OPENING SPEECH OF JOHN SUTTON TO THE SENATE INQUIRY

into the Building and Construction Industry Improvement Bill, February 2, 2004

The Construction Forestry Mining and Energy Union welcomes the opportunity to appear before this Inquiry and make a written submission.

Senators, the Federal Government wants to destroy unionism in the construction industry. In 1996 when John Howard became Prime Minister, his Government named four industries which they planned to reform - 'reform' being a well-known euphemism for attacking trade unions.

Those industries were maritime, coal, meat and the building industry. We all witnessed the Government use balaclavas and attack dogs on our wharves. In the building industry, the balaclavas and attack dogs have come in the form of a biased Royal Commission and an insidious Building and Construction Industry Improvement Bill (the Bill). Nothing in the process leading up to the creation of this Bill could be described as balanced, fair or impartial. On the contrary, virtually every step in the process has been flawed, biased, improper and/or deceitful.

Senators, the Royal Commission was biased. No fair-minded observer could conclude otherwise. In 2001, prior to its announcement, the building industry was barely on the radar screen of public consciousness. And yet after a 10 page report by the Employment Advocate, requested by the Minister for Workplace Relations Tony Abbott and made up of little more than a summation of newspaper articles and miscellaneous gossip, the Government jumped head first into the most expensive Royal Commission in Australian history. By comparison, the Prime Minister had to be dragged by public opinion and the obligation to appear consistent into a similar inquiry into the collapse of HIH. I dare say, that had the Government not been so hell bent on an inquiry into the building industry, there may never have been a Royal Commission into HIH.

It is a measure of the Government's priorities that $60 million of taxpayers' money was allocated to the Royal Commission into the building industry, whilst only half of that was allocated to the Commission examining Australia's largest ever corporate collapse. As well, whilst $700,000 was allocated to the building industry inquiry for "media liaison", only $140,000 was allocated for the same function to the HIH Commission. This reflects the desire of the Government to use the Commission to smear the reputation of the CFMEU. Finally, former judge Terence Cole, a man with no experience of industrial law, but a rigid value-system based around the sanctity of black letter law was appointed Royal Commissioner. He was paid $660,000 on top of numerous perks, whilst his counterpart in the HIH Commission received only a third of this. It is worth noting just one comment from Mr Cole made on 24 January 2002, the outset of the Commission, to understand his mindset,

"There should be no assumption that the rates assumed in EBAs are necessarily the proper rate. There is a great body of people out there who are apparently content, indeed anxious, to keep working at rates which are 14 or 15 per cent lower."

I am quite sure that a person with those views would not be my preferred choice to head an inquiry into the industrial relations system in our industry. His value system was one the Government and most employers were and remain extremely comfortable with.

Given the Government's race to pour money into a Royal Commission, you would be forgiven for thinking that the building industry was somehow unproductive. However, this could not be further from the truth. For some time now the Australian construction industry has been among the world's best. Every analysis, whether it be by Access Economics or the Productivity Commission, has found the industry to be highly productive by comparison with other OECD countries. Before the Royal Commission was announced the Federal Government's Minister for Education, Training and Youth Affairs said the industry was "one of the most efficient and cost effective" in the country. Even one of the Royal Commission's own discussion papers found the industry is well placed by international comparisons and that in 23 international studies, our industry ranked 2nd or better 16 times. On productivity we ranked 2nd in 5 out of 7 reports.

You would think this would be a source of pride. Not for this Federal Government however, who have been tripping over themselves trying to prove the opposite and thus justify their callous attack on building workers. Unable to prove that the industry is unproductive, the Federal Government has found the rather shallow refuge of arguing that it is not as productive as it could be. Minister Tony Abbott arranged for a belated separate report by Econotech arguing this view; something which not even $60 million and a Royal Commission could buy him. That report starts from the disingenuous position of comparing the commercial and housing construction industries. That is comparing the cost of constructing major multi-storey projects with the construction of single free-standing houses. This is, in our opinion, akin to comparing apples and oranges.

As well as the Econotech report, the Government cites Royal Commission Discussion Paper 17 written by Tasman Economics. They say this paper demonstrates the benefits that can result from an increase in productivity in the industry. Whilst I have some grave doubts about the economic modeling used by Tasman, the obvious point is that there is no evidence to suggest that the Bill will create the kinds of productivity increases assumed in the paper. Indeed, it could be argued that the Bill is concerned mainly with restricting the ability of building workers to take industrial action. Much of it is devoted to this cause. And yet the Tasman paper specifically found no connection between the level of industrial action and the level of productivity in the industry.

Let me return to the Royal Commission for a moment. Our union examined the conduct of this Commission very carefully. We were quite frankly appalled by the blatantly partisan way it went about its business. Let me quote some figures which we have compiled.

• 90.33% of public hearing time was devoted to anti-union topics.

• 0% of public hearing time was devoted to anything positive about trade unions.

• Only 3.3% of public hearing time was devoted to topics which adversely reflected upon employers.

• 81.06% of public hearing time (or 581 hours) was devoted to attacking the CFMEU.

• Only 7 hours of public hearing time was spent with a worker in the witness box.

• 293 hours was spent with an employer or a representative of an employer in the witness box.

• Counsel Assisting the Commission called employers to give evidence 663 times. Workers were only called 34 times.

• Not one statement obtained by Commission investigators and presented in public hearings portrayed unions in a positive light.

Senators, nothing in the Royal Commission's processes was fair or unbiased. The Commission provided employers with an open microphone to heap dirt on our union. We were literally flooded with gripes from some of the most dubious employers in the industry. Royal Commission investigators specifically searched for allegations against us. Evidence of employer wrongdoing was ignored. We know of reports by people who approached investigators with such evidence and were ignored or brushed aside. The information we received from such persons is that the investigators were only interested in unions. There is one report of a witness being threatened and intimidated by investigators into signing a false Statutory Declaration.

Counsels Assisting the Commission would sift through the evidence and choose that which would be presented in public hearings. None of those Counsel Assisting have a recognisable background in representing workers or trade unions in industrial relations matters. Most have represented employers or the Federal Government and at least one has a relationship with the right wing HR Nicholls Society.

Counsel Assisting would rarely, if ever, challenge the evidence of someone accusing the union of wrongdoing. Instead these witnesses were led by the hand through their statement and released. In order to test that evidence the union would have to present positive evidence contradicting the accuser. When union officials or workers appeared to defend the union, Counsel Assisting would cross examine them in a most aggressive fashion. We were the target, and notions of fairness or balance were simply an inconvenience.

All this was played out before the nation's media.

After nearly $59 million spent and 171 days of hearings, Commissioner Cole's Final Report essentially just repeated the submissions of Counsel Assisting. The report largely ignored our extensive submissions rebutting those allegations, leaving us guessing whether they were actually read at all. Moreover, by Cole's own admission the evidence he relied on was somewhat dubious. In the final report he was quoted as saying,

"most of the matters investigated by the Commission might have constituted a breach of criminal or civil law. If I did not make any findings in relation to such matters, then the number of findings that would have been open to the Commission would have been very small. That would not have been satisfactory because it would have unduly limited the evidential material to which I could make reference in explaining for the need for reforms that I have recommended."

Throughout the process, the Commission paid scant regard to examples of employer wrongdoing such as phoenix companies, tax evasion, underpayment of workers and sham independent subcontracting. These matters were relegated to discussion papers. Only one example of a phoenix company was examined during public hearings and that example was given to the Commission by the CFMEU. Employers were largely spared the ordeal being cross examined on their transgressions.

Do not be fooled by the Commission's recommendations regarding phoenix companies and the like. These are mere window dressing. The only reason the Royal Commission examined these issues albeit in the very cursory way that they did, was because of public pressure from our union and the inescapable conclusion that if they did not, they would look biased.

The same goes for occupational health and safety. In an industry where one worker dies every week, the Commission could only find two safety breaches in the whole of Australia. Throughout the hearings, not one employer was ever cross examined over the death or injury of a worker. Instead the Commission chose to deal with this crucial issue through a 2 day conference - a talk fest in other words. That's 2 days out of 171 that this Commission devoted to safety.

This soft approach to issues which reflect poorly upon employers led to soft recommendations that involve 'consultation' and 'working parties' rather than legislative change. By comparison, Cole's recommendations aimed at unions are some of the most onerous and restrictive this country has ever seen. These anti-union recommendations involve major changes to legislation and reflect various outdated Liberal Party policies.

And the Federal Government reacted accordingly, hurriedly introducing the Bill which incorporates much of Cole's anti-union recommendations while largely doing nothing about Cole's soft recommendations on employer wrongdoing. When the Bill was tabled the Government released a document outlining the steps taken to implement the Cole report. Of Cole's 212 recommendations, 75 could be said to be "not anti-union". Of these 75, most are 'under consideration', rejected, to be referred to working parties or subject to some other non-legislative action, whilst only 7 are incorporated in the Bill. Of the remaining 137 'anti-union' recommendations, the Government has incorporated 113 of them into the Bill. The Government's hypocrisy is clear.

One of the Government's main arguments justifying their attack on building workers is the number of days lost in the industry due to industrial action. However, if you look at the figures, the number of days lost in the industry actually equates to about one hour per worker per year. Furthermore, as the Tasman paper points out, ABS data on time lost are lower level estimates based on information provided by employers. Even then most of the time lost is the result of managerial change and structural issues such as safety. It is hardly surprising in an industry such as construction that safety issues would cause a significant number of work stoppages. Also in the 12 months ending July 2003, 53% of disputes across all industries were over in less than a day and 79% were over in less than 2 days. 73% of disputes are resolved by parties without the involvement of State or Federal legislation. In other words, disputes are usually settled by the parties themselves, not by Orwellian methods such as those proposed in the Bill.

The figures for time lost through industrial action acquire some perspective when compared with time lost through workplace illness and injury. Data from the National Occupational Health and Safety Commission shows that over the last 4 years, time lost through illness and injury has skyrocketed. It is now 8 times the level of time lost through industrial action which has been steadily falling. Indeed time lost through injury and illness is now costing the industry over $190 million. If the Federal Government were truly concerned about time lost in the industry they would be proposing legislation which seriously attempts to improve safety standards. Instead, their objective is to destroy unionism and thus we have a Bill which does little or nothing about workplace safety and as much as possible to destroy the right of building workers to bargain in an effective manner.

Make no mistake about it, the Bill is designed to destroy our union. But the wider aim is to reduce the wages and conditions of building workers in this country. And in the end, this is why this Bill, if enacted, will be an utter failure. Building workers will not stand for their unions being smashed and their wages and conditions being stripped away. The Bill will cause massive discontent on building sites and will simply be unworkable.

I will avoid unnecessary detail about the specific parts of the legislation. These are addressed in our submission. Suffice to say that the Bill is a fundamental attack on unionism in this industry. Banning pattern bargaining and restricting our right to enter workplaces and represent our members is a cynical attack on workplace organisation. The introduction of a taskforce and a new building industry Commission is an unnecessary intrusion by the State into the working lives of our members. We already heard from the Government about the substantial resources they will make available to this union busting outfit. We have grave civil liberty concerns about the power of that Commission to require workers to provide it with information. We are deeply worried that if the National Code of Practice acquires legislative authority, the Federal Government will be able to unilaterally lay down new requirements for the industry without Parliamentary consultation or scrutiny. This is an affront on this Senate itself.

In short, the aim of the Bill is to place unions in a bureaucratic straightjacket. A Government agency will act as Big Brother to ensure we comply with this quagmire of regulation. If we put a foot wrong, that Government agency (or an employer receiving the legal aid provided by that agency) will take legal action and subject us to massive financial penalties. The goal Senators, is to financially bleed our organisation to death.

Senators, this Bill will further abandon Australia's international obligations and given recent comments by Mr Abbott, we fear that if it were passed by the Senate, the Government will seek to do the same in other industries. We urge the Senate to reject this Bill in its entirety.

Without detracting from anything I've said today, there are some important changes that can be made to improve our industry. Efforts to improve the industry should be inclusive and open, rather than divisive and confrontational. The absurd proposition that one side of the industry (ie unions and workers) is unequivocally bad and other (ie. employers) is unequivocally good, needs to be rejected as the puerile nonsense that it is. Governments, employers and unions need to work together in a consultative, open and accountable environment.

Throughout our submission to this inquiry there are a host of recommendations on issues including phoenix companies, non-payment of employee entitlements, security of payments, underpayment of workers compensation premiums, skills shortages, sham subcontracting and labour hire. In our final submission to the Royal Commission we proposed a set of recommendations on these as well as other topics. We strongly believe that these recommendations will dramatically improve our industry. Our major suggestions include,

1. Safety

- that more resources be allocated to OHS inspectorates

- that a publicly accessible national OHS database of all safety incidents be established for the industry and administered by the NOHSC

- that all contractors be required to produce safety plans for all projects

- that there be a national review of OHS laws to ensure adequate penalties exist to discourage unsafe practices and to ensure that workers are represented and involved in safety committees in their workplace

- that a program be initiated to ensure all plant and equipment in the industry be inspected annually

- that union officials have a national right to enter workplaces to investigate OHS issues

- that industrial manslaughter laws be introduced

- that government contracts not be let to contractors with poor OHS records

2. National Construction Industry Council

- that a tri-partite body be established and funded by the Commonwealth, consisting of representatives of Government, business and unions

- that this body meet with a view to discussing and implementing ideas to improve efficiency, stability and fairness in the industry

3. National Construction Industry Fund

- that a national fund be established for expenditure on public infrastructure projects designed to take account of the cyclical nature of the industry

- that a portion of the Commonwealth's construction budget be set aside for the fund and that it be spent at times when the industry is in a slump or in areas of high unemployment

4. National Licensing

- that a national licensing and pre-qualification system be established for all companies in the industry

- that all companies who tender for work be required to have a license

- that a criteria for licensing be established taking into account whether workers have skills cards, whether plant and equipment are regularly tested for safety, whether the company has been involved in tax or workers compensation fraud, whether the company has complied with awards and OHS standards

5. Tax

- that a national ATO unit be established to investigate and prosecute sham subcontracting arrangements and misuse of the ABN system.

- that the 80:20 concept arising from the Ralph Review be properly implemented

6. Phoenix Companies

- that tougher penalties be enacted for those who repeatedly abuse corporate structures

- that laws be introduced allowing the "corporate veil" to be lifted so that employees have access to the assets of directors/shareholders in appropriate circumstances such as fraud

7. Subcontracting & Labour Hire

- that section 127A of the Workplace Relations Act be amended to ensure that bona fide contractors have recourse to effective remedy in situations where the contract is unfair

- that the Act be amended to include labour hire agencies within the definition of "employer" in section 4

- that a comprehensive national licensing regime be introduced for the labour hire industry

- that OHS laws be amended to guarantee both the client employer and the labour hire company are responsible for the OHS of labour hire workers

8. Security of Payments

- that consideration be given to the extension of schemes such as that set up in NSW to ensure the flows of money

- that workers entitlement be statutorily guaranteed

- that an employer levy be introduced to fund the system

9. Employee Entitlements

- that a simple, low cost and timely process be established to allow workers to resolve alleged award breaches

10. Avoidance of Workers Compensation Premiums

- that insurers and employers be subject to financial penalty where certificates of currency are based on obviously false information

11. Exploitation of Illegal Migrant Labour

- that employers who engage in such practices be subject to heavy financial penalties

- that such workers receive their correct entitlements

12. Apprenticeships and Training

- that steps be introduced such as employer incentives to increase the number of apprentices

- that a national skills card for the industry be introduced

13. Pattern Bargaining and Choice of Representation

- that the Workplace Relations Act be amended to comply with international obligations and thereby protect the right of workers to collectively bargain

In our submission, these are tangible and constructive proposals which will be significantly more productive than the negative and confrontational laws contained in the Bill.

I am happy to answer any questions.

United we bargain - Divided we beg.

Contact the National Office, Construction Division at:
Level 12, 276 Pitt Street, Sydney, NSW 2000
Ph: 02 8524 5800
Fax: 02 8524 5801
Email: queries@fed.cfmeu.asn.au

Postal address: PO Box Q235, Queen Victoria Building Post Office, Sydney NSW 1230.