Building industry groups have reiterated concerns about a Gillard government proposal to replace the commercial construction industry watchdog, warning the alternative to the Australian Building and Construction Commissioner will be a toothless tiger that will not wield enough power to enforce accountability.
As submissions in response to the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2011 draw to a close this week, the Master Builders Association and the Housing Industry Association’s main concern is over plans to slash by two thirds fines applicable to the industry.
The MBA warns this could lead to an increase in unlawful industrial action.
Under the Bill, maximum penalties for a corporation would be cut from $110,000 to $33,000 and maximum penalties for an individual would be cut from $22,000 under the ABCC to $6,000 under the proposed Fair Work Building Industry Inspectorate.
MBA (WA) construction director Kim Richardson said the new penalty levels would not be hard enough because courts were unlikely to hand down maximum fines.
“It is insignificant, it does not represent a real deterrent to unlawful industrial behaviour, which the CFMEU has a sorry track record of,” he said.
Mr Richardson said abolishing the ABCC would be a backward step.
“The ABCC has been a very effective organisation since its inception back in October 2005,” he said. “The intention to nobble it, scrap it, replace it with an ineffective federal building inspectorate is a retrograde move by the current federal government.
“The penalties prescribed by the Fair Work Act may be appropriate where you have a shop or a metal factory or a work yard or something.
“When you have a construction industry site worth hundreds of millions of dollars, the holding costs on cranes alone and all the gear on site runs into tens of thousands of dollars per day. The penalty applied for the economic damage … is so impractical the crime doesn’t fit the penalty.”
The Business Council of Australia said in its submission the changes could jeopardise the productivity of the sector, which was struggling under current economic conditions.
“Ensuring that an important industry sector operates effectively and safely is critical to Australia’s overall capacity to stay economically resilient and prosperous into the future,” the BCA’s acting chief executive, Maria Tarrant, said.
The MBA’s acting chief executive, Richard Calver, said the industry’s productivity had increased under the ABCC.
“The industry’s labour productivity since 2002 has outperformed predictions based on historical performance relative to other industries by 7.7 per cent,” Mr Calver said.
“Multi-factor productivity in the industry was no higher in 2000-01 than 20 years earlier but then accelerated by 14.8 per cent in the six years to 2007-08. These productivity statistics are unambiguous.
“The exercise of the ABCC powers has delivered sustained productivity benefits to the construction industry and the general community.
“These substantial benefits reinforce the need for the continuation of an industry watchdog, ‘the tough cop on the beat,’ not the toothless tiger proposed in the Government’s legislation.”
The Housing Industry Association’s senior executive director, David Humphrey, said that despite ABCC powers not applying to the residential sector (which the HIA represented), the association was opposed to the Bill because the existence of the ABCC and its regulatory framework set the culture for the entire industry.
“There are a lot of contractors that work across commercial and residential, if you have been on a commercial site and subject to pressure to, for instance, sign up to a CFMEU enterprise bargaining agreement, that will apply for all of your projects, commercial and residential,” Mr Humphrey said.
The ABCC was established by the Howard government after a royal commission found the construction industry was characterised by a widespread disregard for the law and that the existing regulatory body of the time had insufficient powers and resources to enforce the law.
In 2009, a recommendation was made to then-workplace relations minister Julia Gillard to replace the ABCC with a specialist division and transfer the building and construction industry rules to those stipulated in the Fair Work Act.
The Bill was rejected then but resurfaced late last year.
