1983 (SA), proclaimed by the
Governor to be an industrial magistrate . There may be as many industrial magistrates as the Governor considers necessary. 323
36 Section 20 of the Act causes the Court's judiciary to be divided between members of its
principal judiciary (those who are occupied predominantly in the Court) and its ancillary judiciary
(those who are not occupied predominantly in the Court).
Western Australia
37 The Western Australian Industrial Relations Commission, by that name, is constituted under the
Industrial Arbitration Act 1979 (WAj.3 24 The Commission is a continuation of the Western
Australian Industrial Commission established under the repealed lndustnal Relations Act 1912
(WA) (repealed in 1 979). The Commission consists of a President, a Chief Commissioner, a
Senior Commissioner and such number of other Commissioners as may be necessary for the
purposes of the Act. 325 A member of the Commission 'has in the performance of his functions
and duties as such a member .. . the same protection and immunity as a Judge of the Supreme
Court of Western Australia' 326 and may, subject to certain conditions, hold a dual appointment
to and be a member of the Australian Industrial Relations Commission. 327
38 Section 22B of the Act provides:
In the performance of its functions the Commission is to act with as much speed as the
requirements of this Act and a proper consideration of the matter before it permit.
39 Under s23, the Commission has, subject to the Act, cognizance of and authority to enquire into
and deal with any industrial matter. 328 1ndustrial matter is defined in s7(1) as:
any matter affecting or relating or pertaining to the work, privileges, rights, or duties of
employers or employees in any Industry or of any employer or employee therein.
40 The definition of industrial matter particularises a number of items in respect of which any
'matter affecting or relating or pertaining to ' falls within the definition of 'industrial matter'.
Where any employer and employee are parties to any workplace agreement entered into under
the Workplace Agreements Act 1993 (WA), any matter that is part of the relationship between
that employer and employee is not an industrial matter329
Ta smania
41 The Tasmanian Industrial Commission is constituted under s5 of the Industrial Relations Act
1984 (Tas.). The Commission consists of 'such number of members appointed by the
Governor [of Tasmania] as the Governor considers is necessary to perform the functions of the
Commission under th is Act'. 330 Under s5(5), the Governor appoints a President and a Deputy
President of the Commission.'
42 The Tasman ian Industrial Commission has jurisdiction to hear and determine matters and
things arising from or relating to industrial matters, including making of awards, the conduct of
hearings and the settling of disputes 331
286 Final Report of the Royal Commission into the Building and Construction Industry
43 A Commissioner is appointed for seven years, and on such terms and conditions as are
specified in the instrument of appointment. A Commissioner may be re-appointed. 332
44 Commiss ion ers have the same protection and immunity as a judge in the performance of their functions as a Commissioner.333
45 Section 16 of the Industrial Relations Act 1984 (Tas.) empowers the President to request the
President of the Australian Industrial Relations Commission to nominate a member of the
Australian Industrial Relations Commission to deal with the whole or any part of a matter before
the Tasmanian Industrial Commission . Where a member of the Australian Industrial Relations
Commission is so nominated, the President of the Tasmanian Industrial Commission may refer a matter, who lly or in part, to that nominee, who may then exercise all the powers that are
exercisable by a Commissioner of the Tasmanian Commission under the Tasmanian Act. A
decision made by the nominated member of the Australian Industrial Relati ons Commission
shall, for the purposes of the Tasmanian Act, be deemed to be an award or order, as the case
may require, made by the Tas manian Industri al Commission under the Tasmanian Act. 334
46 Section 17 of the Act enables a Commissioner to sit in joint proceedings of the Tasmanian
Commission and the Australian Industrial Relations Commission where the proceedings are on
the same or a similar matter. A determination to be made at any time, and on such terms as the
President thinks fit , not to deal with a matter in joint proceedings 335 Th e President of the
Tasmanian Industrial Commission is a Presidential member of the AIRC. 336
47 One of the purposes of the Industrial Relations Act 1984 (Tas .) is to encourage workplace
bargaining. 337
Northern Territory and Australian Capital Territory
48 Neither the Australian Capital Territory nor the Northern Territory has its own workplace
relations legislation , Commission or industrial registry. The Workplace Relations Act 1996
(C 'wth), applies in both Territories. Th e AIRC sits in both Territories and has registries in both.
The Workplace Relations Act 1996 (C'wth) is the Act that governs workplace relations
concerning the building and construction industry in each Territory.
Awards and Certified Agreements
New South Wales
49 The New South Wales Industrial Relations Commission is empowered to make awards, and to
make enterprise agreements, under Chapter 2, Parts 1 and 2, respectively, of the Industrial
Relations Act 1996 (NSW).
50 The Commission is empowered , under s 1 0 of the Industrial Relations Act 1996 (NSW), to
'make an award in accordance with this Act settin g fair and reasonable conditions of
employment for employees' .
51 Unlike the Workplace Relations Act 1996 (C'wth), an award made under the New South Wales
Act is binding on all employees and employers to which it relates, whether or not they were a
party to the making of the award, and an award that applies to a particular in dustry is, subject
to its terms, taken to bind all employees and employers engaged in that industry. 338 Subject to
National Perspective Part 1 287
an award's terms , it is bindin g on all industrial organisations that were a party to the making of
that award 339
52 An award under the New South Wales Act must be in writing, expressed to be an award and signed by at least one member of the Commission.340 It must contain procedures for the
resolution of industri al disputes under the award, but it need not contain such procedures if the
Commission is satisfied that another specified award already does so . Dispute resolution
procedures must include procedures for consultation at the workplace and the involvement of
relevant industrial organisations. Dispute resol ution procedures in awards do not apply to
employers who employ fewer than 20 employees, unless the award specifically applies those
procedures to such an employer341
53 The Commission in Court Session (referred to above) or a Local Court constituted speci fi cal ly for the purposes of Chapter 7, Part 1, of the Act by an Industrial Magistrate may hear
proceedings for breach of an award and order a person to pay a pecuniary penalty not
exceeding $10 000 (as a civil penalty) if satisfied of the breach. 342 Legal proceedings relating to
the enforcement of the award can only be commenced after seven days fol lowin g the day on
which it is published in th e NSW lndustn8J Gazette 3 43
54 An award applies for a specified period (its nominal term) and , after that period, until rescinded
by the Commission. A nominal term of an award must be at least 12 months but not more than
three years An award that sets conditions of employment in connection wi th a project may
have a specified nominal term that does not exceed the expected duration of the project.344
55 The Commission may vary or rescind an award, and may do so in the course of arbitration by the Commission to resolve an industrial dispute 345
56 Th e Commission must review each award at least every three years to modernise awards, consolidate awards rel ating to the same industry and rescind obsolete awards. It must take into
account decisions of the Commission, rates of remu neration and other minimum conditions of
employment, part ti me, casual, an d job sharing work arrangements, dispute resolution
procedures , discrimination issues, obsolete provisions or unnecessary technicalities, and th e
effects of the award on producti vity and efficiency in the industry concerned. 346
57 Enterprise agreements may be made under Chapter 2, Part 2, of the Act, setting conditions of
employment for employees. An enterpri se agreement may be made between the employer or
employers of the employees for whom it is made and one or more industrial organisations
representing any of those employees, although an industri al organisation may represent only
employees who are, or are eligible to be, members of the organisation. An enterprise
agreement may be made between the employer and its employees , although an industrial
organisation that represents any of the employees covered by the enterprise agreement may
become a party to that agreement if requested by a member employee.347
58 An enterprise agreement does not have any effect unless it is approved by the Commission. 348 A Full Bench of the Commission is required to set principles to be followed by the Commission
in determining whether to approve enterprise agreements 349 The Commission must approve
an enterprise agreement if it is satisfied that the ag reement complies with all relevant statutory
req uirements:
2 88 Final Report of the Royal Commission into the Building and Construction Industry
⢠that it does not, on balance, provide a net detriment to the employees when compared
with the aggregate package of conditions of employment under any State awards covering those employees;
⢠that th e employees are not disadvantaged compared to their entitlements under any Federal awards covering those employees;
⢠that the ag reement does not, on balance, provide a net detriment to the employees when
compared with the aggregate package of conditions of employment under a State or
Federal award that covers employees performing sim ilar work to that performed by the
employees covered by the agreement in circumstances where the employees are not covered by any State or Federal award;
⢠the parties understand the agreement; and
⢠the parties do not enter the agreement under duress 350
59 In common with the award provisions of the Act, an enterprise agreement is not to be
approved unless it contains dispute resolution procedures, or the Commission is satisfied that
another relevant agreement or award already does so . Dispute resolution procedures may (but
need not) be included in an enterprise agreement if the em ployer has fewer than 20 employees 351
60 Subject to the terms of an enterprise agreement:
The provisions of an enterprise agreement prevail over the provisions of any State award
of the Commission that deal with the same matters in so far as the provisions of the Sta te award apply to a person bound by the enterprise agreement. 352
Queensland
61 Chapter 5 of the Industrial Relations Act 1999 (Old) provides for the making of award s. The
Queensland Industrial Relations Commission is empowered under Part 2 of Ch apter 5 to make
awards. Section 125(1) of the Industrial Relations Act (1999) (Old) empowers the Commission
to 'make , amend or repeal an award to provide, among other things, fair and just employment
conditions' . An award may operate retrospectively353 The Commission must ensure an award,
among other things, provides for secure, relevant and consistent wages and employment
conditions; provides fair standards for employees in the context of living standards generally
prevailing in the community; and is su ited to the efficient performance of work according to the
needs of part icular enterprises , industrie s or workplaces 354 The Commission must ensure that
an award contains a dispute resolution procedure. The form of the procedure is to be agreed
on by the parties to the award . If the parties cannot agree, the Commission must insert an
appropriate procedure in the award . The procedure must include procedures fo r consultation
at the workplace, the involvement of relevant organisation s and any other procedure
prescribed under a regulation. 355
62 In contrast to a Commonwealth award, an award made under the Industrial Relations Act 1999
(Old) 'takes effect and has the force of law throughout the State and without limit of time,
except as otherwise prescribed by [s123(2)]' 356 Accordingly, awards under the Queensland
Act are common rule awards, unless otherwise pre scribed. Subsection 123(2) allows an award
National Perspective Part 1 289
to state the period, location and employer it covers . In contrast to the Commonwealth award
system, awards can operate at large and their making is not conditional upon any precondition ,
for example, the existence of an industrial dispute.
63 Th e Commission may review an award of its own initiative or on the application of a party to the
award. Reviews must be conducted at least every three years 357
64 To the extent of any inconsistency, an award prevails over a contract of service that is in force
when the award becomes enforceable, or is made while the award continues in force . An
inconsistency does not arise simply because the contract provides for employment conditions
more favourable to the employee than the award .358 By contrast, while a certified agreement operates, it prevails to the extent of any inconsistency over an award. 359
65 Chapter 6, Part 1 of the Industrial Rela tions Act 1999 (Old} provides for certified ag reements.
Part 1, Division 1 deals with makin g the agreements. Division 2 deals with the certifying of the
agreements.
66 Section 142 enables a certified agreement to be made between an employer and its
employees or between an employer and one or more employee organisations. The employee
organisation must represent, or be entitled to represent, any employees of the employer. When
one of those persons or bodies proposes to make a certified agreement, the proposer must
advise the other parties in writing of the proposer's intention to begin negotiations for the
agreement. 360 Industrial action cannot be taken until seven days after the expiry of the existing
agreement and 21 days after the notice to beg in negotiations was given 361 During this period ,
the parties cannot ask the Commission to help to make the agreement.
67 After this period (described in the Act as the 'peace obligation period') has ended , the
Commission may exercise conciliation powers where a party has declared a breakdown in
negotiations or the Commission becomes aware that a negotiating party is engaging in
industrial action 362 Where conciliation has been unsuccessful, the Commission can exercise
arbitration powers to make a certified agreement. 363 Under s149(4) a full bench of the
Commission may establish principles about the arbitration of certified agreements. Unless all
the negotiating parties agree, the Commission as constituted for the conciliation cannot
exercise the arbitration powers provided under s149.
68 Chapter 6, Part 1, Division 2 of the Act deals with the certification of the ag reements.
Section 156 provides that the Commission must certify the agreement if, and must not certify
the agreement unless, it is satisfied of the various matters set out in s156(1 )(a) to (k). These
paragraphs requi re:
⢠that the terms of the agreement were explained in a way that was appropriate, having
regard to the persons' particular circumstances and needs;
⢠the agreement was freely made;
⢠it is in writing and signed by or for all the parties;
⢠it includes procedures for preventing and settli ng disputes;
290 Final Report of the Royal Commission into the Building and Construction Industry
⢠it specifies a nominal expiry date (for a project agreement- the date must be no later than
the date on which the project ends and for another agreement - a date no later than
three years after the date on which the agreement will come into operation);
⢠a valid majority of the relevant employees approved it; and
⢠it passes the 'no disadvantage' test.
69 Section 156U)(i) provides that for an agreement to be made with an employee organisation,
other than an agreement for a new business, each employee organisation that is bound by the
award or industrial agreement that binds the employer, or would bind the employer apart from
an award under the Workplace Relations Act 1996 (C'wth) , is a party to the agreement.
South Australia
70 The South Australian Industrial Relations Commission is empowered to approve enterprise agreements and to make awards under Chapter 3, Parts 2 and 3, respectively, of the Industrial
and Employee Relations Act 1994 (SA).
71 The objects of Part 2 pertaining to enterprise ag reements, set out in s73, are-
(a) to encourage and facilitate the making of agreements governing remuneration,
conditions of employment and other industrial matters at the enterprise or workplace level; and
(b) to provide a framework for fair and effective negotiation and bargaining between
employers and employees with a view to the making of such agreements and to
provide for the participation of associations in the process of negotiation and
barg81ning; and
(c) to ensure that award remuneration and conditions of employment operate as a
safety net underpinning the negotiated agreements at the enterprise or workplace
level; and
(d) to provide for improved flexibility in conditions of employment at the enterprise and
workplace level with consequence increases in efficiency and productivity
72 Sections 7 4 to 77 describe detailed requirements governing an enterprise agreement. Those
conditions include:
⢠a requirement that an enterprise agreement be made at the single business level;
⢠conditional capacity for an employee association to represent the employees employed
with that single business;
⢠a negotiation period accompanying the proposed enterprise agreement;
⢠a requirement that the proposed enterprise agreement 'include procedures for preventing
and settling industrial disputes between the employer and employees bound by the
agreement'; and
⢠if a majority of at least two thirds of the employees covered by the proposed agreement
agree, the agreement may include a provision giving an association of employees that is
National Perspective Part 1 291
able to represent the industrial interests of the employees' rights to represent those
employees to the exclusion of other associations of employees.
73 An enterprise agreement cannot be enforced unless it is approved by the Commission. 364
Section 79 prescribes conditions for approving an enterprise agreement, and requires the
Commission to approve an enterprise agreement if those conditions are met. The Commission must be satisfied that:
⢠before the app li cation for approval was mad e, reasonable steps were taken to explain the
terms and effect of the agreement to the employees who were to be covered by it,
including explaining the procedures fo r preventing and settling industrial disputes; 365
⢠the agreement has been negotiated without coercion and a majority of the employees
covered by the agreement have genuinely agreed to be bound by it;366 and
⢠if the agreement is entered into by an association as representative of the group of employees bound by th e agreement - an appropriate officer of the association has
lodged a statutory declaration with the Commission verifying that a majority of the
employees currently constituting the group have authorised the association to act on
their behalf.3 67 In this regard , s75(3) provides that a member of an association is taken to
have given the association an authorisation to enter into an enterprise agreement on
behalf of that employee for as long as the member remain s a member of the association
unless the member w ithdraws that authorisation .
7 4 Chapter 3, Part 3 deals wi th awards. The Commission is empowered under s90 of the Act to make an award about remuneration and other industrial matters. If there is an inconsistency
between an award and an enterprise agreement, the agreement prevails to the extent of the
inconsistency. 368 Th e Commission may refrain from hearing or determining an application for
an award bin ding only one employer or two or more employers who together carry on a single
business where the Commiss ion considers that the parties should try to negotiate an
enterprise agreement and is not satisfied that there is no reasonable prospect of the parties doing so .369
75 In making an award, the Commission is not restricted to the specific relief claimed, but may
include provisions wh ich the Commission considers necessary or appropriate 370 Before the
Commission makes an award, it must take reasonable steps to ensure that all persons who are
to be bound by it have been given a reasonable opportunity to appear and to be heard. 371
76 An award prevails over a contract of employment to the extent that the award is more beneficial
to the employee than the contract. 372
Western Australia
77 Th e Western Australian Industrial Relat ion s Commission is empowered under Part II, Divisions
2A and 28 respectively, of the Industrial Relations Act 1979 (WA) to make award s and to
register industrial agreements.
78 Part II , Division 2 of th e Act sets out the general jurisdiction and powers of the Commission.
Section 29 provides for the referral to the Commission of industrial matters. Th e decision of the
Commission 'shall be in the form of an award, order, or declaration and shall in every case be
292 Final Report of the Royal Commission into the Building and Construction Industry
signed and delivered by the Commissioner constituting the Commission that heard the matter
to which the decision relates or, in the case of a decision of the Commission in Court Session,
shall be signed and delivered by the Senior Commissioner among the Commissioners
constituting the Commission in Court Session ' 373
79 Division 2A of Part II of the Act makes specific provisions regarding awards. Section 36A(1)
provides that in any proceedings in which the Commission is considering making an award,
defined as the new award, that extends to employees to whom no award currently extend s, th e
onus is on any party opposing the making of the new award to show that it would not be in the publ ic interest. The Commission may make an interim award extending to employees pending the making of such a new award 3 74
80 Section 37(1) provides :
An award has effect according to its terms, but unless and to the extent that those terms
expressly provide otherwise it shall, subject to this section -(a) extend to and bind -
and
(i) all employees employed in any calling mentioned in the Industry or industries
to which the award applies; and
(ii) all employers employing those employees;
(b) operate throughout the State, [subject to certain exceptions].
81 Section 40 empowers the Commission to vary or cancel an award . The Commission is
empowered under s40B of its own motion to vary an award for any one or more of several
specified purposes including 'to ensure that the award is consistent with the facilitation of the
efficient organisation and performance of work according to the needs of an industry and
enterprises within it, balanced with fairness to the employees in the industry and enterprises . '375
82 Specific provisions regarding industrial agreements are contained in Part II, Division 2D of the
Act. Section 41 (1) provides that '[a]n agreement with respect to any industrial matter or for the
prevention or resolution under this Act of disputes, disagreements, or questions relating thereto
may be made between an org an isation or association of employees and any employer or
organization or association of employers. '
83 Bargaining for an industrial agreement may be initiated under and in accordance with s42(1) by
an organisation or association of employees or employers, or an employer. Section 428(1)
provides that when bargaini ng for an industrial agreement, a party to the negotiation shall
bargain in good faith . In order to assist parties to bargain for an industrial agreement, s42 E(1)
provides the Commission may exercise its powers as if it were endeavouring to resolve and
industrial matter. Where the Commission has declared that bargaining has ended between
negotiating parties, s421 provides that the Commission may, on application , make an
'enterprise order'. An enterprise order may also be made, on application, in other
circumstances. Section 43( 1) provides that an industrial agreement may be varied, renewed or
cancelled by the agreement of all the parties to the agreement. The Commission may vary an
National Perspective Part 1 293
industrial agreement pursuant to s43(2) for the purpose of including, omitting or varying a
provision that authorises an employer to stand-down an employee.
Tasmania
84 The Tasmanian Industrial Commission is empowered under Part II, Division 3 of the Industrial
Relations Act 1984 (Tas.) to make or vary an award. Part Ill of the Act deals with the subject
matter of awards, as do regulations 11-14 of the Industrial Relations Regulations 1993 (Tas.).
85 Section 41 provides:
(1) Where it is agreed by the parties concerned, there may be formulated, in relation to
any project, undertaking, establishment, or workplace, a procedure to be followed with a view to settlement, without strike action or other industrial action, of any
grievance or dispute that arises between any 2 or more of the parties.
(2) A procedure referred to in subsection (1) is in this section referred to as a grievance
or dispute settling procedure.
(3) A grievance or dispute settling procedure shall be set out in an agreement made in
writing between the parties.
(4) The parties to a grievance or dispute settling agreement shall be the organization or
organizations representing the employees concerned and the employer or an
organization of employers concerned.
(5) The Commission may encourage the parties to an award or industrial agreement or
any of them to enter into consultation with a view to formulating a grievance or
dispute settling procedure in relation to any project, undertaking, establishment or
workplace.
(6) With the consent of the parties to an award or an industrial agreement, a grievance
or dispute settling procedure may be inserted in that award or, as the case may be,
that industrial agreement.
86 The Act distinguishes between industrial agreements, made under Part IV of the Act, and
enterprise agreements, made under Part IVA of the Act.
87 An industrial agreement may ba entered into by an employee organisation with an employer
organisation, or any employer or group of employers, with respect to an industrial matter. The
Tasman ian Industrial Commission is empowered to conduct a hearing into an application for an
industrial agreement, and to approve the agreement. If all parties to an industrial agreement
agree to enter into an enterprise agreement, they may, by mutual consent, retire from that
industrial agreement which thereupon ceases to have effect. 376
88 Enterprise agreements regulate the conditions of employment for any or all of the people
employed in an enterprise. 'Enterprise' is defined as: any business, undertaking or project or
part of any business, undertaking or project; any combination of businesses, undertakings or
projects or parts thereof; any service provided by (generally speaking) a government
department or state authority; or any combination of services provided by government departments or state authorities. 377
294 Final Report of the Royal Commission into the Building and Construction Industry
89 The Commission is empowered under ss61 1 and 61 J to approve an enterprise agreement, and
must approve it unless satisfied that various preconditions set out in s61 J of the Act have not been met.
Conciliation
New South Wales
90 Section 3(g) of the Industrial Relations Act 1996 (NSW) provides that one of the objects of the
Act is:
To provide for the resolution of industrial disputes by conciliation and, if necessary, by
arbitration in a prompt and fair manner and with a minimum of legal technicality
91 The conciliation powers of the Industrial Relations Commission of New South Wales, are
provided in Chapter 3, Part I, of the Act, dealing with industrial disputes.
92 As noted, ss14 and 39 of the Act require the inclusion of dispute resolution procedures in
awards and enterprise agreements. Consistent with that requirement, s131 of the Act enables the Commission to:
refuse to deal with an industrial dispute until it is satisfied that any relevant dispute resolution procedures in an industrial instrument [defined to include an award and
enterprise agreement] have been followed as far as it reasonably practicable in the
circumstances.
93 Where the Commission deals with an industrial dispute, s132(1) provides that:
For the purpose of resolving an industrial dispute, the Commission may convene a
compulsory conference and require the attendance of any person whose presence the
Commission considers would help in the resolution of the dispute.
94 Section 133 provides that the 'Commission must first attempt to resolve an industrial dispute
by conci liation. '
95 Section 134(1) requires the Commission , when attempting the conciliation of an industrial
dispute, to do everything that seems to be proper to assist the parties to agree on terms for the
resolution of the dispute.
96 The Commission may, during conciliation proceedings:
make a recommendation or give a direction to the parties to the industrial dispute. Failure
to comply with any such recommendation or direction may not be penalised, but may be
taken into account by the Commission in exercising its functions under the Act. 378
97 Section 134(4) requires the Commission, when dealing with an industrial dispute, to consider
whether the parties have bargained in good faith and in particular, whether they have attended
meetings that they have agreed to attend, complied with negotiating procedures and disclosed
relevant information for the pu rposes of negotiation. The Commission may make
recommendations or give directions to the parties to bargain in good faith .
98 Section 135(1) provides:
National Perspective Part 1 295
The Commission is to deal with an industrial dispute by arbitration only if it is not resolved
by conciliation.
99 Section 135 provides :
(2) Arbitration by the Commission is not to proceed until the Commission has issued a
certificate that reasonable attempts have been made to resolve the industrial
dispute by conciliation (certificate of attempted conciliation).
(3)
(4) When determining whether to issue a certificate of attempted conciliation, the
Commission must consider the effect that any industnal action in connection with
the industrial dispute is having on the parties and the public generally. In particular,
the Commission must give urgent consideration to the effect of industrial action in
connection with a demarcation dispute
(5)
(6) The Commission must, without delay, issue a certificate of attempted conciliation
[on the application of any person authorised to notify the Commission of an
industrial dispute} if the person satisfies the Commission that there is no reasonable
likelihood that the dispute will be resolved by conciliation.
(7) The Commission must, without delay, issue a certificate of attempted conciliation if
the Commission decides that industrial action or duress necessitates the exercise
of its arbitral powers.
(B)
(9) Nothing 1n this Act prevents the exercise of conciliation powers mearly because
arbitration powers have been exercised under the Act.
100 Chapter 3, Part 3 of the Act contains a counterpart of s116A of the Workplace Relations Act
1996 (C'wth) . In particular, s141 provides that, subject to certai n exceptions listed in s140(2):
(1) A person may not bring or continue an action in tort to which this Part applies while
the industnal dispute to which the action relates is subject to conciliation by the
Commission.
(2) ... an industrial dispute is subject to conciliation if:
(a) the Commission has been notified under [Chapter 3] of the dispute or has
decided on its own initiative to resolve the dispute, and
(b) a certificate of attempted conciliation has not been issued by the
Commission under [Chapter 3] in respect of the dispute.
101 Further, s142 provides that 'an injunction cannot be granted by any court to restrain a
threatened or apprehended tort, or to restrain the contin uation or repetition of a tort, if at that time the tort is not actionable under th is Part. '
296 Final Report of the Royal Commission into the Building and Construction Industry
Queensland
102 The functions of the Queensland Industrial Relations Commission are stated, in s273(1 )(e) of
the Industrial Relations Act (1 999) (Old), to include 'resolving disputes by conciliation of
industrial matters and, if necessary, by arbitration or making an order'.
103 This emphasis on conciliation is reflected in Chapter 7 of the Act, which deals with industrial
disputes. Section 229 provides that if an industrial dispute exists between an employer
organisation or an employer and an employee organ isation or an employee and remains
unresolved after the parties have genuinely attempted to settle it, each party to the dispute
must imm ediately notify the registrar of the dispute.
104 Chapter 7, Part 2 deals with the actions that the Queensland Industrial Relations Commission
may take for settling industrial disputes. Where a notice is given under s229, s230 provides:
(3) The Commission may take the steps it considers appropriate for the prevention or
prompt settlement of the dispute, by -(a) conciliation in the first instance; and
(b) if the commission considers conciliation has failed and the parties are unlikely
to resolve the dispute - arbitration.
Without limiting subsection (3), the commission may-(a) direct the industrial action to stop or not happen, or
(b) make orders, or give directions of an interjocutory nature; or
(c) exercise the commission's powers under s277 [which empowers the
Commission to grant injunctions] (whether or not application under that
section has been made) to grant an interim injunction; or
(d) make another order or exercise another power the commission considers
appropriate for the prevention of prompt settlement of the dispute.
105 Section 231 empowers the Commission to act as a mediator in an industrial cause, which it
includes an industrial dispute, whether or not it is within the jurisdi ction of the Commission, on the request of the parties directly involved in the cause, or if the Commissioner is satisfied
mediation is desirable in the public interest.
1 06 Section 232 empowers the Commission to hold a compulsory conference to prevent or settle
the industrial dispute. It may require a person to attend, even if the person is not directly
involved in the dispute, if the Commission considers the person's presence would be
conducive to the prevention or prompt settlement of the dispute.
107 The Commission's conciliation powers are given some rigor by ss233 and 234 of the Act.
Section 233 empowers the Commission to 'direct an order' about an industrial dispute to an
organisation, or a person in a capacity as an officer or agent of an organisation, or to any other
person. Where such an order is made, a person or persons (as named) must file an affidavit
with the Registrar of the Commission stating wheth er there has been compli ance with the order
and, if the order has not been complied with, the steps the person is aware of that have been
taken to comply. The Reg istrar must examine the affidavits and decide whether there has been
National Perspective Part 1 297
substantial compliance with the order. If the Reg istrar is not so satisfied, the Registrar must
issue a notice under the ru les of the Queensland Industrial Relations Commission 'calling on
the organisation or person to whom the order was directed, to show cause to the full bench [of the Commission] at a stated time, why the organisation or person should not be dealt with under section 234' 379
108 Section 234(1) then provides that, if an organisation issued with the notice under s233(7) 'does
not show cause at the stated time', the Full Bench may take action including the imposition of
a financial penalty an amendment of an award or certified agreement to which the organisation is a party suspension of the date of operation of a wage increase, a change to the
organisation's rules to exclude from eligibility for membership persons belonging to a particular
class or section of the membership, suspension of the organisation's registration for a stated period, deregistration of the organisation , such orders as the Full Bench considers appropriate
to secure the organisation 's compli ance with the original order, such orders that the Fu ll Bench
considers appropriate to punish the organisation for not complying with the Commission 's
order, and/or costs of the 'show cause' proceedings.
1 09 Section 234(2) deals with the situation where a person issued with a notice under s233(7) does
not show cause as to why the person has not complied with the order. The possible action
includes a fine , costs and such other orders as the Full Ben ch considers appropriate to secure
the person's compliance with the Commission's order and/or to punish the person for not
complying with the Commission 's order.
South Australia
11 0 Section 192 of the Industrial and Employee Relations Act 1994 (SA) provides:
In exercising its jurisdiction, the Commission must make every practicable attempt to
conciliate, to prevent impending industrial disputes and to settle existing disputes and
claims by amicable agreement.
111 The Commission can mediate between the parties to an industrial dispute for the purpose of
resolving the dispute.380 It may mediate between people who may become involved in an
industrial dispute for the purpose of preventing an in dustrial dispute.
112 The Presiden t of the Commission may assign a Commissioner, for up to one year to deal with the prevention and resolution of industrial disputes of a class specified in the instrument of
assignment. 381
113 Sections 200 and 201, respectively, provide for voluntary and compulsory conferences called
by the Commission. In the case of a compulsory conference, the Commission may summon
the parties to the dispute and any other person who may be able to assist in resolving the
dispute to appear at the conference. 382 A compulsory conference may, at the discretion of the Commission, be held in public or private or partly in public and partly in private. 383 A party or
intervener may be legally represented by leave of the person presiding at the conference
subject to certain circumstances. 384
114 Section 205 provides:
298 Final Report of the Royal Commission into the Building and Construction Industry
The President of the Commission may at any time, and must at least once in each year,
convene a conference of all members of the Commission to discuss means of-(a) preventing, and ensuring the fair and expeditious resolution of, industrial
disputes; and
(b) ensuring that determinations made in settlement of industrial disputes are
consistent with the objects of this Act.
Western Australia
115 The pri ncipal objects of the Industrial Relations Act 1979 (WA) include, in s6:
(b) to encourage, and provide means for, conciliation with a view to amicable
agreement, thereby preventing and settling industrial disputes;
116 Section 32 of the Industrial Relations Act 1979 (WA) provides:
(1) Where an industrial matter has been referred to the Commission the Commission
shall, unless it is satisfied that the resolution of the matter would not be assisted by
so do1ng, endeavour to resolve the matter by conciliation.
(2) In endeavouring to resolve an industrial matter by conciliation the Commission shall
do all such things as appear to it to be right and proper to assist the parties to
reach an agreement on terms for the resolution of the matter.
(3) Without limiting the generality of subsection (2) the Commission may; for the
purposes of that subsection -(a) arrange conferences of the parties or their representatives presided over by
the Commission;
(b) arrange for the parties or their representatives to confer among themselves at
a conference at which the Commission is not present.
(6) Where the Commission does not endeavour to resolve a matter by conciliation or,
having endeavoured to do so -(a) is satisfied that further resort to conciliation would be unavailing; or
(b) is requested by all the parties to the proceedings to decide the matter by
arbitration,
the Commission may decide the matter by arbitration.
(7) Where a matter is decided by arbitration the Commission shall endeavour to
ensure that the matter is resolved on terms that could reasonably have been
agreed between the parties in the first instance or by conciliation.
(8) For the purposes of this section the Commission may -
(a) give such directions and make such orders as will in the opinion of the
Commission -
National Perspective Part 1 299
(!) prevent the deterioration of industrial relations in respect of the matter
until conciliation or arbitration has resolved the matter;
(ii) enable conciliation or arbitration to resolve the matter; or
(iiO encourage the parties to exchange or divulge attitudes or information
which in the opinion of the Commission would assist 1n the resolution of
the matter;
(b) give any direction or make any order or declaration which the Commission is
otherwise authorised to give or make under this Act.
II 7 Section 32A provides:
Tasmania
(1) The functions of the Commission under this Act as to the resolution of matters by
conciliation ("conciliation functions") and the determination of matters by arbitration
("arbitration functions'') -
(a) are to and may be performed at any time and from time to tline as and when
their performance is necessary or expedient; and
(b) are not limited by any other provision of this Act.
(2) Without limiting subsection (1 ), nothing in this Act prevents the performance of
conciliation functions merely because arbitration functions are being or have been
performed.
118 The Tasmanian Industrial Commission is given power to conduct hearings for settling industrial
disputes under sl9 of the Industrial Relations Act 1984 (Tas), which provides:
(1) Subject to this Act, the Commission has jurisdiction to hear and determine any
matter arising from, or relating to, an industrial matter.
(2) For the purposes of subsection (1 ), the Commission may-
(c) conduct hearings for settling industrial disputes.
119 Section 20 addresses the exercise of the Commission's jurisdiction, and provides:
(1) In the exercise of its jurisdiction under this Act, the Commission -
(a) shall act according to equity, good conscience, and the merits of the case
without regards to technicalities or legal forms;
(b) shall do such things as appear to it to be right and proper for effecting
conciliation between parties, for preventing and settling industrial disputes,
and for settling claims by agreement between parties;
(c) is not bound by any rules of evidence, but may inform itself on any matter 1n
such a way as it thinks just; and
(d) shall have regard to the public interest.
300 Final Report of the Royal Commission into the Building and Construction Industry
Arbitration
New South Wales
120 Section 3(g) of the objects of the Industrial Relations Act 1996 (NSW) is
To provide for the resolution of industrial disputes by conciliation and, if necessary, by
arbitration in a prompt and fair manner and with a minimum of legal technicality
121 Consistently with that object, the Commission is to deal with an industrial dispute by arbitration
only if it is not resolved by conciliation, and arbitration is not to proceed until the Commission
has issued a certificate to the effect that reasonab le attempts have been made to resolve the
dispute by conciliation .385 The certificate may be issued on the Commission's own initiative or on application by any person authorised to notify the Commission of the industrial dispute. The
Commission must issue the certi fi cate without delay on the application of any person, if the
person satisfies the Commission that there is no reasonable likelihood that the dispute will be
resolved by conciliation, or if the Commission decides that industrial action or duress
necessitates the exercise of its arbitral powers. 386
122 Section 136 empowers the Commission, in arbitration proceedings, to: make a
recommendation or give a direction to the parties to the industrial dispute; make or vary an
award; make a 'dispute order' (as discussed below); or make any other kind of order it is
authorised to make (including an order made on an interim basis).
123 Pursuant to s137 of the Act, the Commission may make the following kinds of 'dispute orders'
when dealing with an industrial dispute in arbitration proceedings:
(a) an order that a person cease or refrain from industrial action;
(b) an order that an employer reinstate or re-employ any one or more employees who are
dismissed in the course of the industrial dispute or whose dismissal resu lted in the
industrial dispute;
(c) an order that an employer not dismiss employees in the course of the industrial dispute if
the employer has threatened to do so;
(d) an order that a person cease a secondary boycott imposed in connection with the
industrial dispute;
(e) if employees are taking industrial action in connection with an industrial dispute, an order
that the employees cease taking that industrial action before it makes any other kind of
dispute order against the employer.
124 However, a dispute order 'may not provide for the payment of compensation, lost remuneration or any other amount' 387
125 Section 139 of the Act all ows a person who applied for the dispute order, or any other person
who is authorised to apply for the dispute order, to apply to the Commission in relation to an
alleged contravention of that order. Before dealing with an alleged contravention, the
Commission must summon the person alleged to have contravened the order to show cause
why the Commission should not take action for the contravention. After hearing from any
National Perspective Part 1 301
person in answer to the summons, and after considering any other relevan t matter, the
Commission is empowered to do any one or more of the following:
(a) dismiss the matter;
(b) cancel the approval of an enterprise agreement;
(c) suspend or modify for any period all or any of the entitlements under an industrial
instrument;
(d) cancel or suspend the registration of an industrial organisation;
(e) make a demarcation order so as to exclude from eligibility from membership of an
industrial organisation persons belonging to a class or group in ci rc umstances where it
finds that the contravention has arisen because of the conduct of a particu lar group of
members of that industrial organisation;
(f) impose a financial penalty on an industrial organi sation or an employer as provided for
under s139(4) ; or
(g) make any other determination that the Commission considers would help in re solving the
industrial dispute.
126 Subsections 139(4) and (5) specify the penal ty that may be imposed, and the manner in wh ich
a penalty may be recovered .
Queensland
127 The functions of the Queensland Industrial Relations Com mi ssion include 'resolving industrial
disputes by conciliation , of industrial matters and , if necessary, by arbitration or making an
order' 3 88 The Commission can resolve disputes in the negotiation of agreements by
conci li ation or arbit ration 389 and disputes that threaten to harm th e community or the economy
by concil iation and, if necessary, arbitration 390
128 As noted, the Commission may arbitrate if it considers that conciliation has failed and the
parties are unlikely to resolve the dispute3 91 Sections 233 and 234 of the Act enable a Full
Ben ch of the Com mission to impose penalties on a person or organi sation against whom an
order is made, where the party or organisation has not complied with the order and is unable to
show cause why a penalty sho1Jid not be imposed .
South Australia
129 The Industrial Relations Commission of South Au stralia has jurisd iction, under sub-ss26(c) and
(d) of the Industrial and Employee Relations Act 1994 (SA), 'to resolve industrial disputes ' and
'to hear and determine any matter or thing arising from or relating to an industrial matter'. For
that purpose, the Commission has power to issue a su mmons requi ri ng a person to appear to
give evidence and to produce evidentiary material. 392 A person who fails to give evidence or produce evidentiary material commits a contempt. 393 The Commission has power to pu nish for
contempt. 394 Evidence may be taken on oath , affirmation or declaration. It may be taken orally
or in the form of a written deposition.395
302 Final Report of the Royal Commission into the Building and Construction Industry
130 Section 202 of the Act empowers a person presiding at a compulsory conference to refer the
subject matter of the conference for determination by the Commission (which may, where the
person presiding is a Presidential Member or a Commissioner, be constituted by him/herseln.
Orders may be made by the Commission, fol lowing referral of a matter for determination. 396
131 The Commission may impose a procedural liability or civil penalty or other penalties, if a party
contravenes or fails to comply with an interlocutory order of the Commission, or an order to do,
or refrain from, a particular act and makes no reasonab le and adequate excuse to the Commission for the contravention or non-compliance 397
132 Chapter 6 of the Act specifies various monetary fines to be imposed in the event that a person
fails to comply with a provision of the Act. For example, under s224 if a person who is bound
by an award or enterprise agreement contravenes or fails to comply with a provision of the
award or ag reement, the person is guilty of an offence pu nishable by a maximum penalty of
$2500. As noted, enterprise agreements must contain procedures for preventing or settling
further disputes. A person or body that fails to comply with those procedures also fails to
comply with the enterprise agreement. The Commission has no power to hear and determine
proceedings for an offence against the Act. Th at power is exercisable by an ind ustrial
magistrate. 398
Western Australia
133 The principal objects of the Industrial Relations Act 19 79 (WA) include, in s6:
(c) to provide means for preventing and settling industrial disputes not resolved by
amicable agreement, including threatened, impending and probable industrial
disputes, with the max1mum of expedition and the minimum of legal form and
technicality;
134 The arbitration powers of the Western Australian Industrial Relations Commission are
contained in s32 of the Industrial Relations Act 1979 (WA). If the Commission does not attempt
to resolve a matter by conciliation, or having attempted to do so 'is satisfied that further resort
to conci liation would be unavailing; or . is requested by al l parties to the proceedings to decide the matter by arbitration', the Commission may decide the matter by arbitration 399
Where a matter is decided by arbitration , 'the Commission shall endeavour to ensure that the
matter is reso lved on terms that could reasonably have been agreed between the parties in the
first instance or by conciliation' 400
135 Section 32A(2) provides that 'nothing in this Act prevents the performance of conciliation
functions merely because arbitration functions are being or have been performed' .
Tasmania
136 Section 29(1) of the Industrial Relations Act 1984 (Tas.) enables an organisation, employer or
employee to apply for a hearing in respect of an industrial dispute. Section 29(3) empowers the
Commission, 'at any stage of proceedings ... of its own motion or at the request of one or
more of the parties to .. . attempt to conciliate the dispute'.
137 Section 31 (1) provides that:
National Perspective Part 1 303
Subject to this section, where the Commissioner presiding at a hearing under section 29
is of the opinion, after affording the parties at the hearing a reasonable opportunity to
make any relevant submissions and considering the views expressed at the hearing, that
anything should be required to be done, or that any action should be required to be
taken, for the purpose of preventing or settling the industrial dispute in respect of which
the hearing was convened, that Commissioner may, by order in writing, direct that that
thing is to be done or that action is to be taken.
138 The Commission has a power to conduct a private arbitration with the consent of all the
parties. Section 61, which gives that power, is:
(1) Where the President is of the opinion that it is desirable to do so for the purpose of
resolving an industrial matter concerning 2 or more parties, he [sic] may, at the
written request of all those parties, appoint a Commissioner to conduct an
arbitration in respect of that industrial matter, subject to the parties agreeing to
accept the Commissioner's decision on the arbitration is final.
(2) All proceedings relating to arbitration pursuant to this section shall be conducted in
private and any record of those proceedings shall be supplied by the Commission
only to the parties to that arbitration.
(3) In conducting an arbitration pursuant to this section, a Commissioner shall have
regard to the matters specified in section 20(1) and to any principles previously
determined by a Full Bench and which still have application.
(4) The decision of a Commissioner acting pursuant to this section shall not be applied
as an award or order of the Commission, but may be incorporated in, or form, an
agreement made pursuant to section 55(1).
139 The Industrial Relations Act 1984 (Tas.) provides penalties for breaches of the Act, or an award
or a registered agreement made under the Act. Proceedings for an offence against the Act, and
the imposition of any consequential penalty, must be heard and determined by a magistrate,
not the Commission 4 01
Injunctions
New South Wales
140 Section 137 of the Industrial Relations Act 1996 (NSW) sets out the kinds of dispute orders that
the Commission may make when dealing with an industrial dispute in arbitration proceedings.
They include a power to 'order a person to cease or refrain from taking industrial action' 402
Under s137(2), 'if employees are taking industrial action in connection with the industrial
dispute, the Commission may order the employees to cease taking that industrial action before
it makes any other kind of dispute order against the employer.'
141 Section 139 deals with contravention of a dispute order, including an injunctive order. Under
s139(2), the Commission is required to summon a person alleged to have contravened an
order to show cause why the Commission should not take action for the contravention.
Section 139(3) sets out the course of action open to the Commission after hearing any person
304 Final Report of the Royal Commission into the Building and Construction Industry
who is all eged to have contravened the dispute order. These kinds of actions are described above.
142 Additional injunctive powers are conferred on the Commission in Court Session by Chapter 7,
Part 1, of the Act, which deals wi th breach of industrial instruments. Such instruments include
certified agreements, and so the legislation covers the breach of the dispute resolution
procedures contained in certified agreements. Under s357(1 ), 'if an industrial court is sati sfied
that a person has contravened a provision of an industrial instrument, it may ord er the person
to pay a pecuniary penalty not exceeding $10,000 (a civil penalty)'. Under s359:
(1) The Commission in Court Session may, on the imposition of a civil penalty under
this Part by it or another industrial court, grant an injunction to restrain the person
from committing further or other contraventions of the industrial instrument concerned.
(2) Such an injunction may be granted on application or on the Commission's own
initiative.
(3) A person who disobeys such an injunction is guilty of contempt of the Commission
and may be dealt with accordingly
Queensland
143 The Queensland Industrial Rel ations Commission can, under s277(1) of the Industrial Relations
Act 1999 (Old), grant the injunctive order it considers appropriate to compel compliance with an industrial instrument, a permit or the Act; or to restrain a contravention, or continuance of a
contravention, of an industrial instrument, a permit or the Act. The Commission may direct the injunctive order to officers or members of an organ isation generally, particular offi cers or
members of an organisation, or a particular employer or employee.403 If the inj unctive order is
directed to an organisation, the organisation and each officer of the organisation must ensure that the officers and members of the organisation comply with the order4 04 Where a person or
organi sation agai nst whom an injunctive order is made fails to comply with that order, and is
unable to show cause why the person or organisation should not be dealt with under s234, the
Full Bench of the Commission may impose one or more of the penalties li sted under s234. This
is discussed further above.
144 The Commission has injunctive powers, under sub-ss230(3), (4) and (5) of the Act, in relation to
an ind ustrial dispute. Section 230(4), quoted above, empowers the Commission to grant an
interim injunction .
South Australia
145 The South Australian Industrial Relations Commission may make orders, in relation to industri al
disputes, under s202 of the Industrial and Employee Relations Act 1994 (SA) , referred to
above.
146 Injunctive remedies under the Act rest with the Industrial Court of South Australia. In particular,
s15 provides:
(1) The Court has jurisdiction to order a person who contravenes or fails to comply
with the provision of this Act, an award or an enterprise agreement-
National Perspective Part 1 305
(a) to take steps, specified in the order, within a time specified in the order, to
remedy the contravention or non-compliance; or
(b) to refrain from further contravention of, or non-compliance with, the
provision.
(2) If there are reasonable grounds to believe that a person is about to contravene or
to fail to comply with a provision of this Act, an award or enterprise agreement, the
Court has jurisdiction to order the person to refrBin from the contravention or non
compliance.
Western A ustralia
14 7 The Industrial Relations Act 19 79 (WA) does not confer on the Western Australian Industrial
Commission a general express power to issue injun ctions. The Commission has power to
convene a compulsory conference under s44. At or in relation to such a conference the Commission may, with respect to 'industrial matters', 'give such direction and make such
orders as wil l in the opinion of the Commission . . . prevent the deterioration of industrial
relations in respect of the matter in question until conciliation or arbitration has resolved that matter' 405 In the case of a claim of harsh, oppressive or unfair dismissal of an employee the
Commission may make 'any interim order the Commission thinks appropriate in the
circumstances pending resolution of the claim ' 406 The Industrial Magistrate's Court has powe r, in limited circumstances, to make orders requiring a person to do or cease any specified
activity4 07 A person failing to comply with such an order of the Industrial Magistrate's Court is
taken to have committed a contempt of the Industrial Appeal Court 408
Tasmania
148 The Tasmanian Industrial Commission has jurisdiction, under s1 9(1) 'to hear and determine any
matter arising from, or rel ating to, an industrial matter'. For the purposes of s1 9(1 ), the
Commission may conduct hearings for settling industrial disputes. 409 Under s31 (1) it can direct,
by order in writing, 'that anything shou ld be required to be done, or that any action should be
requ ired to be taken, for the pu rpose of preventing or settling [an] industrial dispute in respect
of which [a] hearing was convened' . The Commission 's power under s31, would appear to
include a power to direct, by order in writing, that a person or a body cease described action,
or not take described action , 'fer the purpose of preventing or settling [an] industrial dispute'.
306 Final Report of the Royal Commission into the Building and Construction Industry
Attachment 5
Workplace Relations Act 1996 (C'wth) Extracts
National Perspective Part 1 30 7
308 Final Report of the Royal Commission into the Building and Construction Industry
4 Interpretation
(I) In th is Act, unless the contrary intention appears:
industrial action (except in Part XA) means:
(a) the performance of work in a manner different from that in which it is customarily
performed, or the adoption of a practice in relation to work, the result of which is a
restriction or limitation on, or a delay in, the performance of the work, where:
(i) the terms and conditions of the work are prescribed, wholly or partly, by an award
or an order of the Commission, by a certified agreement or AWA, by an award ,
determination or order made by another tribunal under a law of the Commonwealth
or otherwise by or under a law of the Commonwealth; or
(ii) the work is performed, or the practice is adopted, in connection with an industrial
dispute;
(b) a ban , limitation or restriction on the performance of work, or on acceptance of or offering
for work, in accordance with the terms and conditions prescribed by an award or an
order of the Commission, by a certified agreement or AWA, by an award, determination
or order made by another tribunal under a law of the Commonwealth or otherwise by or
under a law of the Commonwealth;
(c) a ban, limitation or restriction on the performance of work, or on acceptance of or offering
for work, that is adopted in connection with an industrial dispute; or
(d) a failure or refusal by persons to attend for work or a failure or refusal to perform any work
at all by persons who attend for work, if;
(i) the persons are members of an organisation and the failure or refusal is in
accordance with a decision made, or direction given, by an organisation, the
committee of management of the organisation, or an officer or a group of members
of the organisation acting in that capacity; or
(ii) the failure or refusal is in connection with an industrial dispute; or
(iii) the persons are employed by the Commonwealth or a constitutional corporation;
or
(iv) the persons are employed in a Territory;
but does not include:
(e) action by employees that is authorised or agreed to by the employer of the employees; or
(f) action by an employer that is authorised or agreed to by or on behalf of employees of the
employer; or
(g) action by an employee if:
(i) the action was based on a reasonable concern by the employee about an
imminent risk to his or her health or safety; and
National Perspective Part 1 309
(ii) the employee did not unreasonably fail to comply with a direction of his or her
employer to perform other available work, whether at the same or another
workplace, that was safe and appropriate for the employee to perform.
127 Orders to stop or prevent industrial action
(1) If it appears to the Commission that industrial action is happening, or is threatened , impending
or probable, in relat ion to:
(a) an industri al dispute; or
(b) the negotiation or proposed negotiation of an agreement under Division 2 of Part VIB; or
(c) work that is regulated by an award or a certified agreement;
the Commission may, by order, give directions that the industrial action stop or not occur.
(2) The Commission may make such an order of its own motion, or on the application of:
(a) a party to the industrial dispute (if any); or
(b) a person who is directly affected, or who is likely to be directly affected, by the industrial
action; or
(c) an organisation of which a person referred to in paragraph (b) is a member.
(3) The Commission must hear and determine an application for an order under this section as
quickly as practicable.
(4) The powers conferred on the Commission by subsection (1) are in addition to, and not in
derogation of, the powers conferred on the Commission by the rest of this Act.
(5) A person or organisation to whom an order under subsection (1) is expressed to apply must
comply with the order.
(6) The Court may, on the application of a person or organisation affected by an order under
subsection (1) , grant an injunction on such terms as the Court considers appropriate if it is
satisfied that another person or organisation:
(a) has engaged in conduct that constitutes a contravention of subsection (5); or
(b) is proposing to engage in conduct that would constitute such a contravention .
(7) If, in the opinion of the Court it is desirable to do so, the Court may grant an interim injunction
pending determination of an application under subsection (6).
166A Restriction on certain actions in tort
(1) Subject to this section, an action in tort under the law of a State or Territory may not be brought
by a person against an organisation of employees , or an officer, member or employee of such an organisation, in relation to conduct by the organisation, or by the officer, member or
employee acting in that capacity, in contemplation or furtherance of claims that are the subject
of an industrial dispute unless the Commission:
(a) has certified in writing as mentioned in paragraph (6)(a) or (c) in respect of the conduct; or
31 0 Final Report of the Royal Commission into the Building and Construction Industry
(b) has certified in writing as mentioned in paragraph (6)(b) in relation to the person in respect
of the conduct.
(2) Subsection (1) does not apply to:
(a) conduct that has resulted in:
(i) personal injury; or
(i i) wilful or reckless destruction of, or damage to, property; or
(iii) the unlawful taking, keeping or use of property; or
(b) conduct arising out of a demarcation dispute; or
(c) conduct arising out of a dispute relating to a claim for payment to employees in respect
of a period during which the employees engaged, or engage, in industrial action; or
(d) conduct that is in breach of a direction given by the Commission or a State in dustrial
authority.
(3) A person who wants to bring an action in tort in respect of conduct to which subsection
(1 ) applies may give written notice to a member of the Commission or a Registrar stating that
the person wants to bring the action .
(4) If a notice under subsection (3) is given to a Registrar, he or she must tell a member of the
Commission as soon as practicable.
(5) If such a notice is given , the Commission must take immediate steps to try, or to continue to try,
by the exercise of its powers under this Act, to stop the cond uct.
(6) If:
(a) after the Commission starts to exercise conciliation powers in relation to the ind ustrial
dispute it forms the opinion that it is not likely to be able to stop the conduct promptly; or
(b) the Commission decides that it would cause substantial injustice to the person who gave
a notice under subsection (3) in respect of the conduct if the pers on were prevented from
bringing the action to which th e notice re lates while the Commission is exercising
conciliation powers in relation to the industrial dispute; or
(c) th e Commission has not stopped the conduct by the end of 72 hours after th e notice
was given under subsection (3) in respect of the conduct;
the Commission must immediately certify in writing to that effect.
(7) If:
(a) the conduct stops before the end of the 72 hours referred to in paragraph (6) (c); and
(b) after the conduct stopped, other conduct occurred; and
(c) in the Commission's opinion , the other conduct is substantially related to the first
mentioned conduct;
then, for the pu rposes of paragraph (6)(c):
Na tional Perspective Part 1 311
(d) the other conduct is taken to be part of the first mentioned conduct; and
(e) the period of the first mentioned conduct is taken to include the period of the other
conduct.
Part VIS-Certified agreements
Division 8 - Negotiations for certified agreements etc.
170ML Protected action
(1) Thi s section identifies certain action (protected action) to which the provisions in section 170MT
(which confers certain legal immu nity on protected action) are to apply.
(2) During the bargaining period:
(a) an organisation of employees that is a negotiating party; or
(b) a member of such an organisation who is employed by the employer; or
(c) an officer or employee of such an organisation acting in that capacity; or
(d) an employee who is a negotiating party;
is entitled , for th e purpose of:
(e) supporting or advancing claims made in respect of the proposed agreement; or
(D responding to a lockout by the employer of employees whose employment will be
subject to the agreement;
to organise or engage in in dustrial action directly against the employer and, if the organisation , member, officer or employee does so , the organising of, or engaging in , that industrial action is
protected action .
(3) Subject to subsection (6), during the bargaining period, the employer is entitled, for the
purpose of:
(a) support ing or advancing claims made by the employer in respect of the proposed
ag reement; or
(b) responding to industrial action by any of th e employees whose employment wi ll be
subject to th e agreement;
to lock out from their employment all or any of the employees whose employment will be
subject to the ag reement and, if the employer does so, the lockout is protected action.
Note 1: The existence of this entitlement does not affect any right of the employer to
refuse to pay the employee where, under the common law, the employer is permitted to
do so because the employee has not perform ed work as directed.
Note 2: The existence of this entitlement also does not affect any authorisation of the
employer to stand down the employee as a result of a variation of an award under section
126, nor does it affect the Commission's powers under that section to vary an award to give such an authorisati on .
31 2 Final Report of the Royal Commission into the Building and Construction Industry
(4) The