Features Australia

Deconstructing the construction unions

30 July 2016

9:00 AM

30 July 2016

9:00 AM

The Coalition may have prised a slim majority from the jaws of electoral defeat, but the fate of Australia’s construction industry – the oft-forgotten genesis of Turnbull’s double dissolution – remains to be seen. Lay observers of politics could be forgiven for dismissing the Government’s building and construction reform bills as a footnote to the Coalition’s re-election pitch. On polling day, I was witness to a young lady berating a Liberal campaigner over whether Turnbull wanted to ‘bring back the ABC after Tony Abbott cut all it’s funding.’

The incident shed painful light on the Coalition’s failure to articulate the systemic problems the ABCC and union reform bills were designed to fix. As laid bare by the Heydon Royal Commission, the grim fact of the matter is that the construction sector is beset by endemic lawlessness and an ingrained hostility to market competition. The cost of this is borne by every member of society through fewer jobs and more expensive infrastructure. The problem is most acute on major commercial and infrastructure sites where union approved enterprise agreements laden with eye-watering wages and restrictive working practices are the standard fare.

These agreements add between 20 to 35 per cent to the overall cost of major public and commercial projects. A typical unskilled labourer on one of these union sites earns nearly double the industry award; far more than a police officer, school principal or paramedic. In one egregious example, a carpenter employed on Victoria’s desalination plant earned a pay packet worth $200,000 a year. Does fairness require paying tradies enough to lease an Aston Martin, especially when it’s the taxpayer footing the bill?

Every Australian wears the cost of these rorts through fewer hospital beds, schools and fewer infrastructure upgrades. Our economy pays through lower investment, reduced activity and fewer jobs. Major contractors sign up to these agreements as the price of buying industrial peace with the incorrigibly militant CFMEU. As recent chaos on the site of the Gold Coast Commonwealth Games Stadium highlights, illegal strikes are a standard negotiating tactic for unions looking to score a pay rise courtesy of the public dime. This process of illegal rent-seeking is facilitated by Julia Gillard’s Fair Work Act which abolished the ABCC and reduced penalties for industrial lawlessness by two thirds.

In the last four years the ABCC was operating, fewer than 20,000 days were lost to industrial action annually. In the four years since Labor’s toothless reforms, that number has doubled to over 54,000 days lost each year.

The Government’s double dissolution bills are all sensible prescriptions for this diseased culture. Tougher penalties for law-breakers would ensure fines could no longer be counted as a collateral cost of the CFMEU’s business model. The restored ABCC’s powers to compel testimony would overcome widespread fears of reprisal for speaking out against coercion and law-breaking. The Government’s new building code would ensure businesses complicit with union rorts and skulduggery are excluded from future Government work. The Registered Organisations bill would have held union office bearers to account, rooting out the culprits at the core of this rotten cartel.

So what are the chances of a once-bitten, twice-shy Turnbull Government passing the bills in a joint sitting of Parliament, needing the votes of seven Senate crossbenchers and independents?

With odds-on that One Nation will win four Senators and Nick Xenophon will secure three plus lower house MP Rebekah Sharkie, their combined backing might just be enough. While One Nation are yet to take a public position on the bills, Hanson has made clear she will be anything but the Coalition’s lapdog. Xenophon is insisting the Government consider his previous amendments, always stopping short of giving the reforms his full-throated endorsement. David Leyonhelm has also conditioned any support on the Government negotiating amendments. Derryn Hinch has indicated he’s willing to ‘listen’ whereas Lambie, the Greens and Labor all remain staunchly opposed. Andrew Wilkie has voted down the bills before and Bob Katter – the beneficiary of a six figure CFMEU campaign donation – is clearly not for turning. Even if we add country independent Cathy McGowan to the ledger, the Government’s odds are far from certain.

It’s entirely possible Turnbull will coral the five missing votes and save himself the humiliation of having yet another ‘signature’ Government policy consigned to the Senate floor’s dustbin. But there’s no guarantee the vital public interest in breaking up our construction cartel will pass muster with the crossbench.

The Government’s defeat on this score would be of more than passing consequence. After winning a popular mandate to restore the ABCC at the 2013 election, the bills were blocked repeatedly by the Senate. Now, even after deploying the Constitution’s circuit breaker of last resort, the fate of the reforms lies in the hands of a ragbag of political rogues with no interest in liberalising the economy or improving the budget bottom line.

The sad reality is that most of the incentives faced by Senate crossbenchers in today’s political climate tend strongly against good faith negotiation. Minor parties and independents are keenly aware they need a steady stream of media exposure. Whiling away months becoming a well-informed expert in the key policy issues before the 45th Parliament has no real political payoff. The smarter option is to become a banner-carrier for every disenfranchised group with an axe to grind and a bloodlust for public money. This raises serious questions about the capacity of our political system to meet the challenges Australia will face in the years and decades ahead. With every year that passes, the amount of self-sufficient workers paying tax shrinks relative to those reliant on public largesse.

What will happen when the credit dries up and there are no more idle billions to funnel into quasi-silicon valley slush funds or tinpot submarines? Do we really want the likes of Lambie, Hanson or Xenophon wielding a veto over any move to tighten the Commonwealth’s purse strings? Parliamentarians should spend less time on self-congratulations and focus on the task at hand. Passing the ABCC and smashing the construction impasse would be a worthy place to start.

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