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

There has been no shortage of debate and scrutiny of this ABCC legislation. During the 44th Parliament a total of six separate Senate committee inquiries were held into the two bills. On two separate occasions both bills were previously inquired into and reported on by a committee. On both occasions the committee recommended that the Senate pass the bills—not surprisingly, because it was a government dominated committee. In addition, the Senate Education and Employment References Committee has considered both bills in depth. Aspects of the bills have also been considered by the Senate Standing Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights. Over the course of the current and previous inquiries there have been no fewer than six public hearings in relation to this legislation. It was the failure of the Senate to pass these bills that led to the Prime Minister in May 2015 to request the dissolution of both houses of parliament prior to the 2 July federal election.

When I spoke on this legislation on 18 April 2016 I supported the second reading stage of the bills, which would have allowed for amendments to be considered in the committee stage. Those amendments were important in order to make the bills fairer, to make them more effective in terms of job creation in this country and to deal with issues of productivity, which I will address shortly. That opportunity did not arise. However, we do have that opportunity in this parliament and there are some important issues to be debated.

The industrial relations framework in the building and construction industry has a long, complex and, some would say, vexed history. There was the Winneke royal commission in 1982, the Gyles royal commission in 1992, the Cole royal commission in 2003 and, most recently, the Heydon royal commission in 2015. There was also the Wilcox report, which was an initiative of the then federal Labor government in 2008. The final report was handed to the then Deputy Prime Minister, the Hon. Julia Gillard, in April 2009 in relation to the operations of the office of the Fair Work Building and Construction inspectorate.

As part of the review Justice Wilcox was asked to investigate and report on some of the following issues: the operational structure of the specialist division, the independence and accountability of the specialist division, the scope of investigations and compliance activities to be undertaken by the specialist division, the powers required by the specialist division and its inspectors for the purpose of conducting investigations and compliance activities, and the best manner of ensuring an orderly transition between the ABCC and a specialist division.

Following an intensive and, some would say, extensive consultation period, Justice Wilcox found that there was still a significant level of industrial unlawfulness in the building and construction industry, particularly in Victoria and Western Australia. While His Honour 'accepts that there has been a big improvement in building industry behaviour in recent years, some problems remain'. That was in section 3.23. Justice Wilcox found that the current levels of investigation and penalties held by the ABCC were justifiable because of the poor conduct that has been, and continues to be, displayed by many building industry participants. I emphasise that this is not just about singling out the union; it also relates to some employers.

His Honour stated:

I am satisfied there is still such a level of industrial unlawfulness in the building and construction industry, especially in Victoria and Western Australia, that it would be inadvisable not to empower the BCD—

the building and construction division—

to undertake compulsory interrogation. The reality is that, without such a power, some types of contravention would be almost impossible to prove.

While Justice Wilcox reported that 'the ABCC has made a significant contribution to improve conduct and harmony in the building and construction industry', the view of the then Labor government was to downgrade it to an inspectorate.

The more recent inquiry of former High Court Justice Dyson Heydon gathered a great deal of evidence—some of which I found quite compelling—about serious issues: allegations of corruption, bullying and harassment. In his interim report Commissioner Heydon found that some 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 confirmed his finding that corruption was widespread and deep-seated. The union officials allegedly involved ranged in seniority from the most junior to the most senior, although I hasten to add that Michael O'Connor, National Secretary of the CFMEU, and Dave Noonan, another very senior officer, have not been tainted by any of these allegations.

It should be noted that there has been agreement in the past from the opposition that the building and construction sector needs a strong regulator. These were some of the comments made when the ABCC was replaced by the FWBC. There was acknowledgement that there was a need for a specialist division to deal with these issues. The Hon. Bill Shorten, on 16 February 2012, said:

The government understand that the industry contains unique challenges for both employees and employers. As a result, we have always supported a strong building industry regulator to ensure lawful conduct by all participants and a strong set of compliance arrangements for the building industry.

Dr Andrew Leigh, on 15 February 2012, said:

We know the industry can be difficult. Because of the unique challenges faced by the industry, it is important to make sure everyone applies the right conduct and continues to be lawful. As is so often the case in industrial relations, that is a tough balancing act—but this is a decision we are not afraid to make.

Simon Crean, on 3 November 2011, said:

The government believes that the safeguards in the bill for the coercive examination powers achieve the balance required to ensure compliance with the law and the fair treatment of individuals. Law-abiding industry participants who have nothing to fear from the existence of these strong laws will be so accorded. Ultimately, whether or not the powers are used remains in the hands of all building industry participants.

They are some of the comments by the ALP. I hasten to add that that was in the context of the FWBC about the need for a specialist division. I accept and respect that the opposition's position is one of trenchant opposition to this bill and to the powers contained in it, but it does acknowledge some of the unique challenges faced by this industry.

Commissioner Heydon recommended a new national regulator with the same powers as ASIC be established. I note that former Senator Muir made reference in his contribution earlier this year to the huge number of court cases in which the CFMEU has been found to have broken the law, or admitted to have broken the law, and the more than $8 million in penalties over the last decade that have been issued against that union. That was an observation but I also note that this is a very large sector with very large turnover in terms of the scope and size of the industry. Last year, in South Australia, the courts issued fines against the union and its representatives with $949,100 in fines, which was a significant amount.

The opposition and others have tried to label the Heydon royal commission—which was not perfect—as a political witch-hunt, but its finding and the large body of evidence presented and the evidence in numerous court proceedings cannot be lightly dismissed, neither can the previous royal commissions. They certainly raise the question of whether our existing legislative framework is strong enough to properly address these issues. I notice Senator Cameron has been a trenchant critic of the current director of the FWBC, Mr Hadgkiss, but I do have concerns about the way that office has been run, its impartiality and whether it has also adequately pursued employers who have not done the right thing and contravened the current legislative framework. That is an observation I make and I do not believe that it is a unfair one in terms of the conduct of the current director of that inspectorate.

One of the key issues, perhaps the key issue, relates to section 11 of the Building Code. This section prohibits code-covered entities from being covered by an enterprise agreement in respect of building work, which includes certain clauses, or from engaging in certain conduct. This section is the centrepiece of the Building Code and its aim, as essentially stated, is to change the culture in the building and construction industry. The long history of royal commissions together with the Wilcox report recommends that there is an issue with the culture in the building and construction industry. It is a difficult issue because the argument from those who are opposed to this bill is that it ought to be within the framework of the Fair Work Act and not derogate away from that framework. That, to me, seems to be the key debate and the key ideological debate in respect of this bill. Others say that those in favour of it say that if cultural change is needed then the Building Code will be the most effective tool. I expect that there will be a furious debate in relation to these issues.

I have continued to speak with the CFMEU and I will continue to speak with them on this issue. I have listened to their concerns and I do take their concerns seriously. There is the conduct of Mr Hadgkiss, where, for instance, a number of months ago Mr O'Connor was charged, and details of those charges were leaked, only to have those charges dropped. That is something that raises particular concern. On the part of Mr O'Connor, I thought that that was most unfair conduct and I do have concerns in relation to the way that the FWBC inspectorate has been operating.

I support the second reading of this bill, as do my colleagues, in order to debate this issue and the amendments that I will move. Some have already been circulated and I will speak in more detail to those during the committee stage. One of the key issues that concerns me is security of payments. What Senator Cameron did—and I am sure we will have fierce debates in the context of the committee stage of this bill—in terms of instigating the Senate Economics References Committee report on Insolvency in the Australian construction industry, is to be absolutely commended. It reported in December 2015. If we are to be serious about the issue of productivity and bad behaviour in the construction sector, the issue of security of payments is fundamental to that. We cannot simply talk about the behaviour of some in the union. We also need to talk about the behaviour of a number of principal contractors and the way that people have been left in the lurch, the way that many thousands of subcontractors have not been paid and have not been treated fairly and that many have been driven to either the brink of bankruptcy or actual bankruptcy.

The recommendations of that report are to be commended—I participated in that inquiry. I have an amendment—it is something I worked on with Senator Hinch as well, who also shares my concerns—that there will be a security-of-payments working group that is designed to complement the new section 11D of the Building Code. It will be made up of employee, employer and contractor representatives. It will be required to meet at least four times a year, and it will monitor the impact that the ABCC has on the conduct and practices of building industry participants in relation to security-of-payments legislation.

We must have a uniform, national system. What we have at the moment is woefully inadequate. We do have a system in place and it does work from time to time. We have rapid adjudication in some states, but not in others. In Queensland, prior to 2014, they had a pretty good system in place and then the then Newman government in their wisdom, or rather lack thereof, scuttled it and destroyed the essence and the effectiveness of that piece of legislation, and we went back to square 1. But occurred in Queensland pre-2014 made a lot of sense, and it meant that a lot of contractors could have rapid adjudication to have their matters dealt with. If all of us are fair dinkum about productivity in the building sector, we need some fundamental reforms of security-of-payments legislation and the framework. I believe that these amendments will advance that in a very realistic way. I will have more to say about that in the committee stage of this bill.

In terms of the functions of the ABC commissioner, the annual report and the appointment and the termination, there are issues there that must be raised to ensure that the functions of the commissioner are carried out in an impartial manner across all building industry participants because I am not satisfied that they have been carried out impartially in recent times. There must be additional reporting requirements to the annual report to increase transparency and accountability. It must ensure that the commissioner upholds the APS values set out in section 10 of the Public Service Act, and expressly state that the commissioner will perform his or her functions in an apolitical manner and act impartially and professionally. The bill should be amended to include an additional ground of failing to act impartially between all categories of building industry participants.

There is also the issue of judicial review. There ought to be an amendment that will mean that decisions made under this legislation—for example, the issuing of a compliance notice—are subject to judicial review. This is the first time in industrial relations law, if passed, that it will be subject to judicial review. It is a significant amendment which will add a layer of review and improve accountability.

In relation to examination notices and AAT oversight, it is important that we maintain the current administrative oversight for the use of coercive powers. The government seeks to overturn that. I believe we need to keep that. It is important that an Administrative Appeals Tribunal presidential member rather than the ABC commissioner will be required to issue the examination notice, as the bill in its current form provides. This is a safeguard against any misuse of the coercive power. There is also the issue of procurement. It is something that I am still having discussions with the government about.

The Building Code can play a powerful role to ensure that procurement is carried out in a way that is fair; that is robust; that takes into account that materials used on building sites with Commonwealth funds comply with the Australian standard, are certified to comply with the Australian standard, are subject to an auditing process—and I suggest that the federal safety commissioner has an important role in respect of that—and that has a consideration and a weighting given in terms of the economic impacts of making a procurement decision in terms of the impact that it has on jobs, the economy and particular industries. These are not novel concepts. It is an approach that has been taken overseas by the UK, by the Netherlands, by an increasing number of European countries, by the United States and by Canada, and I think it is something that would be very positive in terms of productivity in this sector more broadly and in terms of ensuring that there is a more level playing field that will, in effect, mean more Australian jobs rather than using substandard building materials. As you are aware, Acting Deputy President Sterle, as you have a great interest in this, having building materials with asbestos in them is strictly unacceptable, and we need to make sure that the Australian standard is kept.

There will be, no doubt, a very comprehensive committee stage of this bill. There needs to be so that amendments can be considered, questions asked and this bill subjected, along with its amendments, to sufficiently robust examination. Along with my colleagues Senators Griff and Kakoschke-Moore, I will support the second reading stage of this bill. In the event that it does pass the second reading stages, I look forward to the committee stage.