Building industry corruption allegations focuses attention on workplace relations reform
3rd February 2014
The serious allegations of standover tactics, financial kickbacks and extortion in Australia’ building and construction industry this month will not surprise those of you that contract into the building and construction industry. The less than subtle pressure imposed on sub-contractors to standardise conditions of employment and working methods has long been a problem that seems to have neither political nor legal solution.
The focus upon threats and thuggery is important, and must be addressed to ensure the rule of law is upheld. However, this alone does not explain the urgent need for reform across all Australian industries. Maybe the key lesson from the building industry is that corruption flourishes where collusion is allowed to stifle innovation and competition. The building industry uses standover men to enforce the cartel, whilst other industries find more subtle methods to restrict competition. Nevertheless, the stagnating impact on growth and national income is no different.
This is where effective reform of the national workplace relations’ system must proceed in conjunction with reform to industry competition policy.
The Australian Government campaigned at the last federal election promising to re-establish the Australian Building and Construction Commission (ABCC) which was reasonably successful in eliminating the union closed shop. The previous Labor Government curtailed the powers of this regulatory authority and as at the date of this article, continues its opposition to the proposal. Therefore one would expect to have to wait until July this year when the newly elected Senators take their place in the Parliament to see any legislative response to the problems of the building industry.
On the other side of the equation, leadership needs to be shown from employers and in particular the major property developers and construction companies. Unfortunately, I wouldn’t hold my breath waiting for a bit of moral leadership from this group. Only the Australian and State governments, which are both regulators and major contractors in civil construction can ensure that public tendering is truly competitive and prohibits collusion, pattern bargaining and standardised work practices. The building code of conduct championed by the Independent Contractors Association of Australia is a very good template to start the reform. In the private commercial sector a reminder to the Australian Competition and Consumer Commission to police the commercial sector in a similar fashion would be very helpful.
Whilst on the issue of thuggery and misconduct, very few commentators have mentioned the power of the Fair Work Commission to issue, vary and withhold the right of entry permits to union officials visiting workplaces. The law says the Commission must be satisfied that the proposed permit holder is a ‘fit and proper person’ before a permit can be issued. Criteria for assessing whether an official is a ‘fit and proper person’ to hold a permit include:
- whether the official has received appropriate training
- whether the official has ever been convicted of an offence against an industrial law
- whether the official has ever been convicted of an offence involving (among other things) entry onto premises, fraud, dishonesty or violence against another person
- whether a permit issued to the official has been revoked, suspended or made subject to conditions, and
- any other matters that the Commission considers relevant.
Membership of an outlaw motorcycle gang doesn’t seem to rate a mention, so you might expect the Commission to do a little bit more due diligence on the people actually visiting workplaces and their behavior. Of course, this power doesn’t extend to employers so it may need to be reinforced. Ironically, the new power of the Fair Work Commission to issue orders to stop workplace bullying would be an ideal tool to address the stand over tactics of onsite union delegates as well as the thugs employed by major contractors to ensure sub-contractors conform to standardized work practices and conditions.
Looking more broadly, there is little doubt that national workplace laws currently inhibits productivity. The modern awards in particular, impose unreasonable administrative and financial costs on employers as well as limiting when and how staff can be deployed. Although modern awards are notionally industry based, the Fair Work Commission has consistently imposed uniform and rigid conditions without regard to industry specific competitive forces. Trade exposed industries such as manufacturing are treated no different to government funded public services. The ‘better off overall’ test for enterprise agreements prevents innovative company level agreements that would promote productive work practices. Greenfield agreements are simply a mechanism to extort huge premiums before even one dollar is earned.
Unfortunately the Fair Work Commission personnel has neither the capability, appropriate research methodology or the inclination, to create truly modern flexible industry and occupational based conditions of employment. The government should place the responsibility for review and revision of modern awards in the hands of a standing committee or statutory authority that is capable of credible economic research and an understanding of the competitive forces affecting specific industries. Let’s finally face the fact that we no longer work in an industrial age economy and economic success can be achieved with fair terms and conditions of employment.
There is undoubtedly lots more that can be done to improve the way we employ and engage people to create productive and successful businesses and employment relationships. These are some of my thoughts and clearly we need to continue the debate and discussion. I would pleased to hear from you.