Cole royal commission paper raises hopes for labour-market competition

Ask almost anyone involved in the construction industry what outcome they expect from the Cole royal commission and the reply will be negative. The consensus is that the commission will hand down its report and within a short period the industry will return to patterns of industrial relations thuggery and intimidation.

But something has happened to suggest that a different outcome could be possible. About two weeks ago the commission stopped taking evidence, apparently to begin writing its report. However, last week it unexpectedly released yet another discussion paper, with invitations for more submissions.

The paper, the 13th, creates an entirely new focus away from industrial relations perspectives. It looks at competition issues and asks fundamental questions about regulation in society. One interpretation is that it builds on a scenario put to the commission that the industrial relations war in the industry is in fact a charade for a complex process of market and competition destruction made legal by employment law.

Suddenly the focus has shifted from considering unions as the bad guys to looking at the behaviour of businesses that don't want competition.

On the surface, this scenario could appear fanciful. But it transpires that the great institutional defender of competition and consumer rights, the Australian Competition and Consumer Commission, has limited capacity or willingness to interfere in competition destruction where it involves industrial relations, because the Trade Practices Act prevents it from interfering with "employment".

Even the National Competition Council supports a public policy position of excising labour issues from competition law.

Suddenly the industry's problems seem to have deeper causes than the "good-evil employer versus evil-good unions" stance that typifies the public debate.

In the construction industry's present round of enterprise bargaining, businesses that would normally be competitors for plumbing, form work, concreting and other tasks meet with unions to discuss prices, rates and work practices. The meetings are legal because they pertain to employment.

But remove the unions from such meetings and start talking and fixing prices for tenders, concrete, wiring and other inputs, and the participants risk facing heavy fines for collusion under the Trade Practices Act.

The reality is that the legislative and policy framework of competition law has long drawn a distinction between declaring market collusion illegal and the legality of the same behaviour under employment frameworks.

In construction, labour issues constitute a large part of costs and dictate commercial dynamics. The distinction between price fixing on labour and price fixing and competition destruction on tenders is razor-fine.

Taking this perspective, unions look like partners with business in market manipulation, with government the creators of opportunity. Union-employer battles become smokescreens to fool the public and non-insiders in the industry who are the victims of the manipulation.

The discussion paper seems to suggest that in construction, the distinction between legal and illegal market manipulation is blurred and perhaps a core cause of industry problems. The paper asks if it remains appropriate to isolate employment from competition law, thus raising questions about the ethics of the entire industrial relations system.

The commission is seeking submissions, and the responses will be illuminating. Unions and academic labour lawyers can be expected to submit the usual posturings about the immorality of regulating labour like any other commodity. But greater interest will be in responses from business and employer associations.

If the construction industry is silent, recommendations could emerge to extend competition law into labour areas in unpredictable ways, potentially threatening some underlying business structures.

If businesses and their associations criticise the paper but fail to substantiate their criticism, evidence already accumulated by the commission could expose possible complicity in market manipulation.

If business agrees with the paper, it could open a new and, to some, frightening era of competition.