Earlier this month the government tabled
22 volumes of the Cole Royal Commission
into the Building and Construction Industry.
Former Court of Appeal judge Terence
Cole made 392 specific findings of unlawful
conduct and, in the confidential final
volume, recommended that 31 individuals
be referred for possible criminal prosecution.
As was to be expected, the construction
unions claimed that the report was a witch-hunt
and people who should have known better
claimed that Cole was biased.
The anti-union allegations were never
very plausible given that most unions
had refused to cooperate with the Commission
and had even boycotted the Commission's
special conference on occupational health
and safety. As things have turned out,
one of their own has fatally undermined
the unions' case. The National Secretary
of the Construction Division of the CFMEU
has unwittingly confirmed that Cole is
right. In an unguarded moment, John Sutton
admitted to a Melbourne newspaper that
"virtually everything we do breaches
part of this Act". Sutton's admission
means that Cole's description of a largely
lawless industry cannot credibly be denied.
The problems of the industry have been
established beyond credible doubt and
the question now is: what needs to be
done about it?
Nothing, says the CFMEU, because it's
alright to break the law in the best interests
of the working class. Leading union officials
take the view that, in a tough industry,
only wimps take the law seriously.
Change won't be easy in an industry conditioned
to think that might is right. Change which
shifts power from one unscrupulous group
to another will not be reform. As Grocon
has discovered, the first company to "buck
the system" is liable to heavy-duty
industrial payback. No one wants to be
the first to change but change is necessary
in the national interest.
In 2002, the Victorian construction
industry alone accounted for 17 per cent
of all days lost through strikes. WA accounted
for another eight per of the national
strike tally. Construction is a $40 billion
a year industry comprising six per cent
of GDP and employing 500,000 Australians.
Due to over-manning, demarcation disputes
and chronic stoppages, labour productivity
in commercial construction averages 13
per cent less than in home building. Plastering
the same wall in the same way costs 40
per cent more in a high-rise building
than in a standard house. Just raising
commercial construction labour productivity
to the home building standard would mean,
according to Econtech,
a one per cent drop in the cost of living,
a one per cent increase in GDP and $2.3
billion in benefits to consumers, workers
and taxpayers every year.
Change is about decent Australian values,
not just a more efficient industry. Workers
don't like late-night house calls, compulsory
attendance at demos, and days spent sitting
in the shed to make an industrial point
any more than bosses. Threats of violence,
contempt for court and commission orders,
mob rampages when one side doesn't get
its way, habitual failure to honour agreements
and routine harassment of people exercising
their legal rights are not acceptable
in modern Australia and cannot be excused
even in a good cause.
After the meeting of the Workplace Relations
Ministerial Council of the Council
of Australian Governments, state and
territory ministers declared: "There
was unanimous agreement that unlawful
behaviour in the building and construction
industry is not acceptable".
Unfortunately, the state and territory
ministers supported more powers for the
Australian Industrial Relations Commission
to settle construction industry disputes.
In fact, the Commission already has power
to settle disputes. What's missing is
effective power to enforce agreements.
The issue is not settling disputes. The
issue is enforcing the law.
The construction industry typically
conducts itself like this: A certified
agreement is in place including an agreed
dispute resolution procedure. Unions identify
a grievance, often a spurious safety issue.
Agreed dispute procedures are not followed
and a strike ensues, even though strikes
outside "bargaining periods"
are "unprotected" and theoretically
subject to damages orders. At that point,
employers often ask the Commission to
end industrial action but instead of ordering
an immediate return to work because an
agreement has been breached, the Commission
will typically seek to conciliate on the
basis of the "merits" of the
issue. With costs escalating and liquidated
damages looming, the employer invariably
agrees to rectify the matter alleged and
to pay increased allowances (including
pay for days on strike). At this point,
the Commission orders a return to work
on the basis of the agreed settlement
- which lasts only until the union decides
on its next move.
The union has ignored the law and broken
its original agreement but typically suffers
no adverse consequences. The employer
has been manoeuvred into conceding a demand
that should never have been made. A façade
of legality conceals a travesty of unionism
and a travesty of justice. Nearly all
construction industry strikes are unprotected
and potentially unlawful under section
170MN of the Workplace Relations Act.
Even so, employers nearly always opt to
pass costs onto consumers, while existing
arrangements for gathering information,
launching prosecutions and imposing fines
hardly work at all in an industry where
giving evidence against the unions is
thought to mean commercial suicide.
The construction industry is a classic
case not of market failure but of regulatory
failure. The fact that it does not face
potential import competition limits its
exposure to market discipline. Still,
the main reason why unions can get what
they want from business and business can
get what it needs from hapless consumers
is the absence of independent policing
and enforcement of the industrial equivalent
of fair trading laws. To an extraordinary
degree, the commissions lack sufficient
power, the courts lack sufficient speed,
the employment advocate lacks sufficient
authority and the police lack sufficient
This is an edited version of Tony Abbott's address to the National Press Club on 2 April 2003. Click here for the full text.