Restoring the Rule of Law in the Construction Industry

By Abbott, Tony | Review - Institute of Public Affairs, March 2003 | Go to article overview

Restoring the Rule of Law in the Construction Industry


Abbott, Tony, Review - Institute of Public Affairs


As this issue of the IPA Review was at the press, we were alerted to the delivery of the following speech by the Minister for Employment and Workplace Relations. The paper marks a seminal change in the government's approach to systemic corruption in the construction industry, and is another major step in the reform of workplace relations in Australia.

Last week, 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 witchhunt 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. No less an authority than the National Secretary of the Construction Division of the CFMEU has unwittingly confirmed that Cole is right. In what was, no doubt, 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 can be disputed at the margins but not credibly 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. The news that "only" 31 individuals had been recommended to face criminal charges was greeted with something approaching jubilation, as if the industry's code of silence based on fear had largely kept the Royal Commission at bay.

As the Australian Financial Review commented in an editorial, the union's dismissive reaction to Cole's report "speaks as loudly as his damning findings of entrenched lawlessness". Imagine the reaction if a royal commissioner had identified 31 people in the finance industry or the steel industry for possible criminal charges. This would rightly be regarded as the sign of an industry in crisis demanding urgent government intervention.

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. The West Australian construction industry accounted for another 8 per cent of the national strike tally. Construction is a $40 billion a year industry comprising nearly six per cent of GDP and employing nearly 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 labour productivity in commercial construction to the home building standard (let alone the 50 per cent increase needed to match North American levels) 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.

Still, change is about decent Australian values not just a more efficient industry.

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