Senator Abetz Set to Drive ABCC Bill into the Wall 5

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Wednesday, March 25th, 2015
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The next two weeks in the Senate will have a profound effect on Australia’s construction industry no matter what happens.

The ideological wrecking ball being swung by Employment Minister Eric Abetz to tackle a recalcitrant CFMEU clearly has no hope under the current ABCC legislation soon to return to the Senate.

This ideology oscillates depending on which of the major parties is in power. Labour, which tends to side with the unions and the Coalition, which caters to powerful employer associations, are the extremes. The losers are the more than 200,000 construction enterprises registered in Australia, the one million people who work in the construction industry and, perhaps more importantly, construction’s clients.

Senator Jacqui Lambie has declared she is against legislation that prevails on one side of the industry over the other. In the case of the ABCC, the target is the unions. Let’s be clear on one thing: the unlawful and disruptive tactics employed by the CFMEU have to stop. So does the continuation of new enterprise agreements that include double digit inflation wage adjustments and benefits without commensurate and independently verified productivity improvements. It’s a two-sided case.

Senator John Madigan has also signalled his intent to vote down the legislation because he sees it as an affront to the idea that “all individuals” should be treated equally before the law. That’s a nice idea if the disrupters, like the CFMEU in this instance, were not out of line. The reality is that the concept of “all individuals” should be extended to construction clients who have no voice in the dealings of an industry accountable to no one and whose out of control costs are hurting the economy and Australian households. Political actions need to apply a public interest test.

Senators Lambie and Madigan sit at a unique crossroads in Australia’s political history. This is certainly the case for Australia’s construction industry, where the schoolyard battle between labour and capital has gone on for so long no one can remember who started it.

These Senators could force the setting up of a roots and branches review of Australia’s construction industry. They could ensure this is conducted with voice being given equally to all stakeholders. What is not needed this time is a consultative process that simply turns into a last group hug as the industry sinks. There have been too many of these and the results have been more of the same.

It appears the Abbott government has come to power with an unresolved agenda, as evidenced by last year’s budget and the ABCC legislation. Another example was one of the first acts of the government at the 2013 COAG meeting, where the jettisoning of nationally important policies such as the harmonisation of construction standards, compliance, builder licencing and security of payment were sent back to the states to sort it out for themselves.

Now the Senate has observed that contractor insolvency in construction is so serious that it has called on its own enquiry. For what?

Australia’s federation of construction both politically and through industry associations will not create the leadership construction now needs in a rapidly changing global construction market in which we are but a minnow. Global construction is undergoing a transformation which sees it taking on many of the characteristics of other industries now driven by the ethos of quality up and prices down. That’s what happened to the motor vehicle industry, and its happening in construction.

The Australian construction industry has been shielded from the most recent of these dynamics, first by the Rudd government’s GFC economic stimulus efforts and then the need to ramp up the momentum of construction in the post-mining boom economy to save jobs by relying on the Reserve Bank’s use of record low interest rates. All of these actions only delay the inevitable, and the big questions around where the post mining and construction boom jobs will come from remain.

Talk to anybody in the construction industry these days and they will tell you the horse has bolted. Successive governments at the state and federal levels have progressively abandoned this industry by dismantling  the nation’s public works procurement capabilities and changing portfolio ministers so frequently that a temporary post covering construction can be flicked to any mug who has no idea how to contribute to turning things around. This has led, for example, to the progressive diminution of industry standards and the bodies supposedly with oversight of compliance and accreditation.

When it comes to lifting productivity, there are no incentives to change current practices. This will involve shining a light on the performances of the industry’s professionals and construction managers who all operate to protect their position in a food chain driven not by innovation and value add, but by bid shopping and squeezing margins.

It’s time to challenge the obvious waste and associated costs imposed on a dysfunctional industry supply chain through procurement processes long past their use by date. The defence that it’s the unions alone is no longer sustainable.

What Senator Abetz needs to understand is that the design, organisation of work and procurement practices in the construction industry are determined well ahead of a single construction worker starting on site. That is an informed buyer and management issue that can no longer be shrouded in process driven tendering where tick the box compliance with tender codes is deemed to deliver best value for money. They don’t, and it’s time to change them. Hiring more lawyers and quasi-construction consultants will not bring the insights needed to remap these processes.

This year, I estimate that over 50,000 new constructors and related professionals will start their careers in Australia. I estimate that over one million people will start their construction careers around the Asia Pacific Rim. I have spoken to employers, unions and academics about how they see this new cohort of constructors being introduced to a more competitive, industrialised and globalised industry. I have asked how these institutions might be preparing new constructors for the skills they need in an industry that will see a radical transformation of how projects are conceived, how construction jobs and work will be redefined and how they are sowing the seeds of better, smarter, faster and cheaper in the minds of the next generation of construction leaders.

I will not bore readers with a sorry narrative of the evidence that I can table to reinforce the dire state in which Australian construction now finds itself. My challenge to Senators Abetz, Lambie, Madigan and others is not to crash the ABCC legislation into the wall, but to hold it up, to reshape an urgent and accountable productivity and innovation blueprint applicable to the whole construction industry. It’s time to smoke out the laggards and reposition Australian construction in a global context that reflects what’s happening elsewhere and make sure we are part of it.

My challenge to Senators is to set aside some time to come to the construction edge and see what is happening, to see the waste and dysfunction that is defended by the status quo. With these insights they may then be in a position to reshape the ABCC legislation into something profoundly meaningful. Something that might lift the potential for Australian contractors, workers and students.

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5
  1. Whilst one can understand some reluctance to reintroduce the ABCC, the fact is that when you have Royal Commissions talking about a pervasive culture of law breaking activity, the head of the agency responsible for maintaining law and order within the sector (FWBC) publicly expressing alarm at what he describes as a relentless rise in unlawful activity and growing numbers of alleged instances of union officials wilfully disregarding site safety procedures, surely there can be no reasonable denying that behaviour over recent times has been unacceptable and needs to be addressed (albeit with the behaviour of what I imagine is some but a minority of employers toward workers no doubt being unacceptable as well).

    Bill Shorten and co should either say exactly how else things can be brought under control or get out of the way and allow the Coalition to fulfil its clearly given mandate to enact one of the clear promises which Australians voted for at the last election.

  2. Colin Shears

    David,
    I understand you need to say that both sides need to be nice and fair and balanced…but the reality on the ground on construction sites says that the previous labor Greens government emasculated the ability to stop union bribery, corruption and standover tactics. I know of this secondhand through builders. When a Conservative Government seeks to ensure fairness and lawful behaviour, the usual suspects squeal…including the Union Labor/Greens and crazies like Jacqui Lambie. The current Government cannot get its legislation through because of the second government (the hostile senate) so it looks weak. Our system is broken and we need to ask the Senate to be a house of review only. Not a second government that blocks the elected governments legislation and seeks to drive legislation as if it were the elected government. This model of blockage and hatred and seeking to cause chaos in government is a direct model of what Obama is up against with the crazy Fox Republicans. Funny world eh. Anyhow thanks for starting conversation on this matter.

  3. Harris

    Well constructed and insightful perspective on this subject. Hope it will awaken society, that adaptation to best practices is critical to procuring effective investment, resources and social outcomes for all.

  4. John Smolders

    David,
    Cole got it right in 2003 and a sense of harmony came back to construction sites. We all knew when Labor got into power the Unions would be supported and a less than positive result of that is now evident on many construction sites today. Quite frankly, I do not believe we can mediate a solution as it's not a simple case of parties being poles apart, but rather the questionable tactics being used by the unions today is no different to their tactics prior to Cole's introduction of the ABCC.
    It is time for Unions to give some thought about the well being of this country foremost, consider the jobs created by our industry and employing their members otherwise what we may see is a construction model close to our shores and that is local builders shutting their doors and replaced by large foreign construction companies importing their workers and living on site. Is this what we want for Australia and our kids future?
    The late Lee Kuan Yew was a visionary and had no time for those that impeded Singapore to progress, a legacy we should learn from.

  5. Luke McNeilage

    "When a Conservative Government seeks to ensure fairness and lawful behaviour,"… really, look at the MUA and other Fed court wins? If you listen to every word that comes out of Abetz mouth in question time it is pure unfounded ideology. The problem as clearly stated by David is absolutely juvenile and petty nah nah'ing by both sides. If anyone saw the interview on Lateline on Wed night with Boral CEO, again, opinion isn't evidence . Evidence of wrong doing against the law is actionable. Sending a big burly guy covered in tattoos to present an argument isn't against the law, it's just not in the "good faith" sense of negotiation. But given that there is no Federal platform that those negotiation can take place then of course this behaviour is going to continue.
    If construction companies continue to prove the need for unions, and Unions continue to gouge the industry, then David is right, it will implode. But I disagree that like the motor industry, it is too late. I think that it is the perfect time to look forward and not go back to the same systems (ABCC) that are proven not to work.
    Idealogs like Abetz are the pinheads that will burst the balloon.