It gives me great pleasure to present the 2017–18 Annual Report, my first as Commissioner of the Australian Building and Construction Commission (ABCC).

I was appointed Commissioner in the latter half of the reporting period and commenced my role on 6 February 2018. Mr Nigel Hadgkiss served as Commissioner from 2 December 2016 until his resignation on 27 September 2017. Ms Cathy Cato served as Acting Commissioner from 28 September 2017 to 14 January 2018. Mr Cliff Pettit served as Acting Commissioner from 15 January 2018 to 5 February 2018. I take this opportunity to acknowledge the leadership and enterprise provided by my predecessor, both Deputy Commissioners, and my entire Executive Team.

In the past year, the ABCC delivered a number of significant achievements aimed at promoting appropriate standards of conduct within the building and construction industry. The Commissioner's functions are prescribed by section 16 of the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act).

Education is a key priority for the ABCC. Our education programs aim to ensure that building industry participants are provided advice and assistance regarding their rights and obligations under the BCIIP Act, designated building laws and the Code for the Tendering and Performance of Building Work 2016 (the Code).

In the reporting period, the ABCC delivered 171 presentations to 5,110 people aimed at educating participants on their rights and obligations. Aligned with this, the ABCC made tailored presentations to industry on a broad range of topics under its jurisdiction, including the Code, right of entry, freedom of association, coercion, security of payments, unlawful industrial action, wages and entitlements, sham contracting and unlawful picketing.

We also responded to 6,976 enquiries and requests for advice from workers, employers and their representatives—significantly more than the previous financial year. The ABCC provide a dedicated advice line to ensure we are responsive to building industry participants.

When you contact the ABCC, your call is answered within 60 seconds, you speak to a real person, and a subject matter expert provides you with advice and assistance. Our statistics show 98% of requests for advice are responded to within 24 hours. It is imperative that we continue to deliver a responsive and reliable service that provides effective and tailored advice that meets the expectations of all stakeholders in the industry, be they employers, employees, contractors, subcontractors, employer and employee associations, or indeed any person who has to conduct business on a building site.

One of the most significant regulatory tools available to my agency is the Code. The Code aims to strengthen the workplace relations framework by improving productivity on projects that receive Australian Government funding. The Code is also critical in encouraging the development of safe, healthy, fair and lawful building sites for the benefit of all industry participants.

A key feature of the Code is requiring employers with enterprise agreements to ensure they are compliant with the Code. In 2017–18, we assessed 3,092 enterprise agreements for compliance with the Code. This compares to 871 assessments in the 2016–17 financial year. Particularly pleasing is the fact that the average time to assess these agreements has been reduced to four weeks.

Another important feature of the Code is improving the compliance of companies who work on Commonwealth funded projects with state and territory security of payment laws. The ABCC is set to play a lead role in educating and raising awareness among building subcontractors about their rights when they do not receive contractual payments. This is particularly critical for small and medium-sized subcontractors who rely on cash flow and are most at risk when a building industry participant in their supply chain goes into administration. From July 2018, the ABCC security of payment campaign will aim to increase reporting of disputed or delayed payments by contractors with responsibilities under the Code.

We have been greatly assisted by the Security of Payments Working Group—comprising representatives from industry, unions and government—in providing input into our education campaign.

The ABCC will seek voluntary rectification of late payments on behalf of subcontractors undertaking Commonwealth funded work who are affected by disputed or delayed payments, and recommend exclusion sanctions where appropriate.

The ABCC have an important role to play in ensuring employers in the commercial building and construction industry correctly pay their employees. In 2017–18, we recovered $262,398 in wages and entitlements for 186 employees. Every dollar recovered is a meaningful and important outcome for those affected workers.

Our experience on wages and entitlements audits shows that most employers are willing to work with the ABCC to ensure their workers are paid their due entitlements; further, where errors have been detected, rectification has been agreed. Our preferred approach on all of our compliance activities is to work with industry to address problems when they arise, and to ensure building industry participants understand and comply with their rights and obligations.

However, where the circumstances warrant it, we have not shied away from taking legal action. Indeed, it is a core function of the ABCC to investigate suspected contraventions and present appropriate matters before the courts.

In this respect, we commenced 10 civil penalty litigation matters during this reporting period and have maintained a success rate of 94% in finalised cases.

The courts awarded penalties in 2017–18 totalling almost $6.0 million, of which $3.5 million is subject to appeal or further decision. The majority of the penalties, $5.6 million, were awarded against the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and its representatives.

The total penalties in all ABCC matters for the reporting period are significantly higher than the $2.1 million for 2016–17 and $1.8 million for 2015–16.

During the reporting period, the ABCC was successful in concluding a number of significant cases, including:

  • Australian Building and Construction Commissioner v. Ingham (No. 2) (The Enoggera Barracks Case) [2018] FCA 263, in which work stoppages over several months at two major Brisbane sites resulted in the CFMMEU and 19 officials being penalised $817,500
  • Australian Building and Construction Commissioner v. Construction, Forestry, Maritime, Mining and Energy Union (The Nine Brisbane Sites Case) (No. 3) [2018] FCA 564, in which month-long strikes and work stoppages at nine sites resulted in the CFMMEU and seven organisers being penalised $522,000
  • Australian Building and Construction Commissioner v. Construction, Forestry, Mining and Energy Union (The Quest Apartments Case) (No. 2) [2018] FCA 163, in which workers were prevented from working unless they joined the union, resulting in penalties totalling $105,000.

In a landmark case, the High Court also confirmed the Federal Court can order a union official to personally pay a penalty and not seek reimbursement from the union. This ruling paved the way for the Full Federal Court, in its determination in relation to Construction, Forestry, Maritime, Mining and Energy Union v. Australian Building and Construction Commissioner (The Non-Indemnification Personal Payment Case) [2018] FCAFC 97, to not only order a personal payment penalty but also state:

The penalty against the individual must be a burden or have a sting to be a deterrent.

While it is self-evident that the CFMMEU continues to be over-represented in litigation matters, as it has been in the past, my agency is also committed to supporting unions as they conduct their lawful business.

In this respect, the ABCC successfully intervened in a matter in Queensland where two CFMMEU officials were denied lawful entry to a construction site on three different occasions in December 2015. In this case, Andrew Ramsay & Anor v. Susan Menso & Anor [2017] FCCA 1416, the ABCC made submissions to the Federal Court in support of the rights of union officials to enter worksites where they comply with the legislative requirements. We will continue to support any building industry participant who has been a victim of unlawful conduct.

The circumstances leading to the former Commissioner's resignation arose from the Federal Court's decision in Construction, Forestry, Mining and Energy Union v. Director of the Fair Work Building Industry Inspectorate [2017] FCA 1166. The decision is reported in Part 3 of this Annual Report. The actions of Mr Hadgkiss were regrettable, and it is noted that he took full responsibility and accountability for them by tendering his resignation.

Notwithstanding this matter, it is appropriate to also acknowledge Mr Hadgkiss's important contribution to the regulation of the building and construction industry, and his commitment to public service in many fields, during his extensive career.

Finally, I acknowledge the commitment of the staff who wake up every working day to meet the unique challenge of regulating workplace laws in the Australian building and construction industry. The ABCC's staffing profile highlights a diverse mix of skills and experience. In total, 44% of staff have been with the agency for less than two years, and 39% for longer than five years.

One of the success stories for the ABCC has been the graduate recruitment program, under which 16 members of staff have been employed since 2 December 2016. The graduates bring to the agency fresh ideas, sound academic grounding, and an enthusiasm to make a difference on building and construction sites. Our newest cohort of graduates has been matched with experienced investigators, who have done the hard yards, and developed their expertise on designated building laws and the building codes. The agency has invested significantly in training, and the results set out in this Annual Report are attributable to the shared learning, passion and commitment of the staff across all disciplines and regions.

While the reporting period has thrown up many challenges, the staff have remained steadfast in their determination to promote understanding and enforce compliance with Australia's workplace laws in the building and construction industry. I thank them for their ongoing support.

Stephen McBurney
Australian Building and Construction Commissioner