The ABCC

While the ABCC has enjoyed a controversial existence, condemned broadly by the labour movement, the Rudd Government has recently firmed in its commitment to maintain a strong industry watch dog in the face of enormous internal political pressure. In many respects, this is a situation which can be attributed to a small number of union officials and members within some branches of the construction industry unions. Indeed, Kevin Rudd and Julia Gillard have both confirmed this in recent media interviews explicitly naming the Western Australian and Victorian branches of the construction division of the CFMEU.

The ABCC came into operation following the enactment of the Building and Construction Industry Improvement Act 2005 (the BCII Act) with the aim of securing industrial peace and an acceptable level of productivity in the industry.

After less than four years the ABCC is now set to be replaced with a specialist division within the new Fair Work Ombudsman. The proposed powers this body will have will be contained in the legislation to be introduced to Parliament this week. Predictably, they will be largely shaped by Justice Murray Wilcox’s report titled “Transition to Fair Work Australia for the Building and Construction Industry” (the Wilcox Report), which makes recommendations on the structure and powers of the specialist division and has been adopted in principle by the Rudd government.

The Wilcox Report makes numerous recommendations for the specialist division including:

  1. that it should be a semi autonomous unit of the Fair Work Ombudsman rather than Fair Work Australia;
  2. that compliance powers should be retained but with additional checks; and
  3. that breaches of the law in the construction industry be penalised at the same level of breaches in other industries.

The most controversial aspect of this report is a recommendation that the coercive powers be retained. These recommendations come at a time when it appears the ABCC has finally found its feet.

Over the past twelve months the ABCC has successfully prosecuted breaches of the BCII Act in almost all cases which it has initiated. The consistency seen in ABCC prosecutions over the past twelve months is somewhat of a new phenomenon. In 2005 when the ABCC was established, its prosecutions were patchy and plagued by errors. In the year 2005 to 2006, six of its applications were dismissed. In 2006 to 2007 of the eight penalty proceedings initiated, two were discontinued.
Over the past 18 months the success rate of the ABCC has dramatically improved.

Current successes

  1. Prosecutions

    Since 2008 there have been over 20 successful prosecutions concluded by the ABCC and many others are under way. Of these successful prosecutions, four arose in NSW, 10 from Victoria, four from Western Australian and one in Queensland and South Australia.

    Unions have been heavily penalised in these proceedings. In 2008 and 2009 so far, the CFMEU has been ordered to pay over $250,000 in damages. In addition, it is quite common now that Unions are being ordered to pay, or at least contribute to the legal costs of the ABCC. On top of their own legal fees, this adds up to an expensive exercise. Additionally, individual Union Officials have also been ordered to pay tens of thousands of dollars in fines.

    Whilst there is an increasing rate of success in the prosecutions initiated by the ABCC, the sheer volume of prosecutions launched in the last year also suggests that there are still consistent breaches of industrial laws in the industry, particularly in Victoria which maintains a disproportionate level of legal activity.
  2. Rate not declining

    Since the introduction of the ABCC the number of prosecutions initiated has not declined, rather it has increased. The Wilcox Report commented that the high success rate achieved by the ABCC, in relation to penalty proceedings launched at the rate of about one per month, suggests that there is still a significant degree of non-compliance with rules governing the industry. It is this activity that makes the findings of the Wilcox report and in the recommendation to retain coercive powers not particularly surprising.
  3. Productivity gains

    The success of the ABCC has not just been measured by the number of successful prosecutions. Productivity gains were also of focus of the Wilcox Report.

    There has been much speculation as to the impact of the BCII Act and the operation of the ABCC on lifting labour productivity in the industry. In 2007 a report by KPMG Econtech reported that productivity in the industry had lifted by 9.4%. John Holland Group assessed that the increase was 10%. Both of these figures are irreconcilable with ABS National Accounts Data. The Wilcox Report stated “I accept that there has been an increase in building industry labour productivity over the last few years, but only a modest one. I reached this conclusion because it is consistent with ABS data”.

    There is no doubt that productivity gains in the building and construction industry have occurred due to changes in the industrial regulation of the sector. The simple fact is that there is less industrial action occurring now then prior to the introduction of the BCII Act and the operation of the ABCC.
  4. The future

    The ABCC was ostensibly created to introduce industrial peace to the construction industry with an acceptable level of productivity .Based on these measures alone, it appears that the ABCC has had some success in meeting its original imprimatur.

    Will this last? Certainly the Federal Government appears to be committed to obtaining “a tough cop on the beat” and is positioning itself as no fan of the Victorian and Western Australian branches of the construction division of the CFMEU. In recent interviews, Prime Minister Rudd expressed no sympathy for Ark Tribe who is currently facing imprisonment for refusing to comply with a direction to attend an examination with the ABCC. Similarly when Minister Gillard addressed ACTU Congress recently, she cited aberrant industrial behaviour in Victoria in justification of the ABCC in defiance of the union audience.

    Accordingly, it is clear that from the 1st of February next year the specialist construction division of the Fair Work Ombudsman will continue to pay an important role in policing the laws and regulations in the industry.