Building Cop Saved Consumers $7.5 Billion: Report

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Thursday, September 5th, 2013
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As debate surrounding the future of building industry regulation arrangement regarding industrial relations throughout Australia heats up in the lead-up to the federal election, a key building industry lobby group last week released a report which claims a former building industry regulatory body which was abolished last year saved consumers $7.5 billion.

Released last week by Master Builders Australia, the Economic Analysis of Building and Construction Industry Productivity report published by Independent Economics says that by restoring the rule of law in the construction industry, the former Australian Building and Construction Commission (ABCC) delivered annual benefits of $7.5 billion to consumers and added 0.9 per cent to both national GDP and consumer after-tax real wages.

It notes, however, that following the ABCC’s abolition in July last year, the number of strike days lost due to industrial action increased almost fourfold from 24,000 in 2011/12 to 89,000 in 2012/13 – partially reversing gains which had seen this figure drop from an average of 159,000 in the five years to 2001/02 leading up to the Taskforce/ABCC era.

The report also says a number of regulatory changes implemented at the time the ABCC was abolished  have meant the its replacement body, Fair Work Building and Construction Commission is less powerful than its predecessor and less of a deterrent to unlawful conduct.

“This means that the building and construction industry now largely lacks the regulations required to address the industry-specific issues identified by the Cole Royal Commission,” the report says, referring to a Royal Commission established by the Howard government to examine building industry practices early last decade.

“The main remaining feature from the Taskforce/ABCC era is that the FWBC is still a specialist regulator for the industry. However, its most important powers used to obtain information are substantially weakened and used in only limited circumstances.”

“Just as the Taskforce/ABCC era led to productivity gains, this regulatory reversal under the FWBC can be expected to lead to a partial or complete reversal of those productivity gains.”

The latest report comes amid intense debate over the regulation of industrial relations within the building industry, with the Coalition promising to reinstate the former regulator within its first 100 days if it wins office.

Unions, such as the Construction, Forestry, Mining and Energy Union (CFMEU), disliked the former regulator, which they saw as a relic from the Howard era and which they say had excessive powers and lacked accountability.

CFMEU boss Dave Noonan says claims the new arrangements have led to watered down powers for the new regulator or a rise in industrial disputes are unfounded and untrue.

But Master Builders Australia chief executive officer Wilhelm Harnisch says the ABCC’s abolition precipitated a resurgence in unlawful practices such as intimidation of sub-contractors, principal contractors and suppliers and ‘sign-up or else’ bargaining, and that the report highlighted the importance of the former regulator’s work.

“Recent campaigns of industrial thuggery by the Construction, Forestry, Electrical and Mining Union’s (CFMEU) in Victoria and Queensland would not have been tolerated by the ABCC,” Harnisch said.

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