Address to the Air Conditioning and Mechanical Contractors Association (AMCA) National Conference
Sanctuary Cove, 7 October 2011
I acknowledge, and pay my respects to, the traditional and original custodians of the land on which this conference is taking place, the Yungambeh people, their elders past and present.
I acknowledge their continuing connection with and contribution to country and their unique role in the life of the Gold Coast region.
Introduction
Good morning, thank you for the invitation to be here with you this morning. In particular, I thank David Eynon who arranged for me to attend.
I am very pleased to be here in this stunning region for AMCA.s 50th anniversary conference - happy anniversary AMCA. As it happens, your anniversary coincides, this week, with my one year anniversary as the Australian Building and Construction Commissioner; and, also, today, happens to be my birthday. What a great way to spend it.
I jumped at the chance to be here with you because air conditioning and mechanical services are integral to all modern-day construction projects.
And the AMCA is a vital co-producer of the public value that my agency returns to the Australian community each and every day. I look forward to our ongoing working relationship.
Good temperature control, ventilation and air purification systems are fundamental modern conveniences that millions of Australians in offices and apartments all around the country only notice when they break-down. I know that.s the case in our office. Every so often somebody forgets to remove me from the all-staff emails along the lines of:
“Can somebody find out why it is 48 degrees in the video-conference room.”
When the technicians arrive to fix the problem they have usually elevated to a kind of super-hero status.
I'm sure that.s a nice upshot associated with your line of work. It.s not usually how the regulated community respond to the attendance of the ABCC on site.
And we meet today in the context of a deepening decline in construction activity. Just this morning we saw the release of the September quarter Australian Performance of Construction Index (Australian
PCI) produced by the Australian Industry Group in conjunction with the Housing Industry Association.
1 Australian Industry Group, ‘Australian PCI®: Construction decline deepens further in September’, 7 October 2011.
For the 16th consecutive month the Australian PCI has gone backwards. Ai Group report,
At the sectoral level, house building, apartments and commercial construction all recorded sharper declines in activity during the month. Despite a further reduction in engineering construction, it remained the most resiliant of the four broad sectors of the industry, with activity falling at its slowest pace over the past four months.
And so the need for the building and construction industry to focus on its productivity occurs in a pressing environment. Therefore, I am going to spend some of our time together this morning discussing the link between good workplace relations practices and productivity for small to medium-sized contractors in the non-residential construction industry.
I will also give you some information about the role, work and focus of the Office of the Australian Building Construction Commissioner over the past 12 months.
I will happily take questions at the end of this presentation, but you should also feel very welcome to interrupt me during this address if questions arise. I much prefer to engage with you immediately about the issues of concern to you.
ABCC snapshot 2010-11 (stats to 30 June 2011)
I'd like to begin by highlighting the work the ABCC has been doing this past year.
The following statistics and information demonstrates the increased public value the ABCC has delivered in the last financial year - we:
- assumed full responsibility for investigating wage and entitlement claims in the building and construction industry. As such, the ABCC is now a full service regulator;
- recovered $127,479 in wages and entitlements for 38 building and construction workers;
- undertook 30 per cent more investigations into suspected breaches of workplace laws;
- initiated 47 per cent more investigations;
- finalised 32 per cent more cases;
- commenced a public inquiry into Sham Contracting;
- initiated 134 sham contracting-related investigations and successfully concluded litigation in one;
- conducted 58 penalty proceedings before the courts and secured $2.570 million in penalties;
- made submissions in 7 Fair Work Australia proceedings and intervened in 2 new court proceedings;
- responded to 2,497 enquiries; and
- delivered 292 presentations to building and construction industry participants;
In the face of initial industry concern about the ABCC undertaking new work I said, at the time of announcing this broader regulatory role for the ABCC, our inspectors could “walk and chew gum at the same time”. The evidence of the past 12 months is that they clearly can.
And if you look at the employee enterprise agreement I have just negotiated with my own staff (and which was approved by Fair Work Australia on Tuesday) all this has been achieved in exchange for modest pay rises (4%, 3% and 2%) and no trade-off in productivity.
This contrasts favourably with the example set by major stakeholders in the building and construction sector and the deals they have signed-off on this year (notably the MBAV/CFMEU and NECA/ETU pattern agreement deals in Victoria). Both pattern agreements not only contain no effective productivity improvements; they actually contain terms that will provide for diminished productivity in coming years.
The ABCC’s role and functions
Consistent with the main object of the Building and Construction Industry Improvement Act 2005 (BCII Act), since I was appointed the ABC Commissioner in October 2010, I have been seeking to “ensure that building work is carried out fairly, efficiently and productively for the benefit of all industry participants and for the benefit of the Australian economy as a whole”.
The ABCC enacts its functions by:
- providing advice to industry participants about their rights and responsibilities under workplace laws;
- investigating suspected contraventions of the law, the National Code of Practice for the Construction Industry (National Code), federal enterprise agreements and awards;and
- instituting or intervening in proceedings when workplace laws are breached.
We now have offices in all State and Territory capitals. Earlier this year I opened an office in Canberra and in July I opened our Darwin headquarters.
Since it was created six years ago the ABC Inspectorate has been resolute in promoting respect for the rule of law, and the industry has undergone an important era of reform. I am continuing that reform agenda.
In focussing on fair building and construction work we are concerned to promote harmonious, equitable practices on sites, and tackle issues including sham contracting, the underpayment of building workers and the defence of right of entry provisions.
We have also been working to ensure the ABCC provides comprehensive regulatory and advisory services that are accessible to all industry participants.
I call this operating as a full-service regulator.
Building the capacity of industry in 2012
In 2012 we will be reviewing and improving the ABCC.s educative work to make sure that we are providing our B&C industry with the most valuable and practical services.
While treating breaches of workplace laws through investigations and litigation is a vital and ongoing part of our work, ideally, as a regulator, I would rather breaches not occur.
We are updating and improving the advice and assistance we make available to B&C industry participants to enable them to better comply with workplace laws.
Our inspectors incorporate education into many aspects of their daily work. They provide fact sheets, referrals, advice, attend trade-shows, give presentations, answer questions and direct people to online tools and resources.
Providing B&C industry participants with a clear understanding of what is required of them to be fully compliant with workplace laws, means they are more likely to comply. This reduces the number of complaints received by the ABCC and allows us to focus our compliance activities on the investigations related to the most serious contraventions.
This will involve a two-way conversation in which all of you here today as building industry participants involved in the B&C industry. You are encouraged to participate.
We are your regulator and we welcome you telling us what you need by way of advice and assistance. We work productively with associations like the AMCA as co-producers of our public value. Recently, for example we worked closely with industry stakeholders on the design and implementation of our Concreting and Finishing Trades Sham Contracting Audit project.
The full range of regulatory enforcement strategies
As a sophisticated regulator we recognise that a one-size-fits-all approach does not lead to long term compliance or cultural reform.
Regulators are viewed with integrity only when they use the full range of tools available tailored in a way to address particular situations. As such the ABCC employs a traditional “Braithwaite” triangle model (see below) to its compliance strategies, necessarily starting with an understanding of what motivates people to comply with legislation.
The responding tools are then matched with the offender.s attitude to compliance depending on whether they are:
- willing to do the right thing (in which case we should give them every opportunity to get it right);
or
- resigned to comply;
and should be engaged in prevention/persuasive regulation (at the bottom of the pyramid); or
- avoiders; and
- active resisters;
who should be responded to through hard/coercive regulatory responses (at the top of the pyramid).
Getting workplace relations settings right – from the start
I know that not every company can afford to employ an industrial relations adviser or a human resources adviser to manage their workplace relations issues. That.s why the role played by associations like the AMCA is so important. It.s why I view this association, in its 50th year, as an essential co-producer of our public value.
I also know that hiring staff, managing staff, remunerating staff and making sure all staff-related record-keeping is up-to-date are some of the most stressful, time-consuming undertakings for any small to medium-sized business.
However, investing the time it takes to get the basics sorted right from the start always proves worthwhile.
Laying good foundations means workplace problems are easier to deal with if they arise down the track.
In this regard it is vital that, as employers, you:
make sure you:
- know which award, agreement or industrial instrument applies; which allowances, overtime rates or RDOs your workers are entitled to;
- understand how to manage performance and how unfair dismissal laws operate;
- are clear about terms of employment and engagement – whether you are engaging a subcontractor or taking on a new full-time or casual employee - how much notice parties have to provide to terminate the engagement – what the workplace dispute processes are and how to use them effectively;
- understand how to bargain in good faith, understand protected action provisions and understand the requirements for best practice bargaining; and
- communicate directly with your employees about all of these matters. High levels of employee engagement are a significant driver of productivity at the enterprise level. Employee engagement requires communication, communication, communication; that is, direct communication, not communication through a third party.
During agreement-making there can be an increased likelihood of disputes. When employers have a strong history of engaging genuinely and respectfully with employees about workplace issues their chances bargaining for mutual gain and minimising disputes during agreement-making are greatly improved.
Time and time again I see disputes escalate unnecessarily because of misunderstanding about basic workplace rights and obligations.
If you need assistance understanding or implementing good workplace relations practices you can contact the ABCC. There are also a range of resources available online at the ABCC website.
I see a key role of ours, as the regulator of workplace laws in the building and construction industry, to better support you in industry so that you are better managers of your people, demonstrate leadership and increase levels of employee engagement. This is the gateway to more productive and harmonious workplaces.
Productivity for small to medium-sized employers
I noted AMCA.s policy statement on workplace relations states that a key issue for its members is that IR systems remain overly complicated, too focussed on process, and agreement making is too complex.
At the ABCC we know productive workplaces are more likely to be compliant with workplace laws, and visa versa; workplaces that have good workplace relations practices are more productive.
Establishing good workplace relations practices pays dividends.
This is a significant issue. National labour productivity growth to June 2011 was the second-lowest it has been in 15 years.3 Small and medium sized businesses are at risk when productivity dwindles. They are generally not well-placed to absorb wage increases or increased costs.
In recent times much has been written about the apparent link between workplace relations/industrial relations frameworks and productivity. It is an important discourse to be had. However, to my mind, any explanation which seeks to draw a causal link between macro-economic economy-wide performance measures (which contain, in particular, the distorting affect of productivity figures in the mining and utilities sectors) and the operation of specific sections in the Fair Work Act 2009 is unpersuasive.
For small to medium-sized enterprises it is of more utility (to them and to the need for Australia to lift its productivity performance) to focus on and break-down the factors that facilitate productivity.
They are tangible.
A modern workplace that employs progressive management systems where:
- a high investment is made in workforce skills and training;
- technology and business-infrastructure are prioritised;
- workplace relations laws are well managed and implemented;
- employees are engaged; and
- productivity is measured and bargained for,
will have a much better chance at creating productive operations.
Productivity is essentially about getting maximum bang for your buck. When your company is at its most productive you can probably „feel. it. You can sense that projects are flowing exactly as they should.
Many CEO.s in the construction sector know this productive „sensation. but struggle to articulate how their employment practices impact on the ratio of production for each hour worked by their staff.
Granted, labour productivity in the building and construction sector is difficult to quantify – (not all outputs are equal - some production processes are more labour intensive than others - there are a variety of specialised skills required at each stage of a project).
However, I would encourage you to start tracking; measuring and analysing productivity. What it means for your company. What it might mean next time you come to negotiate a workplace agreement.
And - involve your employees. Communicate openly with them. Start a discussion about what productivity means in your workplace and to them.
Efficiency will always be an imperative in this industry. As I stated earlier, forecasts suggest Australia's building and construction sector will remain relatively flat market to at least the end of 2012. Availability of finance, the trickle-down effect of the GFC and the withdrawal of government stimulus spending from the market all play a role in this downturn.
Several significant mining, oil and gas resource construction will come on stream in the next 3-5 years. Other major sub-sectors (commercial, housing, infrastructure construction) look set for only moderate growth across the period.
If the workplace relations legislation seems overly complex – give the ABCC a call. We will assist you to access the information you need and provide tailored advice specific to your circumstances. We will work in partnership with your Association to build the capacity of all employers in your industry.
The impact of industrial disputation
Too often, when disputes arise, lawful dispute resolution procedures are ignored (by all parties) and, consequently, we see unlawful industrial action occurring.
Given the uninspired market forecasts we have seen recently – none of us can afford the loss of productivity which is attached to unlawful industrial action.
The ABCC plays a crucial role in policing unlawful industrial action.
At any given time, between a quarter and a third of the ABCC.s investigatory work relates to unlawful industrial action.
There have always been disputes on building sites. As the B&C industry.s regulator the ABCC's job is to treat disputes through investigations and, where appropriate, litigation. As we are funded by the tax-payer; we take our obligation to act in the community.s interest very seriously.
The most recent ABS industrial disputations data show a significant spike in „days lost. to industrial action. In the June 2011 quarter there were 44.7 days lost per 1000 employees in the sector. This was driven by high disputation levels on Queensland Government-funded jobs and at Victoria.s desalination plant.
Disputation levels this high are unacceptable. Every productive work day lost to industrial disputes is one day too many.
The ABCC acted swiftly to investigate the stoppages that caused this high „days lost. figure. In Queensland we have already commenced litigation in the Federal Court alleging the CFMEU, the CEPU and seven organisers took unlawful industrial action across a range of projects. In Victoria, we.ve got 21 matters before the courts including proceedings in the Supreme Court of Victoria in relation to the desalination plant. We acted swiftly to get these matters into court.
The Fair Work system is designed to deal with inevitable disputes. All workplace agreements contain procedures for workplace dispute to be resolved fairly.
If there is a dispute on your site – whether you are a subbie – a worker – or a business-owner - you have the right to ask that your grievances be dealt with under these dispute resolution clauses. This gives you a way to be heard, and to have your concerns addressed properly and promptly. That is your right.
Refusing to observe or abide by to an agreed dispute resolution clause is a breach of an agreement. The integrity of agreement making is important and the ABCC will investigate breaches of dispute resolution clauses.
Recent disputation figures tell me that parties need to try harder when it comes to lawful dispute resolution.
The ABCC will continue to enforce the legislation (which requires compliance with enterprise agreements), but we.d prefer not to have to spend tax-payer dollars litigating in relation to strikes where they could have been avoided.
Full service regulator
Operating as a full-service regulator involves taking responsibility for regulating compliance with wages and entitlements matters in the building and construction industry.
On taking up my appointment I announced that, consistent with the recommendation of Royal Commissioner Cole, the ABCC “will assist building and construction workers in the regulated community to recover under-payments when they seek our assistance.”
Royal Commissioner Cole concluded that there is a significant role for the ABCC to play in connection with the non-payment of employee entitlements.
Accordingly, a year ago I wrote to Fair Work Ombudsman, Mr Nicholas Wilson, and terminated the longstanding practice which saw the ABCC refer claims of underpayments to the FWO. As a full service regulator, the ABCC now assists building and construction workers to recover underpayments where they come to the ABCC for assistance.
Since we started this work we have recovered more than $180,000 in back-payment of wages, leave, allowances or superannuation for workers in the industry.
Preventing breaches of time and wage legislation before they occur is the ABCC.s preferred way of regulating these matters. That means providing targeted and timely advice - helping businesses to voluntarily rectify payroll errors - and making accurate information easily available to the industry about rights and obligations.
Conclusion
In closing, I reiterate that a productive, well-regulated building and construction industry is good for workers and their families; as well as head-contractors and their building and construction companies. Productivity creates more jobs, more job security, more training and higher wages.
The building and construction industry is your industry. The ABCC is here to help you and we remain willing to stand shoulder to shoulder with industry players committed to ongoing cultural reform.
Do not hesitate to:
- use us as a resource;
- call us when you have problems on site; and
- seek us out when you need information or advice.
Additionally, each of you here must do what you can to make your industry harmonious and productive.
The ABCC supports the building and construction industry by providing services that facilitate harmonious workplace relations and allow projects to be delivered on time, on budget and with minimal disruption. Effective labour regulation plays a key role in fostering investor confidence and promoting stable growth.
It.s what I have been committed to over the past 12 months and what I and my agency are committed to in the future.
Thank you.