1. Skip to navigation
  2. Skip to content

ABC Commissioner's speech to the Australian Industry Group National Construction Conference in Melbourne


VIC , Industry news 

Release date: 20 May 2011 

Address to Australian Industry Group, National Construction Conference

Melbourne, 20 May 2011

I acknowledge, and pay my respects to, the traditional and original custodians of the land on which this conference is taking place, the Wurundjeri of the Kulin Nation, their past and present.

I acknowledge their continuing connection with and contribution to country and their unique role in the life of the ACT and the surrounding region.

I extend my respect to other aboriginal people here today.

Introduction

Good morning; and thank you for the invitation to speak with you.

The ABCC has always enjoyed a very constructive working relationship with the Ai Group and its members.

As a peak industry association in Australia which, along with its affiliates, represents the interests of more than 60,000 businesses in an expanding range of sectors including construction, the Ai Group plays an important and constructive role in promoting the viewpoints and interests of Australian industry in respect of competitive and sustainable industries, skills development, productive and flexible workplace relations, infrastructure development and innovation.

Under the leadership of Heather Ridout and, in the WR and IR policy areas, Peter Nolan and Stephen Smith respectively, the Ai Group continues to be one of the preeminent voices of industry in this country. As does the Australian Constructors Association under the leadership of Peter Brecht and Jim Barrett.

In that regard the Ai Group and ACA are a vital co-producers of the public value that my agency returns to the Australian community and I look forward to our ongoing working relationship.

This afternoon, I will update you on some of the activities the ABCC has focussed on since I took up my appointment in October 2010.

I will also speak about productivity in Australia’s building and construction industry (B&C): factors that drive productivity, the workplace relations contributors to productive projects and the way the ABCC encourages productivity through its operations.

Please note that, as the CEO of an independent statutory agency, the views I
express today are my own and do not necessarily reflect Government policy..

THE ACTIVITIES OF THE ABCC
The National Context

In a national context it is clear that maintaining a high functioning, harmonious building and construction industry is not just in the interests of industry participants, but is in the interest of all Australians.

Australia’s B&C industry accounts for 7.5% of GDP and employs almost 1 million of our fellow Australians.

Recent Construction Indexes show activity in the engineering construction sector expanding. This growth will likely continue as more infrastructure is required to support the resource and mining sectors.

Noting this National context, the work of the ABCC is not just about workplace relations compliance for compliance sake; rather the work of my agency and that of my hard working staff is intimately connected with the building of this nation and future prosperity of this country.

I was, in particular, reminded of this last night at the Australian Construction Achievement Award, where the 7 finalists included the; the Northern Expressway in SA, the all Australian designed Abbot Point Coal Terminal which has significantly expanded our export capacity, the Sydney Desal Plant (costing $1bn, it is the 2nd largest desal plant in the world), the $3bn Clem Jones Tunnel in Qld (the longest and most technically advanced tunnel in Australia) and the internationally awarded 6 star energy rated ANZ Centre here in Melbourne.

The importance of these projects and $billions of worth of projects under construction or being planned, is why barriers to participation like breaches of freedom of association laws, coercion, mandated industrial arrangements and other anti-competitive practices must be eliminated.

An active regulator

It is why the creation of (and the government’s policy of retaining) a separate standalone regulator of workplace relations in the B&C industry is to be seen as a significant structural change that cured an identified weakness in the mechanisms for enforcing laws of general application, especially workplace laws and the civil law for recovery of loss caused by unlawful action.


The ABCC is committed to ensuring that the B&C industry operates within the law and it is as busy today, indeed busier, than it has ever been; expanding its regulatory work and geographic reach in an effort to increase the public value it delivers.

Nationally, we currently have:

  • 84 active investigations;
  • 37 matters being assessed by our internal legal department; and
  •  33 matters before the courts.

The majority of the matters under investigation and with our legal department relate to alleged breaches in Victoria (29%) and Western Australia (25%). The court matters also principally relate to matters in Victoria (64%) and Western Australia (24%).

Since October 2010 I have authorised the commencement of more civil penalty proceedings than the average in the corresponding period of the previous three years.3 We have kept our foot on the regulatory accelerator; however, the scope of the subject matters being litigated has expanded.

We have also expanded our capacity to assist B&C industry participants by making sure our office locations allow us to act swiftly when regulatory intervention is required.

The ABCC has offices in all state capitals, but had no presence in the Territories. Consequently, I recently opened an office in Canberra and in July I will be opening an office in Darwin.

Although the ‘strong cop on the beat’ metaphor has become somewhat hackneyed, it is the case that there will now be more “cops”, on more building and construction “beats.”

Indeed we are looking to expand further. Noting that seven out of Australia’s ten largest advance mineral and petroleum projects, worth around $125.6 billion, are under construction or about to be constructed in the Pilbara, Barrow Island and the Burrup Peninsula, subject to the successful conclusion of a current recruitment round, we hope to improve our service offering in the Pilbara in Western Australia.

A transparent regulator

As the ABC Commissioner and a labour regulator with a unique position in the Australian workplace relations environment, I am accountable for upholding the important principles of impartiality, accessibility and procedural fairness.

To this end, since I became ABC Commissioner I have attended to several governance issues to make our operations more transparent and engender accountability across the agency in our service of the B&C industry participants.

Last November I published an ABCC Litigation Policy4 that sets out the considerations that are factored in when determining whether a proceeding should be commenced.

At the beginning of February I published on our website further Guidance Notes which clearly outline the processes the ABCC follows in relation to:

  • investigative processes; and
  • written undertakings as an alternative to litigation.

It is important that the B&C industry is given practical information about how the ABCC performs its functions.

Additional Guidance Notes are being developed in relation to:

  • Right of Entry;
  • National Code processes; and, importantly,
  • Good Faith Bargaining in the B&C Industry. As a regulator with
  • a statutory function to educate workplace participants and build their capacity to work with the Fair Work Act 2009, it is important that we assist the parties to understand their obligations to bargain in good faith, especially when parties are seeking to bargain with the goal of advancing productivity (which is to be encouraged, despite it not being mandated).
    A full service regulator

    In addition the ABCC has moved to become a full-service regulator, taking responsibility for regulating compliance with wages and entitlements matters in the B&C industry under the Fair Work Act 2009 (FW Act).

    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.

     It is also consistent with our obligations under the 1947 International Labour Organisation Labour (ILO) Inspection Convention (No. 87), in particular Article 3 which provides that,

    The functions of the system of labour inspection shall be: to secure the enforcement of the legal provisions relating to conditions of work and the protection of workers while engaged in their work, such as provisions relating to hours, wages, ... and other connected matters, in so far as such provisions are enforceable by labour inspectors...

    It is fair to say that there has been a modest start to our wages and entitlements practice. The ABCC has received 125 enquiries related to wages and entitlement matters to the end of April 2011. We have undertaken a total of 83 wages and entitlements investigations. There are currently 23 investigations underway and in respect of the 39 matters which have been resolved 12 have resulted in recoveries of nearing $80,000 for workers.

    Our investigations to date do not indicate any systemic issues in relation to underpayments, rather, there have been a range of basis for the underpayments arising out of errors in relation to crib, site, travel, meal and first aid allowances; incorrect hourly rates, overtime rates and the nonpayment of agreed wage increases.

    With average payments of $6000, this is a demonstration of my agency's commitment to protecting the Australian tradition of a fair day’s pay for a fair day’s work and to making a difference to the lives of the workers who are the victims of this unlawful behaviour.

    It demonstrates clearly my determination that the ABCC meet its duty to be a full service regulator of the building and construction industry.

    LABOUR PRODUCTIVITY AND ENHANCING INDUSTRY CAPACITY
    Productivity in the Building and Construction Industry

    A productive, well-regulated B&C industry is good for workers and their families, as
    well as employers, head-contractors and sub-contractors.

    Productivity and participation create more jobs, more job security, more training and
    higher wages, greater efficiencies and higher profits.

    The B&C is undoubtedly going to experience employment growth in coming years. The extent of predicted skills shortages was acknowledged by measures announced in the federal budget handed down last week.

    Productivity measures in the construction industry are of course vulnerable to peaks  and troughs caused by fluctuating business cycles. Despite this, significant expansion is predicted in the engineering and civil construction sectors in coming
    years and wage growth remains solid.

    By percentage, wage growth in the construction industry has been running above
    the average in other industries from as far back as the 2004-2005 financial year.

    In contrast, labour productivity in the B&C, measured by gross value added per hour worked, runs almost on par with the all industries figure and lags behind comparable industries like mining and manufacturing.

    The CPI increase for the 2009-10 financial year was 2.3 percent. Claims for wage
    increases in new B&C industry agreements being negotiated this year routinely run
    to between 6-10 percent.

    Accordingly, the primary way for productivity advancements to occur, without considering of the opportunities provided by technological innovation, is through improving baseline project efficiency - more output for your inputs.

    The success of many of the major projects that currently have approval, especially in
    the resource construction sector, will be influenced by how successfully labour productivity measures are incorporated into agreements and implemented at a project-level.

    The scale of productivity gains that can be achieved will be determined by the ability to ensure appropriate allocation of resources across the life of projects. With wage costs increasing and having regard to building prices, cost of materials and other project overheads; capitalising on productivity gains that can flow from good workplace relations models should be a priority for everybody in this room, and everybody in the industry.

    Maximising productive working days, ensuring projects have harmonious workplace
    relations settings and are being delivered efficiently, will actually be crucial in Australia’s capacity to harness the productivity dividends that will flow from national
    infrastructure projects and major resource construction.

    If we can secure productivity gains in the B&C, crucial improvements to living standards will flow to all Australians, not just construction workers. A productive B&C means more value added in production and more income generated; available
    to be distributed nationwide.

    Investor confidence will also be influenced by our domestic capacity to create lawful project sites where workers are paid correctly, unlawful strikes are eradicated and contracting arrangements are sturdy and reliable.

    Australia’s building and construction industry and the budget

    Last week’s budget contained a number of measures concerning the challenges and opportunities presented by the resources boom “mark two”. New training and
    apprenticeship opportunities, increased skilled migration and tax measures designed to attract private investment in infrastructure are all relevant to the building and construction industry.

    This year’s budget sets aside a further 5.6 billion for a new infrastructure fund.

    A proposed major funding boost to Infrastructure Australia is intended to facilitate the development of priority assessments for better allocation of major national project funding.

    Investors in projects deemed nationally significant will have access to new tax provisions. Projects that Infrastructure Australia classifies as ‘Ready to Proceed’ or
    ‘Threshold’ will be able to access exemption from ‘continuity of ownership’ and ‘same business’ tax treatment tests on losses to try to create more certainly for private investors.

    There are measures to make a $996 million equity investment in the Australian Rail Track Corporation for upgrades to major rail freight networks12 and the Budget provides $916 million for the first eight infrastructure projects to be funded from the Regional Infrastructure Fund (RIF).

    The Building Australia’s Future Workforce package which commits $3 billion to skills development over the next six years has a focus on training and support to meet skill demand across all sectors, including construction.

    The Australian Industry Group, welcomed the government’s focus on fundamentals in the budget, but expressed some concern for those industries that are suffering as a result of our high dollar like tourism and manufacturing. Ai Group, in particular, noted the proposed establishment of the National Workforce and Productivity Agency and its objective of strengthening partnerships between Government and business and new investment in transport infrastructure.

    The Australian Constructors Association welcomed measures to address skills bottlenecks and the government’s support of accelerated apprenticeships. ACA also
    commended the enhanced role to be assumed by Infrastructure Australia with the
    development of a National Priority List for major projects and an infrastructure
    financing group to improve prospects for infrastructure-based PPPs and private
    investment.

    Similarly, the Master Builders Association strongly supported the government’s investment in developing skills and employment, including the skilled migration program and increased support for apprenticeships. The establishment of the $558m National Workforce Development Fund as part of a partnership with industry
    to deliver more training outcomes was welcomed. The MBA also supported the
    proposal to improve deductibility provisions for some privately funded public infrastructure projects.

    A fair and productive building and construction industry is vital

    Investments in apprenticeships, addressing skills shortages and paths for skilled
    migration will benefit the B&C industry by increasing participation in our industry.

    The challenge for all of us then is to make sure that those new entrants into the B&C
    workforce maintain their level of participation in our industry.

    The questions for all of us include; How do we create an industry that skilled workers want to be a part of? That apprentices feel proud to be involved and stay in? That overseas workers are keen to enter?

    The ABCC has a central role here. We are charged with monitoring appropriate standards of conduct in the industry. We encourage compliance with workplace
    relations laws; we provide assistance and advice to industry participants about their
    rights and obligations; we disseminate information about workplace issues that affect construction workers.

    This is important to younger workers, skilled workers and overseas workers want to
    be involved in a lawful industry that is productive and harmonious.

    Maintaining a lawful, high-functioning industry where employees are paid correctly, freedom of association rights are respected and industry participants can easily
    access information about their rights and obligations is the best way to fortify ourselves against skill-shortages.

    The ABCC’s role in regulating unlawful industrial action is fundamental to fostering harmonious work practices. Every day lost to industrial action is a day of lost productivity. That's why, at the ABCC, we are so concerned about investigating and litigating section 38 of the BCII Act; it is a pro-productivity agenda of our regulatory work. It's why we look to use section 39 of the BCII Act, our injunction power, to try
    and get UIA stopped at the earliest opportunity.

    However, as a regulator I would prefer to prevent UIA rather than treat it.

    If individual industry participants considering whether to engage in unlawful strike action have access to the guidance and information provided by a strong regulator,
    as well as a clear understanding of the potential legal consequences of taking illegal strike action, they are more likely to consider alternative dispute resolution options.

    As a consequence, we are increasing our educative efforts with workers; explaining
    to them how they can solve disputes without resorting to the brutal measure of UIA
    and losing a minimum of 4 hours pay, sometimes over the most minor of matters.

    Employers can contribute here by modelling best practice workplace relations strategies. Andrew Ermer spoke this morning about the importance of communication and I endorse those comments. Where we see strong management, effective leadership and high levels of employee engagement we see corresponding productivity dividends.

    A culture of harmonious workplace relations across the board can only be brought
    about by genuine commitment and cooperation between key players, many of whom
    are in this room today.

    If the budget measures intended to address projected skills shortages, infrastructure bottle-necks and deliver vital projects are to be effective, we must work together to make the industry one that skilled workers want to be a part of.

    Additional apprenticeships and skilled migration are good for our industry. In order
    to make sure workers see the building and construction industry as somewhere they can carve out a professional career, we need to ensure it is a secure, successful and lawful industry to work in.

    Conclusion

    The health of Australia’s B&C industry is an indicator as to the overall prosperity and
    vitality of our broader economy.

    The ABCC will continue to support the B&C industry by providing education and regulatory services that facilitate harmonious workplace relations and allow projects
    to be delivered on time, on budget, with minimal disruption. Effective labour regulation plays a key role in fostering investor confidence and promoting stable growth.

    This industry requires a flexible, skilled and mobilised labour force and lawful
    forward-thinking employers.

    It also requires a responsive, transparent and enabling workplace relations regulator – resourced to rapidly respond to industrial relations issues that arise as industry participants grapple with volatile supply chains, fluid and changeable demand chains, cyclical swings in employment and the consequences of protracted contracting arrangements.

    The ABCC is changing the way it does business with the industry. It is widening the scope of its role and activities and increasing its capacity to deliver public value.

    We are here to support and enable the industry by promoting a culture of workplace relations compliance.

    You can all play an important role by engaging in an open dialogue with the ABCC - giving us feedback about our activities, and information about the tools you need to get about doing the important job of building this nation. Thank you. 

    Download

     Print friendly version - 390KB