Building and Construction Industry Bill 2013

Memo to self—I probably need a bit more exercise, because you shouldn't get out of breath in the distance from my office to the chamber!

It gives me great pleasure to speak on this bill—

Senator Moore: I'm sure it does!

Senator McGRATH: And I think Senator Moore, who has this ability to give me the giggles—and I would ask you to stop giggling, Senator Moore, because I would have to look away from you, and we would not want that!

Senator Moore interjecting—

Senator McGRATH: I think it might be something to do with this bench, because I think Senator Smith last night had the giggles also and it might be contagious. It is a very serious piece of legislation that we are looking at here.

What I want to talk about is the government's commitment to re-establishing the ABCC and returning the rule of law to the building and construction industry. The evidence that the construction industry stands apart from the rest of Australian industry is beyond doubt. The rule of law has little if any currency in the construction industry, and that is unacceptable. It is unacceptable to Australians and it is especially unacceptable to those of us on this side of the chamber, who proudly believe in the rule of law as being one of the most important values of a liberal democracy.

The problem is that for far too long there has simply not been an effective deterrent or a consequence in the building industry when people break the law. When the laws are weak and ill-suited to the problem and there is a weak regulator it is hardly surprising that people in the industry would continue to break the law, because they know they will probably get away with it. The this is what the ABCC is designed to deal with.

When it was first established it was starting to be effective in showing industry participants that their unlawful conduct had consequences and that they were more likely to be brought to account for breaking the law. This realisation in the building industry that breaking the law had consequences was starting to make a difference.

Regrettably, at that crucial time the Labor Party gave into union demands and abolished the ABCC and instituted a weakened shell of a regulator. Labor cut the maximum penalty for breaking the law by two-thirds and slashed the replacement agency's budget and ability to enforce the law. Who can then be surprised that almost immediately parts of the Melbourne CBD were shut down in defiance of Supreme Court orders?

There remains a pressing need to fix the current legislation to re-establish the ABCC so as to re-establish meaningful penalties that actually deter people considering compliance with the law as optional and stop them repeatedly from breaking the law as it suits them.

Debate interrupted.


It is a pleasure to be able to continue my remarks in relation to the Building and Construction Industry (Improving Productivity) Bill 2013 and related bill. I believe there is a pressing need to fix the current legislation: to re-establish the ABCC so as to re-establish meaningful penalties that can actually deter people considering compliance with the law as optional and stop them from repeatedly breaking the law as it suits them; to re-establish an effective building code to ensure contractors that want to do taxpayer funded work strictly meet all of their legal obligations, including laws dealing with worker entitlements, workplace safety and migration laws; to ensure antiquated practices that only add cost and delay are avoided on taxpayer funded projects; and to remove the absurd restriction on the regulator's ability to enforce the law in the public interest where parties reach a private settlement in their own commercial interests. This is a Labor and Greens imposed restriction that does not apply to any other Commonwealth regulator.

The building and construction industry is very important for the Australian economy not only because of the number of people it employs and the number of families it supports but also because it represents approximately eight per cent of GDP, which is similar to the contribution made by the mining industry. The building and construction industry can be an important source of sustainable, high-paying jobs. That is why it is so important to ensure the rule of law is respected by those in the construction industry, and that thuggery, intimidation and coercion are effectively dealt with. When projects are delivered on time and on budget, there is more money for more projects and that benefits the construction industry with not only more work and jobs but it also, more importantly, provides a better return for the Australian economy and the Australian consumer. The taxpayer and the consumer ultimately pay for construction delays and budget blow-outs.

The bill to establish the Australian Building and Construction Commission will re-establish a genuinely strong watchdog to maintain the rule of law and to protect workers and constructors. A re-established Australian Building and Construction Commission will improve productivity on building sites and construction projects, whether on shore or offshore. The re-establishment of the Australian Building and Construction Commission will bring to the industry confidence that the rule of law will be applied. This will encourage further investment and provide more jobs and greater prosperity for workers and the economy. The bill will prohibit unlawful industrial action, unlawful picketing and coercion and discrimination.

Labor experimented with a weaker regulator when it abolished the Australian Building and Construction Commission, strung one hand behind the regulator's back, slashed the regulator's budget by a third, reduced its staff complement by a third, and, alarmingly, reduced the applicable penalties for wrongdoing by two thirds.

A key feature of the government's legislation to re-establish the Australian Building and Construction Commission will see a return of penalties for unlawful conduct that are high enough to actually deter people who repeatedly break the law to suit their industrial agendas. For many years, it has unfortunately been only too clear that the commercial building and construction sector provides the worst examples of industrial unlawfulness. In 2003 the Cole royal commission examined the construction industry and noted that it is characterised by unlawful conduct, and concluded:

These findings demonstrate an industry which departs from the standards of commercial and industrial conduct exhibited in the rest of the Australian economy. They mark the industry as singular.


… the rule of law has little or no currency in the building and construction industry in Western Australia … The ... industry ... is marred by unlawful and inappropriate conduct. Fear, intimidation and coercion are commonplace. Contractors, subcontractors and workers face this culture continuously.

The royal commission findings lifted the veil on what everyone in the industry had known for years. Previous governments had been unwilling or too intimidated to tackle it. The Howard government was prepared to step in and make the tough decisions required to clean up the sector. The establishment of the Australian Building and Construction Commission in 2005 provided a genuinely strong watchdog and dissolved the 1970s-style practices that plagued the industry. It was a strong, specialist regulator that enforced the rule of law applying to the building and construction sector. Even Labor reluctantly acknowledged the need for a regulator and retained the Australian Building and Construction Commission, with its coercive powers, for its first term of government. It then, regrettably, abolished the ABCC and replaced it with a weak imitation with a slashed budget.

The establishment of the Australian Building and Construction Commission saw a decrease in lawlessness. Site managers reported that for the first time in years they could focus on building rather than industrial relations. Over its term in government, Labor progressively dismantled the powers of the Australian Building and Construction Commission and abolished it in 2012. Almost immediately, as night follows day. militancy and violence was demonstrated on the streets of Melbourne with the CFMEU shutting down part of the Melbourne CBD in its aggressive protest at the Grocon Myer Emporium construction site. In that dispute workers on the site who were being blockaded purchased an advertisement in the Herald Sun with an open letter to their own union bosses asking for the blockades to stop and to be given access to their own workplace. Images of these protests were seen on television screens across the world. What message did that send to national and international companies about investing in building construction projects in Melbourne or Australia? In what was unfortunately only too characteristic of the approach in the building and construction industry, on 4 September 2012 in that same dispute which shut down part of the Melbourne CBD, senior CFMEU official Derek Christopher addressed a crowd of over 1,000 protestors on Lonsdale Street with a megaphone. With fewer than 100 police officers present, he said:

There’s 11,000 coppers in the country or in Victoria and there’s 30,000 members of the CFMEU and greater among the other unions when we call on their support, so we’re up around the 50,000 mark, so bring it on we’re ready to rumble.

The approach by this union thug epitomizes the approach taken to the application of the rule of law in the industry by the CFMEU, amongst others. The current industry regulator advises that the spread of unlawfulness in the industry was a feature of Victoria and Western Australia and has now spread to Queensland and South Australia.

The previous government was well aware of this type of behaviour in the building and construction industry, and so was understandably reluctant to abolish the Australian Building and Construction Commission despite the strong union pressure. It contracted Justice Murray Wilcox QC to review the industry to buy time. Justice Wilcox recognised the need for and the benefit provided by the Australian Building and Construction Commission, stating in his report:

… the ABCC's work is not yet done.

and that it would be unfortunate if the ABCC's replacement body led to a reversal of the progress that had been made. But that is exactly what we have seen.

The principal purpose of penalties in the legislation is as a deterrent. As the royal commission into trade union governance and corruption concluded in its interim report, there is a culture of wilful defiance of the law which appears to lie at the core of the CFMEU. Unions began budgeting for penalties for breaking industrial laws and treated penalties simply as a cost of doing business. The Federal Court noted that comments such as, 'The last time it cost us'—I will say 'a bucketload' of money; I do not want to swear!—'and it is going to be expensive, but our fighting fund will fix it'. This is evidence of an attitude on the part of branch officials that the risk of the imposition of significant pecuniary penalties will not be allowed to act as a constraint on unlawful activity which they consider to be warranted.

In recent findings against the CFMEU for contempt of the Supreme Court orders in Victoria—and this was for shutting down parts of the Melbourne CBD—the Supreme Court said that the imposition of a penalty for contempt of court should not be viewed as simply an anticipated cost of industrial action. Few things could be more destructive to the authority of the court and to the rule of law then the idea that fines or similar punishments akin to a tax that, once budgeted for, enable the use of unlawful conduct to achieve industrial outcomes.

When Labor abolished the Australian Building and Construction Commission, it slashed applicable penalties by two-thirds. This only made it cheaper for the CFMEU to continue its business model of breaking the law. Even when maximum penalties were still at a meaningful level, the Federal Court said that the CFMEU had a 'deplorable record' of contraventions, that the contraventions were significant and that substantial penalties for past misconduct had not served to prevent repetition.

It was a few months ago that the Federal Court handed down yet another penalty, finding against the CFMEU, noting that the CFMEU's continued willingness to engage in contravening conduct supports the view that earlier penalties, some of them severe, had not had the deterrent effect.

The court went on to speak, in relation to the CFMEU's contravention, about the deplorable attitude on the part of the CFMEU to its legal obligations and to the statutory process which govern relations between unions and employers in this country, and that this ongoing willingness to engage in contravening conduct must weigh heavily when the need for both specific and general deterrence is brought to account.

The court also went on to say that, not for the first time, the CFMEU sought to impose its will by means of threats and coercion against employers. Its approach was one of entitlement. It was free, despite legal constraint, to deploy its considerable resources in order to achieve its industrial objectives. The concept of the rule of law was anathema to it.

This is not some historical exercise; this is a real and current problem. We must not forget that the maximum penalties are reserved for the worst offenders and repeated offences. It is extremely unlikely that individuals are penalised anywhere near the maximum for first offences.

In what was the last of the Australian Building and Construction Commission's legacy cases—meaning that it was a last case before the maximum penalty was cut by two-thirds—the CFMEU was found to have broken the law when it shut down work on a Queensland government housing project, which would have provided housing for the long-term homeless. The CFMEU proceeded to use cars to block access to the site and abused any worker who tried to enter the site.

Workers were repeatedly called 'scabs, parasites and dogs' plus a smattering of unparliamentary expletives. In fact one CFMEU official, Paul Cradden, approached one of the site workers and flooded him with aggressive attacks, saying to him, 'Hey scabby, gay boy, gay boy, gay boy, scabby. The CFMEU officials also made sure to let people know who they were dealing with. The court's decision records that while people outside the main gate were yelling 'scum' and 'scab', a CFMEU official, Mr Miles, said to a group of contractors words to the effect of, 'You've all got a long time left in the industry and we can influence your future jobs.' The clear implication was: 'Do not cross the CFMEU. We will ruin you, your business and your livelihoods.'

The CFMEU think they are a law unto themselves. We cannot in this country allow this state of affairs to continue in this industry and assist the kind of behaviour that the Labor Party or the Greens, who continue to accept substantial donations of support from the union, condone. The Federal Court certainly did not. It fined the CFMEU and a string of its officials a total of $545,000 for their offences, but, despite such a penalty, the CFMEU has not been deterred and it continues to break the law as and when suits it. The point is this: if the former Australian Building and Construction Commission's penalties, which were larger, were only partially successful in deterring the repeated breaking of the law, what did Labor and the Greens really expect would happen when they slashed the maximum penalty for doing the wrong thing by two-thirds? We will no longer see the penalties of this magnitude because the penalty for wrongdoing was substantially cut.

Justice Logan called out the CFMEU for its outrageous disregard of the law, and reiterated the comments of other judges and Royal Commissioner Cole in condemning the union's perverse attitude to the law. In light of this, it is absolutely disingenuous to see the CFMEU feigning outrage at the government's efforts to restore lawfulness to the construction industry through the re-establishment of the Australian Building and Construction Commission. The CFMEU pretends that the construction industry does not require special regulation, when it is precisely because of the CFMEU's disregard for the rule of law that special legislation is necessary.

If you need any further example, who can forget what John Setka, now the CFMEU Victorian state secretary, said to a crowd of 100 people outside the Australian Building and Construction Commission offices? Directing his comments to the public servants working at the Australian Building and Construction Commission, this CFMEU official said:

And just for the task force, or ‘Rats’, ‘Dogs’ whatever they are—

he is referring to the inspectors, the public servants, employed by the Australian Building and Construction Commission—

just to remember one thing, when this is all over and they don’t exist anymore, they’ve got to work elsewhere and we will remember them 'cause we know every—

they really do swear a lot these union officials—

one of them; We'll never forget 'em.

Hindering regulatory powers is something that the CFMEU prides itself on. The former Labor government gave into unions demands and abolished the Australian Building and Construction Commission, replacing it with a severely curtailed version of the regulator in the Fair Work building industry inspectorate. As well as this inspectorate having its power substantially curtailed, it faced significant reductions in funding and cuts to staffing of around 30 per cent. In closing, I totally support this bill and the reintroduction of the Australian Building and Construction Commission. It is certainly needed so that we can cut down on the misbehaviour and the bad behaviour of the CFMEU.