The 2016–17 reporting period was a watershed year for the agency. On 1 December 2016, the Building and Construction Industry (Improving Productivity) Bill 2013 received Royal Assent and on the following day, the Australian Building and Construction Commission (ABCC) was re-established.

The new legislation brought new areas of responsibility to the agency. The ABCC has assumed responsibility for investigating contraventions of Fair Work Act 2009 (Fair Work Act) provisions relating to misclassification and sham contracting, and wages and entitlements matters in the commercial building and construction industry. These matters, as they arose in the commercial construction sector, were formerly regulated by the Fair Work Ombudsman (FWO). In now directly undertaking this important function, the ABCC sought advice on implementation from the FWO. To the greatest extent possible, the ABCC’s new processes and procedures mirror those of the FWO. I am pleased to report that the agency has established a dedicated team to provide advice and assistance in these areas across our organisation, and has commenced both proactive and reactive auditing and investigation of such issues.

Another significant development under the new legislation is the Code for the Tendering and Performance of Building Work 2016 (2016 Code). As a result of the 2016 Code, the agency now has the ability to monitor the compliance of code covered entities with state and territory security of payments laws and other requirements. Code covered entities must now report disputed and delayed progress payments to the ABCC, and comply with any adjudication determination. A failure to comply with security of payment laws is considered a breach of the Code.

My agency’s approach to dealing with security of payments under the 2016 Code was developed following extensive engagement with state and territory agencies with responsibility for security of payments legislation. I have also been in regular dialogue with Mr John Murray AM, who has been appointed to conduct a review of security of payments laws in the building and construction industry.

The 2016 Code also requires strict compliance by contractors with their work health and safety obligations. A failure to comply with safety legislation by a code covered entity is considered a breach of the Code. The ABCC’s approach to monitoring safety under the Code has three prongs. The agency monitors:

  • breaches of applicable Commonwealth, State and Territory work health and safety laws by code covered entities;
  • contractual agreements to only use products that comply with relevant Australian Standards on Commonwealth funded building work; and
  • compliance with drug and alcohol testing requirements on Commonwealth funded building work.

As Commissioner, where I am satisfied a code covered entity has failed to meet or rectify breaches of the Code, I can recommend to the Minister for Employment that that entity be excluded from Commonwealth funded work. Indeed, in the 2016–17 reporting year I issued show–cause letters to four contractors across the country for suspected breaches of the Building Code 2013, including one relating to a security of payments matter.

In 2016–17, the Minister imposed an exclusion sanction, on my recommendation, on J. Hutchinson Pty Ltd (Hutchinson Builders). The exclusion sanction was imposed for three months between 1 April–30 June 2017 during which Hutchinson Builders was excluded from submitting expressions of interest, tendering for or being awarded Commonwealth funded building work.

My agency has also made substantial progress in undertaking our function of assessing enterprise agreements for compliance against the requirements of the 2016 Code. Significant effort has gone toward ensuring that these assessments are provided in a timely and consistent manner. From the time the function commenced on 2 December 2016 until the end of the reporting period, the agency has undertaken 871 agreement assessments and has published extensive guidance material, including more than 1,600 examples of real clauses and advice about whether or not they meet the requirements of the Code.

The ABCC is committed to implementing the new aspects of the agency’s expanded jurisdiction whilst also ensuring we do not lose sight of the essential work carried over from FWBC and the previous ABCC before it.

The high number of investigations commenced (142), particularly those investigating suspected contraventions of freedom of association, coercion, right of entry and unlawful industrial action, demonstrate that there remains a culture of industrial lawlessness that continues to pervade the industry.

In 2016–17, my agency finalised 28 matters before the courts, and penalties awarded in those matters totalled $2,146,525. This is the third time that penalties imposed in a reporting year have exceeded $2 million in the history of the ABCC and its predecessor agencies.

Despite the imposition of these substantial penalties, and an overwhelming success rate, there does not appear to be any marked reduction in the propensity of certain industry participants to break workplace laws. The Court has frequently commented that the repeated imposition of civil penalties has not appeared to have had the intended deterrent effect.

Regrettably, the Construction, Forestry, Mining and Energy Union (CFMEU) and its representatives continue to be over-represented in the penalties handed down by the courts. This year, penalties against the CFMEU and its representatives accounted for 86% of all penalties imposed in ABCC cases. This result saw total penalties imposed against the CFMEU and its representatives reach almost $10 million since the creation of the predecessors to the ABCC.

In the reporting period, as in previous years, there have been a number of concerning observations from the Court about the conduct of some building industry participants. In a decision handed down on 15 December 2016, Judge Jarrett, of the Federal Circuit Court, Brisbane, said the following of the CFMEU:

As the very many reported cases reveal, it is an organisation with a long and sorry history of industrial disputation in which its willingness to disregard the industrial laws of this country seems to know no bounds.

In a separate judgment handed down on 8 February 2017, Justice Jessup, of the Federal Court, Melbourne, noted that the CFMEU’s prior history of unlawful conduct:

…justifies only one inference: that the CFMEU has done nothing, over the years, to cause its own staff to comply with the law.

Regrettably, such an attitude hinders the ability of my agency to engage in constructive dialogue with the full range of building industry participants. In an alarming development in May 2017, a union that had invited me to address their delegates about the Building Code was publicly denigrated by other unions for attempting to engage with the regulator about compliance with the law. I fear such a culture and behaviour of this type will deter other building industry participants – whether unions, employers or workers – from seeking assistance and advice from the regulator.

Whilst this behaviour by some participants in the industry is disappointing, it is heartening to see an increasingly large number of participants who are willing to engage with the ABCC. Through these productive engagements, we continue to move toward the agency’s mission to ensure that the rule of law prevails in the Australian building and construction industry.

The new legislation provides the ABCC with various tools to achieve this noble aim, including the 2016 Code, a new civil penalty provision prohibiting unlawful picketing and higher maximum penalties for contraventions of the law. Penalties under the new legislation have been reinstated to the levels that previously existed under the former ABCC.

Despite the significant organisational change in the reporting period, the agency’s most important asset – its people – have remained steadfast in their dedication to achieving the ambitious targets set out in our Corporate Plan. I again thank them for their hard work and commitment. It is pleasing to see their high levels of engagement and job satisfaction reflected in the agency’s outstanding results in the 2016–17 Australian Public Service (APS) Employee Census.

I, and my agency, remain absolutely committed to our vision that all Australian building and construction workplaces are fair, efficient and productive. We seek to achieve this for the benefit of all building industry participants, without distinction, and for the benefit of the Australian economy as a whole.

Nigel Hadgkiss
Australian Building and Construction Commission