Senate debates

Monday, 18 April 2016


Building and Construction Industry (Improving Productivity) Bill 2013 [No. 2], Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 [No. 2]; Second Reading

5:54 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | Hansard source

I know I am getting text messages from journalists to hurry up because they want a vote before the seven o'clock news, but I may not be able to oblige given that Senator Lazarus and Minister Cash will need to speak. When the ABCC bill was before the Senate last August, I supported the second reading of the bill but reserved my position on the third reading. I will again support the second reading stage of this bill, which I emphasise allows for amendments to be considered in the committee stage. But it seems almost inconceivable that the government will deal with the issues that I believe are important in order to make this bill fairer and to make it more effective in terms of job creation in this country and in terms of the critical issue of occupational health and safety. It is fundamental to the function of the parliament that we fully debate this important and—it must be said in this case—controversial legislation.

When the Prime Minister announced his decision to bring this bill back before the Senate by the extraordinary mechanism of proroguing the parliament and his intention, if it is not passed, to proceed to a double dissolution election, the Prime Minister argued that the construction industry is a vital part of Australia's economy. It is, indeed, a sector that employs more than a million Australians and represents about eight per cent of the nation's GDP. The government argues that the additional costs of construction in this country, due to the frequency of industrial disputes and standover tactics by some militant union members, are a serious handbrake on economic growth. Moreover, as the Attorney-General pointed out on ABC Radio this morning, on the AM program with Michael Brissenden, there have been not one but two royal commissions into this industry—the Cole royal commission and the more recent Heydon royal commission. Both reached very similar conclusions.

The more recent inquiry, that of former High Court justice Dyson Heydon, gathered a great deal of evidence—some of which I found quite compelling—about corruption, bullying and harassment. In his interim report, Commissioner Heydon found that CFMEU members had acted in 'wilful defiance of the law', and there were allegations of corruption, death threats, extortion, gross neglect and other 'serious criminal matters'. In his final report, released last December, the royal commissioner affirmed his finding that corruption was widespread and deep seated. The union officials allegedly involved 'ranged in seniority from the most junior levels to the most senior', although I hasten to add that Michael O'Connor, the National Secretary of the CFMEU, has not been tainted by any of those allegations.

Commissioner Heydon recommended a new national regulator, with the same powers as ASIC, be established. I would also note, as Senator Muir did earlier in this debate, the huge number of court cases in which the CFMEU has been found to have broken the law, or have admitted they have broken the law, and the more than $6 million in penalties that have been issued against that union. The Labor opposition has tried hard to label the Heydon royal commission as a political witch-hunt, but its findings, the large body of evidence presented and the evidence in numerous court proceedings cannot be lightly dismissed. They certainly raise the question of whether our existing legislative framework is strong enough to properly address these issues. The government clearly campaigned on the issue of the ABCC in the lead-up to the 2013 election. They have a mandate to bring this legislation on and to argue its case, and the Senate equally has a mandate, as a house of review, to scrutinise it and to vote accordingly.

There are, without doubt, big problems on our nation's construction sites. I certainly want a strong and vibrant building and construction industry in this nation. Building and construction can provide an antidote to some of the job losses we are experiencing in manufacturing and the many more job losses that we are expecting. I believe we do need an Australian building and construction commission, but I am not convinced that this legislation, in its current form, will deliver the productivity gains the government seems so sure it will. Nor am I convinced that this bill contains the appropriate checks and balances in so far as coercive powers are concerned and with regard to issues of workplace safety. A major preoccupation for me is what happens on the ground in the many thousands of construction workplaces around the country. I want to see intimidation, standover tactics and corruption dealt with effectively. I also want to see that the workers in that industry go to a safe working environment where occupational health and safety are of paramount consideration, so that they can go back to their loved ones each night. I also want them to be well paid for the work that they do. If there are impediments, then they need to be dealt with in a way where people's rights are respected.

Unlike some members of the government, I do think unions have a vital role in Australia's workplace relations system and they must have the freedom and power to be able to do their jobs. That involves not just issues about terms and conditions for their employees but also issues of workplace safety. These have long been of concern to me. In my home state of South Australia, as a state member of the legislative council, I supported the establishment of VOID, Voice of Industrial Death, a support and lobby group that places focus on the issues of workplace deaths in South Australia and the need to improve industrial health and safety. As a member of the South Australian parliament, I proposed industrial manslaughter laws with strong penalties. Regrettably, that proposed legislation was opposed by the then state Labor government. So I come to this legislation with some long held concerns about workplace safety.

No-one should forget that workplace accidents and fatalities are not just statistics. Every workplace death is a human tragedy: a parent, spouse, son or daughter lost. It is a very sombre thing to deal with and hear stories of the spouses, parents and families of workers who have been killed in workplace accidents. I would like to pay tribute to the foundation president of VOID, Andrew Madeley, who lost his son, Daniel, in a horrific workplace accident in 2004 and who has been tireless in campaigning for industrial manslaughter laws and better workplace safety.

Insofar as unions have a right of entry for the purpose of safety issues, that is quite fundamental and ought not to be diminished. It seems inconceivable that under the Fair Work Act the provisions that allow for unions to enter a workplace, if there is an imminent risk of danger to a worker, have been diminished in the ABCC legislation. That is not acceptable. I have already filed and tabled an amendment, in that regard, should this bill go to committee, which now seems most unlikely. I do not subscribe to the view that unions are uniformly bad or have too much power. Equally, they should not cause unnecessary and needless disruption, and they should be subject to greater scrutiny in that regard. Nor should anyone imagine that unions are the only problem in the construction sector.

I would be very interested to hear, in the context of this debate, the government's response to the report of the Senate Standing Committee on Economics, on insolvency in the construction industry, and I want to pay tribute to the very fine work that Senator Cameron did on this. That Senate inquiry, which I was a part of, was completed last December. The committee's report very clearly exposes the 'completely unacceptable culture of non-payment of subcontractors for work completed on construction projects'. During that inquiry, a big issue in my home state of South Australia was that we heard damning evidence concerning the failed South Australian building firm Tagara Builders that allegedly traded while insolvent for more than two years before it went bust in June 2015.

At the time of its liquidation Tagara had major construction projects worth up to $100 million on its books. The collapse put more than 40 people out of work and more than 750 creditors, mostly SA businesses, involving hundreds more workers, subbies, were left with bad debts totalling some $21.5 million. Evidence to the Senate inquiry included claims that Tagara had bullied subcontractors by delaying payments and claiming poor workmanship so they would not pay. South Australia's Small Business Commissioner, John Chapman, told the inquiry that subcontractor bullying was widespread, and he indicated he was concerned whether a new intimidation offence should be created for the industry.

This is but one example of what a well-known South Australian construction consultant described as 'unconscionable acts', including a sharp increase in the occurrence of fabricated claims by builders in order not to pay subcontractors. That was part of a much larger and disturbing picture. The Senate inquiry found that businesses operating in the Australian building and construction industry face an unacceptably higher risk than any other industry of entering into insolvency themselves or becoming the victims of insolvency further up the contracting chain. The construction industry's rate of insolvencies is out of proportion to its share of national output.

As the government has repeatedly pointed out, the construction industry accounts for some eight per cent of the nation's GDP. Yet the industry also accounts for between one-fifth and one-quarter of all insolvencies in Australia. The Senate inquiry found that this state of affairs does not reflect market forces and there needs to be reform. As a result, the industry is burdened, every year, by nearly $3 billion of unpaid debts, including subcontractor payments, employee entitlements and tax debts averaging around $630 million a year for the past three years.

The committee made reference to the powerful forces at play, of serious imbalances of power in contractual relationships—harsh, oppressive and unconscionable commercial conduct. These are matters we also need to deal with. The Senate economics committee called for a complete sea change in the federal government's role in regulating payment practices in the construction industry. The committee recommended that the Commonwealth urgently enact uniform, national legislation for a security-of-payment regime and rapid adjudication process in the commercial construction industry.

The committee's second, related major recommendation was that the Commonwealth commence a two-year trial of project bank accounts on construction projects where the Commonwealth's funding contribution exceeds $10 million. That committee's report cannot be ignored in the context of productivity of the construction sector, of the bullying and intimidation that occurs of subcontractors, of subbies, and their workers who miss out all too often. It is pushing people into insolvency.

Insolvency and poor payment practices in the construction industry are not new, but one might reasonably imagine that these problems deserve at least equal priority with those arising from union intimidation and malfeasance. As Senator Muir observed earlier, if the government were really serious about improving productivity in the building and construction sector, it would see the merits of the ABCC being a full service regulator, properly resourced to also investigate employers who underpay workers as well as investigate unconscionable subcontracting practices. I agreed with Senator Muir on that.

More broadly, I also have concerns about limiting the power of a body such as the ABCC solely to the building and construction industry. I must say that the government's approach is distinctly lopsided. Allegations of union corruption and malpractice are hardly limited to the building and construction industry. One only need look at the recent history of the Health Services Union, where predatory officials rorted expenses and abused the trust placed in them by their own members. We also need to give much greater attention to corruption and malpractice in the corporate world.

I have long campaigned for stronger regulation and investigatory powers to deal with misbehaviour in business, for whistleblower protection powers of the government, corporate and union sectors, where whistleblowers are not only protected but also are compensated, as they are in the United States. This is so that there is a culture of openness, a culture where people can come forward and speak the truth without their lives being ruined, financially, as a result.

Regrettably, this has not been a high priority for the government. In recent weeks, we have seen some huge revelations in the press about foreign bribery involving the oil industry consultancy Unaoil, together with the Australian firm Leightons. We have also learned about the pervasive use of foreign tax havens facilitated by the Panamanian law firm Mossack Fonseca, with hundreds of Australian businesses and individuals allegedly involved.

If anyone still thinks that Australia is immune from large-scale corruption they are remarkably naive. Yet there has been barely any reaction from the government to the latest revelations. What happens at the big end of town does not seem to be a priority. I have long supported the establishment of a national anticorruption commission. It is quite fanciful to think that our national level of government and politics is somehow insulated from the sorts of corrupt influences that we have seen in state and local governments. The fact that there has long been so much political and bureaucratic resistance to the establishment of a federal anticorruption body only reinforces my concern that such an institution is sorely needed.

I know that the Prime Minister has been dismissive of the idea of a national ICAC that might be linked to a debate about the ABCC legislation. Good on Senator Lazarus for raising this as an important issue. These might be separate matters, but a very clear public commitment from the Prime Minister and the government to the establishment of a national independent anticorruption commission could go a way to reassure me and, I think, some other members of the Senate crossbench, as well as voters, that they are not just targeting unions but are in fact committed to combatting corruption wherever it might be found and whatever its political connections may be.

If one listens to some of the government's statements, one could be forgiven for thinking that the sky is about to fall in on the construction industry unless immediate action is taken. As I have said, I think there are serious problems. The royal commission's findings cannot be ignored. Yet, in terms of urgency, a key element of the package—the coercive powers to compel witnesses to give evidence—is still in force in transitional legislation for another 14 months—something that the opposition leader and former industrial relations minister, Mr Shorten, supported when in government.

Moreover, if the government is fair dinkum about addressing productivity in this country, it must do much more than re-establish a body whose main purpose is to pull wayward building and construction industry participants into line. The government has taken a blinkered vision and highly selective choice of the issues it wishes to pursue, as is evident when it comes to other vital sectors of the economy. If we are arguing about jobs, we should look at the collapse of manufacturing jobs in this country—140,000 jobs lost since the GFC, and 200,000 jobs that are potentially at risk, particularly in Victoria and South Australia, with the closure of carmaking in this country. Our shipbuilding industry is suffering because ships are being built offshore, in terms of our naval supply ships. In Australia's manufacturing sector we have an absolute crisis in our steel industry. Arrium, Australia's largest structural steel maker, a $5.5 billion company, went into voluntary administration just a few days ago. Considering what is at stake, that is a critical issue. What is at stake here is not just the future of Whyalla and Arrium, but the future of Australian manufacturing itself, which in a decade has shrunk from 12 per cent of GDP to just under seven per cent. I met with the administrator of Arrium, Mark Mentha, in Adelaide last week. He gets it, and I wish him well. I want to work with him, as do the state and federal governments, to make sure that we can get that company out of administration to continue to work well.

We are seeing Ford, Toyota and Holden set to disappear as car makers in this country by the end of next year—Ford sooner than that. But one does not get any sense that the government has a strategic plan for manufacturing or for the areas most affected by the crisis in manufacturing. We see a lot of hand wringing but not much else from the industry minister, even though his own state, South Australia, is most severely affected. While the Prime Minister talks a lot about Australia's future as an innovative nation—which I welcome—he has very little to say to the workers in Elizabeth, Whyalla, Port Kembla and around the country—particularly in Victoria, as well, and many other places—who have mortgages to pay and families to support and who face enormous challenges if manufacturing dies in this country.

That is why, if this bill went into the committee stage, I would have been moving amendments in relation to the building code having real rules with teeth in terms of procurement to ensure that we have Australian steel and Australian-made products in building contracts as part of the building code. Given the potential economic and social costs of the crisis in manufacturing, the reluctance of the government to adopt a procurement policy that takes into account the economic effects of buying local is an issue that ought to have been in this bill.

It may be that be that the government will not be unhappy if the Senate votes down this legislation. The government says that there is a narrative that is all about jobs. I am certainly very happy to see the election campaign focus on jobs. Indeed, that is where the focus should be. In this the Prime Minister will need to talk about a lot more than the ABCC. He will need more than a number of speeches going on about union corruption and malfeasance, important issues though they are. The government needs to show Australia that it has a plan for Australian manufacturing jobs, a strategic plan to help the cities and towns that depend on manufacturing and to protect the hundreds of thousands of manufacturing workers whose jobs are on the line.

I will support the second reading stages of this bill. In the event that it goes into a committee stage, I have a number of amendments to move, which are all about protecting the jobs of Australian workers.


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