The federal government has warned Victoria it could lose up to $7.6 billion in Commonwealth infrastructure funding if the state fails to adopt new rules designed to rein in the influence of militant unions on construction sites.
The threat is unlikely to have any immediate impact, however, as the new rules come into force only if and when stalled legislation to reintroduce the Australian Building and Construction Commission is passed.
Releasing a revised version of its Fair and Lawful Building Sites Code 2014, Federal Employment Minister Eric Abetz has warned that states which do not comply with the code would not receive any new federal government money for building and infrastructure projects – a warning particularly pointed at the newly elected Victorian Labour government which has promised to abolish a similar existing state-based code and not to adopt the federal code.
“Compliance with the Code will be a condition of any new Commonwealth funding to the States for major infrastructure projects,” Abetz warned. “States which do not agree to apply the Code to such projects will not receive funding.”
Designed to limit union influence on construction sites, the code applies to contractors who bid for work on federally funded building and infrastructure projects and sets out rules about expected conduct and behaviour regarding industrial relations with which those who bid for such projects are expected to comply. Contractors whose practices do not comply are supposed to be ineligible to work on such projects and states who employ the services of such contractors on projects are being locked out of any chance of receiving federal money for those projects.
Amongst other things, the original version of the Code disallows enterprise agreements containing certain restrictive clauses and requires contractors to have dispute settlement procedures in place and also to report actual or threatened industrial action. While that version was released in April, Abetz said the revised version addresses areas of confusion with the original draft and makes clear that the Code applies to variations of enterprise agreements as well as the agreements themselves and also that contractors must strictly comply with immigration laws and visa requirements.
Abetz’s threat to withhold funding from states that refuse to comply, however, is unlikely to come to pass in the short term as the code will only come into effect if and when legislation to re-establish the Australian Building and Construction Commission (ABCC) becomes law – a prospect which is not likely to happen soon as that legislation remains stuck in the Senate.
Australian Industry Group chief executive officer Innes Willox welcomed the revised draft but said its release reinforced the need for the legislation to be adopted as law.
"The existing inappropriate and unproductive laws and arrangements are having an adverse impact on every Australian,” Willox said, adding that the rule of law needed to be re-established on construction sites and that existing arrangements had given unions a free pass to engage in unproductive conduct and driven up construction costs.
The latest threat follows an earlier warning that the federal government would demand money previously paid to the state to build the East West Link be repaid.