Senate debates

Monday, 19 March 2012


Education, Employment and Workplace Relations References Committee; Reference

5:43 pm

Photo of Mary FisherMary Fisher (SA, Liberal Party) Share this | | Hansard source

I move:

That the revised implementation guidelines for the national code of practice for the construction industry in the context of the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2012 be referred to the Education, Employment and Workplace Relations References Committee for inquiry and report by 10 May 2012.

The coalition seeks to refer the revised code and guidelines for the National Code of Practice for the Construction Industry to the Employment and Workplace Relations References Committee for a number of reasons. Those reasons include the fact that Minister Shorten released the so-called revised guidelines to the code with very little, if any, explanation in some several days following the introduction to the Senate of the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2012, which is essentially this government's bill, to gut the Australian Building and Construction Commission. Minister Shorten released the revised guidelines, with very little explanation, in the days following the introduction of the bill to the Senate. On the face of it, the revised guidelines would themselves appear to be a pale shadow of earlier guidelines. In addition to that, this would appear to be being done in the context of a bill to neuter the Australian Building and Construction Commission. And it would appear to be being proposed to be done in the context of a bill which was amended at the eleventh hour in the House of Representatives before coming to the Senate by, essentially—a deal done between this government and the Greens so that if a perpetrator to a wrong under the building industry legislation agrees with another perpetrator to a wrong, or a victim to that wrong, to somehow settle the wrong, then the watchdog, with the lesser tooth it may have, is no longer able to either investigate or prosecute in respect of that wrong, something which the coalition thinks is simply wrong, wrong, wrong.

So there are at least three examples of why the revised code and guidelines deserve to be referred to the Senate Employment and Workplace Relations References Committee for inquiry, even more so because all of this happens at a time when the construction industry is not alone in much of industry in this country's economy in facing particularly challenging times. It ought to be sobering to this government to hear a report of comments from the likes of Daniel Grollo, now head of Grocon, one of our major construction companies. They turn over something like $800 million a year and build in Brisbane, Adelaide, Sydney and Melbourne. Daniel Grollo has essentially moved on from being concerned about strikes of labour to what he calls strikes of capital. He put it in the context of: if pay increases in the industry fail to generate sufficient productivity gains but instead reinforce inefficiencies in the sector then foreign investors will simply take their capital elsewhere—in short, there will be a strike of capital. He says that Grocon currently has workers being paid about 60 bucks an hour, in round terms, but that will go up to about 80 bucks an hour over the next three years under enterprise agreements with the union at the moment. That compares with one of their competitors—if you use what he calls a comparative set of rates—in Texas of some $20 an hour.

So we hear that in this country Grocon is currently paying its workers 60 bucks an hour, and over the next three years 80 bucks an hour, compared with competitors in Texas of some 20 bucks an hour. Give us a break. Mr Grollo says, 'The only way you can bridge that gap is with productivity.' So the construction industry has a massive productivity challenge as an industry if we do not produce some productivity gains over the next three years. With a combination of our currency and our labour rates we will be so disproportionately out of whack with other centres around the world that our industry will basically have a strike of capital, yet this government seems to have the confidence that, through Minister Shorten, they can whack out a revised set of guidelines that further weaken the protections offered to business, industry and participants in this industry. The context for the code and guidelines in the construction industry is that they are essentially the Bible by which contractors who get gigs on federally funded construction sites will operate. So, unless a contractor is prepared to agree to these guidelines and their accompanying code of practice, you do not get a federally funded gig. So good were the guidelines and code introduced by the Howard government at the time that it also established the Building and Construction Commission, the industry writ large welcomed the guidelines and the code of practice. This government saw fit to weaken the guidelines and code in 2009, soon after being elected to government, and now Minister Shorten wants to have his go. Now the Labor government wants to have another go in the context of a bill to strip the ABCC of any effective powers, overlaid with an amendment that says that if a dirty deal is done then all bets are off in terms of prosecuting an alleged breach of the law or investigating an alleged breach of the law, in any event.

It is hard to work out yet again what the government is thinking with this industry, other than they simply do not understand what happens on building sites, they somehow believe what the unions tell them, or they do not care. They either do not know or they do not care. Let us look at some of the changes in the revised guidelines. The foreword from the good minister starts to give you a flavour. He says:

The Australian Government is committed to ensuring that all participants in the building and construction industry comply with Australia's workplace relations laws.

Really? That is, unless they reach an agreement that they have not broken the law. He goes on to say:

The Government has no tolerance for conduct which breaks the law ...

Really? Unless you reach a dirty agreement with one of the other perpetrators or the victim that the breach of the law does not matter. He goes on:

Organisations that breach their legal obligations face preclusion from future tendering opportunities for Australian Government funded work.

That of course begs the question of whether, if you manage to fall foul of the guidelines, you can reach a deal to neuter an alleged falling foul of the guidelines so that you can still keep your federally funded construction job. That is yet another reason why this committee deserves to inquire into these guidelines—not only to work out exactly what the changed wording means, not only to somehow reassure ourselves that this is not yet another government attempt to do the CFMEU's bidding and weaken their protections in the construction industry, but to say that, if you should somehow manage to be so silly as to fall foul of these weakened guidelines, you can reach a deal where no-one can touch you in any event.

The minister's foreword says the continuation of the guideline signifies the Australian government's commitment to ensuring the industry remains strong and prosperous for the benefit of all participants. Well, on the face of it, it looks like he has written in lemon juice—apply the iron afterwards—that by 'all participants' he really means unions and, more particularly, their officials.

Going to the fine print of the guidelines themselves, probably the most concerning weakening of the guidelines centres around project agreements, unregistered agreements and sham contract provisions. Starting with the interesting inclusion in the guidelines of a new object which simply says the purpose of code and guidelines is 'to promote fair, cooperative and productive workplace relations'. It sounds nice, but what that means is in the lap of this government to explain. That is one of the things the Senate should be able to ask officials about in an inquiry by the references committee to reassure themselves that union officials and also opportunistic contractors who are doing the wrong thing do not somehow in their conduct fit the bill of promoting 'fair, cooperative and productive workplace relations'. We deserve reassurance that the main beneficiaries of these changes will not be unions and their sometimes thuggish officials.

Section 3.9 of the guidelines is new. It tries to suggest that, where both Common­wealth guidelines and state guidelines for state funded construction work apply, the Commonwealth guidelines will prevail to the extent of there being any inconsistency. That might be all well and good if the Commonwealth guidelines were a law—you know, section 109 of the Constitution. I do not know if the minister is trying to invoke The Castle'it's the vibe'—but it does not seem to make sense when the guidelines are simply an administrative instrument. They do not have the force of law, so it is a bit difficult to tell how this new provision can stand up constitutionally. Indeed, the Victorian Minister for Finance, Robert Clark, has queried whether it does stack up. He has indicated that the Victorian government will proceed with its own set of guidelines and has suggested that it could be entirely possible for a contractor to comply with both the Commonwealth guidelines and also the state guidelines over the top, even if the state guidelines impose higher standards.

Of course, it could happen the other way. A state might argue that if a contractor chose to comply with the Commonwealth guidelines, on a jointly funded project, in a way that arguably displaced the state guidelines then there is a proper question as to whether that contractor should be excluded from state work. So there are more questions than answers, and this Senate deserves the right to inquire into the meaning of those provisions, apart from anything else.

New section 4.2 of the guidelines deals with tender evaluation criteria and introduces new terminology of compliance with the Fair Work Principles, a nice set of six or so principles introduced by the Labor government with the Fair Work Act. But reference to those principles in terms of the tender evaluation criteria is new territory for the guidelines, which previously and simply provided that the code and guidelines were to be applied consistent with Commonwealth procurement guidelines. So now they are also to be applied in a manner consistent with the Fair Work Principles—whatever that is supposed to mean.

Section 4.22 of the earlier guidelines used to stop agencies from entering into contracts with contractors who had a judicial decision against them on, for example, not paying employee entitlements. The new provisions are expanded to stop contracts from being reached between the federal government and a contractor who has an adverse court or tribunal decision against them for breach of workplace relations, OHS or workers comp laws and is not complying with the order. If we are going to be so extensive about our stipulation of those who fall foul, then it begs the question of why the guidelines are not going to preclude a contractor who has breached in the past—prior to amendment by the Labor government—the Building and Construction Industry Improvement Act, especially if he has done so on more than one occasion. We deserve some explanation about the intentions behind, the reasons for and the effect of those provisions.

Section 4.3, on project agreements, is the most concerning change to the guidelines because the issue with project agreements in this industry is that they are the backbone of pattern bargaining and they enable the transfer of one set of costly arrangements from one project to another. So to have the new provisions interestingly say 'there shall be no flow-on of the provisions of project agreements' suggests that the writer of this document assumes that the reader does not get that the whole intent and effect of the provisions on project agreements is exactly that—to facilitate flow-on.

The previous guidelines prevented the use of project agreements unless fired strict criteria were met. But now the project agreements will be allowed so long as they are supposedly approved under the Fair Work Act or under state law. So there go the very strict provisions and the restrictions essentially on project agreements. There is only one way that costs are going to go with the removal of those restrictions, and that is up. In addition, union control, especially over subcontractors, will only intensify.

Previously, written unregistered agree­ments were restricted on the basis that if there are things to do with workplace relations or the employment of people then they should be the subject of registered agreements, and the previous code and guidelines essentially say that. But now the revised guidelines expressly list a whole lot of things that can be subject to a written but unregistered side agreement—something which greatly concerns the industry. Essentially, it allows the farming out of workplace conditions beyond the so-called Fair Work Act. For example, written unregistered agreements can be reached about:

•   community, welfare or charitable activities;

•   initiatives to promote the employment of women, indigenous, mature age or other groups of workers disadvantaged in the labour market;

Okay, but that is about the workplace, so why should it not be in a registered agree­ment if it is to be in an agreement? There is also:

•   workers’ health and wellbeing initiatives (such as health checks, suicide prevention, screening for dust diseases, drug and alcohol awareness and treatment );

•   waste-reduction, carbon pollution reduction and recycling initiatives;

Oh, please!

•   programs to reduce bullying, sexual harassment or workplace discrimination;

And then we have the kitchen sink of what will be able to be allowed in unregistered but written workplace agreements or side agreements:

•   initiatives to encourage fair, cooperative and productive workplace relations across the industry;

Well, in the words of Richard Calver, a very experienced operative from Master Builders Australia, that is a loophole the size of Texas.

And then we have in clause 6.1.5 new language regarding sham contracting. It says:

The FW Act and the Independent Contractors Act 2006 protect genuine employees from ‘sham’ contracting arrangements which are sometimes used by employers to avoid paying employee entitlements (e.g. annual leave).

The last time I was home the law expressly stated that sham contracting is about disguising the real working relationship, not about whether or not there might be a consequence as to non-payment of workers' entitlements. This guideline attempts to re-characterise and redefine sham contracting. It is obviously just part of the hot 'gospelling' of sham contracting—which is, arguably, highly stated in terms of its prevalence in the industry. But, as I said, we are clearly supposed to be obsessed about limiting and stopping sham contracting.

Then we go to clause 6.5, right of entry. You could not find a shorter provision in these guidelines—four lines—and it has to be one of the most abused conditions in this industry. (Time expired)