The key purpose of the bill is to re-establish the Australian Building
and Construction Commission (ABCC).
Submitters who were critical of the bill generally argued that there is
no need for special laws for the building and construction industry, criticised
the increased powers of the regulator, the increased penalties, and questioned
whether productivity would improve if the bill were to be passed.
For example, the Australian Council of Trade Unions (ACTU) submitted that the Fair
Work Act 2009 (Cth) constitutes an adequate and appropriate framework for
the regulation of industrial relations in Australia, including the promotion
and compliance with industrial laws.
The Construction, Forestry, Mining and Energy Union (CFMEU) also argued
strongly against special laws for the building and construction industry and
submitted that the proposed powers for the ABCC are inappropriate in the
The key issues emerging from supporters of the bill include the need for
the ABCC to be re-established, the need for specific legislation for building
and construction industry, and the increased productivity gains which will
result. The committee heard that since the ABCC had been abolished there has
been an increase in working days lost, illegal activity and contravention of
the relevant legislation. Supporters of the bill argued that the measures
contained in the bill would re-establish a strong watchdog to maintain the rule
of law and by doing so protect workers and constructors, and improve the
productivity of building sites. 
On balance, the committee found these arguments persuasive, and they are
discussed in more detail below.
The need for the Australian Building and Construction Commission to be
A number of submitters strongly supported the bill's proposal to
re-establish the ABCC, submitting that the original reasons for creating the
body were still relevant as evidenced by recent examples outlined below.
The Cole Royal Commission
In 2001 the government established the Royal Commission into the
Building and Construction Industry. The Royal Commission reported its findings
in 2003. Chief among these was the conclusion that endemic within the building
and construction industry was a disregard for the law.
Master Builders Australia described the report's findings in the following
It found that the industrial behaviour of building unions and
union officials had established a culture of coercion and intimidation that was
to the detriment of productivity in industry and the broader community. This
regrettably remains the case. Even in recent times, Justice Wilcox and the
previous government held similar views. So they are not just views of the
industry but were views found subsequent to the Cole royal commission in other
inquiries that have been conducted.
In response to these findings the Coalition government introduced
legislation to establish the ABCC in 2003. This legislation was unfortunately
watered down by the Labor government in 2012, with productivity losses. ACCI
submitted that the findings of the Royal Commission have 'enduring relevance'
and 'are as true today as they were in 2003'.
Recent examples of illegality in
The committee heard of examples of recent illegality in the industry,
illustrating that the findings of the Royal Commission are still pertinent
today. Indeed, Business SA submitted that 'there is evidence that the
lawlessness identified by the Cole Royal Commission now has returned in full
Master Builders Australia described how the 2011 'Melbourne Markets'
case demonstrates that the courts have recognised 'deliberate flouting of the
law by the CFMEU to obtain industrial advantage'. In that case the court
imposed $250,000 in fines and awarded $190,000 in costs against the CFMEU
'after finding that the union had deliberately and illegally prevented work
from going ahead on the new Melbourne Markets site in Epping, Victoria'.
MBA reported the court's observation that:
...the CFMEU’s conduct on this occasion was calculated and
deliberate, and that union officials had taken the view that they should simply
proceed with the action even though they knew it would cost an enormous amount
of money. The cynical rationale behind this decision was that any fine would
cost the CFMEU less than the membership benefit to be gained by engaging in the
MBA also listed a number of other examples of illegality and asserted
that unions deliberately allow entry permits to lapse to avoid prosecution for
The CFMEU rejected MBA's suggestion that union officials were deliberately
allowing entry permits to lapse in order to avoid prosecution.
Other examples provided by MBA include:
...the CFMEU war with the construction company Grocon and
unions' appalling tactics, including the blockade of the Myer employees on site
in Melbourne during August and September 2012. There are other examples—for
instance, the Children's Hospital in Queensland, the Little Creatures Brewery
in Geelong and the Lend Lease dispute in Adelaide—from recent times.
Further, there has been a threefold increase in working days lost to
industrial disputes, since the ABCC was abolished. Independent Economics
reports that this has increased from 24,000 days in the 2011-2012 financial
year to an estimated 89,000 days in 2012-2013.
The graph below illustrates the number of working days lost to industrial
disputes in the construction industry every second quarter between March 2001
and March 2013.
The Australian Mines and Metals Association (AMMA) explains the graph in
the following terms:
What we are seeing is a high number of working days lost to
industrial disputes leading up to the introduction of the ABCC and BCII Act on
1 October 2005, after which we see an immediate and dramatic drop. Working days
lost to industrial disputes then remained at relatively low levels until a
small increase coinciding with the change to a Labor government in December
2007 and again with the introduction of the Fair Work Act on 1 July 2009. We
then see a dramatic spike that coincides almost exactly with the repeal of the
BCII Act and ABCC on 1 June 2012.
Re-establishment of the ABCC
The committee heard that the only way to address this pattern of
unlawful conduct is to pass the bills currently before the committee.
The Australian Chamber of Commerce and Industry (ACCI) agreed with this
conclusion, observing that all aspects of the economy have been adversely
impacted by unlawful conduct in major construction projects. ACCI submitted
that the restoration of the ABCC would restore the rule of law in the building
and construction industry:
Re-establishing the ABCC with its full suite of powers
represents a big win for the industry and consumers, especially for small
businesses and contractors which have traditionally been unlawfully locked out
of major construction projects. The return of the independent industrial
regulator will also result in significant gains for the national economy, as a
result of a more productive and efficient industry that observes the rule of
law and recognises free enterprise over intimidation and industrial thuggery.
Business SA submits that the 'sharp increase in working days lost to
industrial disputes and the protracted and very public industrial disputes in
2012-2013 demonstrate the need for re-establishing law and order in the
building and construction industry and to properly resource the relevant
The Australian Industry Group also supported the bill, submitting that the
Australian community has a 'direct interest in ensuring that the rule of law is
upheld' and that passage of the bill will have a 'positive effect'.
AMMA submitted that the 'ABCC remains a desperately needed regulator to address
widespread unlawful industrial conduct in the industry'.
The MBA submitted that the actions taken by some unions as outlined above are
'part of a concerted national campaign to exploit the weaknesses' in the
The CFMEU rejected these conclusions, submitting that the issues connected
to the Grocon dispute provided by MBA were ‘particular to that employer and the
industry and the union’ and there is ‘no correlation’ between that dispute and
the abolishment of the ABCC.
The persistent illegality in the building and construction industry is
of serious concern to committee members. The committee notes the indisputable
evidence that the building and construction industry still requires specific
and robust legislation. The recent examples of illegality in the industry demonstrate
the need to re-establish a strong watchdog to maintain the rule of law. The
reforms contained in the bill are a necessary and proportionate response to
increased militarism and illegality in the construction and building industry.
The committee heard that the passage of the bill would also enhance
productivity in the building and construction sector. The productivity of the
sector has significant flow on effects to the Australian economy more broadly,
representing 'approximately eight per cent of Australia's GDP'. 
Research conducted by Independent Economics (formally Econtech),
demonstrates that productivity has declined sharply since the previous ABCC
regime was dismantled. The research highlights that during the former ABCC regime:
building and construction industry productivity grew by more than nine
consumers were better off by around $7.5 billion annually; and
fewer working days were lost through industrial action.
Independent Economic's findings were supported by a number of submitters
in the industry, including the Housing Industry Association
and the Australian Mines and Metals Association.
The MBA offered strong support for the bill, submitting that the reforms
are necessary 'in order to ensure a return to compliance with the rule of law
on building sites and to boost the industry's and the nation's productivity'.
MBA contend that industrial relations have a significant impact on labour
market outcomes and macro-economic performance, particularly in the construction
and building industry. According to their submission the 2005 Act that
established the ABCC:
...significantly improved industrial relations and increased
productivity in which industrial relations was not the predominant and negative
influence that it had been in the past and which it has become again in the
MBA commissioned a report in 2013 from Independent Economics, the latest
in a series of reports from that organisation. The findings from those reports
form the basis for MBA's argument about the impact on productivity of the
[T]he data analysed for each update continues to support the
findings of the 2007 Report; that there has been a productivity outperformance
in the building and construction industry compared to other sectors of the
economy and its historical productivity performance prior to the implementation
of improved workplace practices.
The Australian Chamber of Commerce and Industry supported the findings
of the Independent Economics report, arguing that without the reforms proposed
by the bill, key productivity gains would be lost.
The ACTU rejects the evidence relied upon by the government, as outlined
above, describing the research as being based on 'flawed and discredited
The committee notes that both the ACTU and CFMEU submissions discredited
professional work done by Independent Economics, an internationally renowned
independent research body used by both Labor and Coalition governments in the
The Northern Territory Government submitted that the reforms proposed by
the bill are necessary to ensure strong growth and promote labour mobility:
The introduction of the ABCC led to an increase in
productivity in the sector across the nation. With a significant number of
construction jobs coming online over the next few years, the Northern Territory
Government sees the reintroduction of the ABCC as having a stabilising and
positive influence on the sector, both in terms of providing a solid framework
for employers and employees, but also for representative groups.
A vital part of the legislation is enabling the minister to
issue a Building Code. This will be a code of practice that all participants in
the building and construction industry, employer, employee, union and the Commonwealth
must comply with in respect of building work. This will further standardise
work practices across the country, thereby allowing employees to move
seamlessly from jurisdiction to jurisdiction, and allowing employers to be able
to attract potential employees from across the country.
The Queensland Government also supported the productivity gains that
passage of the bill would achieve, submitting that 'unlocking the activity in
Queensland's construction sector to create jobs and investment is crucial to
Queensland's economic recovery'.
The committee is satisfied that the evidence produced by Independent
Economics is the result of thorough and careful research. The evidence leads to
the inevitable conclusion that the reforms proposed by the bill will contribute
to increased productivity in the building and construction industry, for the
benefit of workers, employers and, ultimately, all Australians.
The bill proposes to retain the role of the Commonwealth Ombudsman
currently performed under the Fair Work (Building Industry) Act 2012.
The Commonwealth Ombudsman would review and report on the exercise of coercive
powers to gather information by the ABC Commissioner.
The Commonwealth Ombudsman advised that it 'welcomed' retention of its
function, submitting that this would 'provide assurance to Parliament and the
public that the powers are being exercised in compliance with legislative
requirements and best practices.'
The Ombudsman indicated he anticipated that his oversight function may expand
if the bill is passed, and that he will work with the ABCC to develop a
memorandum of understanding to ensure that its oversight function is
The committee expects that if the bill is passed the ABCC and the Commonwealth
Ombudsman will work closely to develop a memorandum of understanding that is
appropriate in the circumstances.
Some submitters who generally supported the policy objectives
underpinning the bill suggested technical amendments.
The committee is persuaded that the bill as it stands, with the amendments
recommended earlier, will achieve the stated policy objectives of the bill:
re-establish a strong watchdog to maintain the rule of law and by doing so
protect workers and constructors, and improve the productivity of building
The building and construction industry is an important sector of the
Australian economy. Throughout this inquiry the committee has been presented
with evidence of increased illegality and disregard for the rule of law in the
building and construction industry. It is of the utmost importance that this
sector is able to flourish and is not hampered by illegality and a culture of
intimidation as evidenced in the inquiry. The committee is also persuaded by
evidence that productivity in the sector has declined since the ABCC was
abolished by the former government. An independent, empowered, and properly
resourced regulator is necessary.
For these reasons the committee concludes that the measures contained in
the bill are an appropriate and prudent response to the issues raised in this
inquiry, and considers that the bill should be passed without amendment.
The committee recommends that the Senate pass the bill.
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