Federal construction funding and freedom of choice

[The following article was printed in the Australian on June 25, 2002 - p11, 'Building rules limit freedom of choice']

Workplace Relations Minister Abbott's brinkmanship over funding for the Melbourne Cricket Ground redevelopment raises serious questions about the way the Federal Government allocates millions of dollars of taxpayers' money in the construction industry.

However, Abbott's bid to make federal funding of all state construction projects contingent on compliance with federal industrial relations rules by all parties, including state governments, may yet unravel in ways not entirely anticipated.

In 1997 the Federal Government introduced a National Code of Practice for the Construction Industry. That Code contains a series of industrial relations measures that the Government insists must be met on all federally funded projects. Amongst other things, the Code limits the capacity of unions and builders to enter into site agreements for such projects. The penalties for non-compliance include exclusion from further Government work.

The Federal Court is now set to hear an application by the CFMEU for orders declaring the Government's Code to be in breach of the Workplace Relations Act. Yesterday, the Court heard applications to intervene by several State Labor Governments who clearly have an interest in the matter. There will be further argument on 8 July.

The idea that public funds could and should be used to define the parameters of bargaining in the construction industry is not new. US President George Bush Snr made an Executive Order to that effect in 1992. In February last year, President Bush Jnr re-issued an Order prohibiting federal government agencies (and the recipients of federal funding) from requiring Project Labor Agreements as part of bid specifications for construction contracts.

PLAs, as they are known in the US, are "pre-start" agreements that are negotiated between head contractors and unions for large construction projects. Once an agreement is struck, compliance becomes a condition for those contractors tendering for work on that project. They have been a feature of the industry in the US since the 1930s.

Needless to say the US federal government's construction budget is substantial. A single project, the Woodrow Wilson Bridge in Maryland, was set to receive over US$1.5 billion in public funding. The Bush decision had wide ramifications for unions, construction companies and Government departments alike.

By November, however, the Order had been found by a US District Court to be unenforceable. The President had exceeded his constitutional authority. The Court said:

"In the guise of preserving open competition and government neutrality (the Order) has altered the balance of power between labor unions and employers on federally funded construction projects."

The emptiness of the Howard Government's rhetoric about 'free choice' is nowhere more obvious than in its attitude to the Australian construction industry. The Workplace Relations Act favours individual agreements over collective ones. Major builders with responsibility for delivering huge projects are told that certain contractual terms and industrial practices, although permitted by law, are no longer acceptable.

Never mind that it might make sense in this industry to manage construction projects through site agreements or to allow employers and unions to strike sector or industry agreements if they wish. Now, the only legitimate agents of free choice are individual workers and sub-contractors. In other words, the Government permits "choice" only where employee bargaining power is at its weakest.

Earlier this year, the Cole Royal Commission raised some serious questions about the role of State Labor Governments in awarding construction contracts and delving into industrial relations. Media reports portrayed these Governments as acquiescing to union power. No doubt Mr. Abbott sees plenty of political capital in that. But so far, scrutiny of the National Code by the Royal Commission has been limited.

The effect of the Code can be bluntly put - builders that adopt it and the Abbott version of industrial relations, get government contracts, those that do not, need not apply. However the document itself is carefully couched in the language of political neutrality. It seems that no government, not even one as brazen as Mr. Howard's, likes to be seen to be awarding big government contracts to its political mates.

Irrespective of the outcome of the Federal Court proceedings, the big question for the Cole Commission is the legitimacy of this use of market power by the Government. To deal with that question, it must inevitably turn its attention to Canberra. This is public money after all.

John Sutton
National Secretary
CFMEU Construction & General Division

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.