If you thought that housing was expensive, wait until the feral construction unions get their hands on the domestic housing construction sector. The legal seeds for this long-held union ambition are to be planted later this year by the Albanese government.

The process is to force every independent tradie into the clutches of the industrial relations system by imposing a de facto, compulsory unionism on housing tradies through the backdoor.

Currently, tradies are their own bosses because they work under commercial contracts not employment contracts. The legal trick the government has promised is to create legislation that requires commercial contracts to be controlled by the Fair Work Commission (FWC). Effectively this trashes the notion and structure of a commercial contract and by legislation turns commercial contracts into pseudo-employment contracts.

Once this is done, construction unions will proceed to impose collective enterprise agreements across the housing sector, just as they do with the commercial construction sector. This is how they control commercial construction. Currently, construction unions cannot do this in housing because they do not have legal jurisdiction, through the industrial relations system, over tradies’ commercial contracts. This is the domestic housing sector’s saviour!

However, to anyone not intimately familiar with the legal difference between the commercial and employment contract, the understanding of the importance of this issue is remote. That’s no surprise.

I’ve sought to explain this in two recent Spectator Australia articles.

In the first article, I described the Albanese government’s promise to subject the commercial contract to employment law. This is key to Treasurer Chalmers’ ‘rebirthing of Australian Capitalism’. The promised law will upend competition law and the authority of the Australian Consumer and Competition Commission. It will assault the authority of the High Court in its 2022 ruling which settled and created legal certainty about the difference between the commercial and employment contract – arguably the most important ruling of the High Court on this issue in over 70 years.

In short, the government’s agenda is no mere tinkering with an obscure aspect of law. It is instead a fundamental upheaval of the very structure and regulation of Australian commercial operations.

Yes, the government is politically pitching this as a cure for the ‘cancer’ (Workplace Relations Minister Burke’s description) of the gig economy. In my second recent Spectator Australia article, I clarified what the gig economy is. And I wonder if the Minister’s ‘cancer’ reference applies to barristers and others (e.g., musicians) who are, by definition, gig workers.

Plus The Spectator UK published an article from our friends in the UK warning Australia not to go down this path of creating uncertainty over the commercial/employment contract status. The UK has done this and the outcome is a mess.

But it’s important to turn from such political posturing and face hard practical facts.

The scenario around housing tradies parallels that of the 2016 disaster that hit Australia’s independent owner-drivers.

In 2012 the Rudd/Gillard government created what it called the Road Safety Remuneration Tribunal (RSRT). The Tribunal was supposed to set ‘safe’ rates for long-haul truckies. It involved a legal process for fixing prices of the commercial contracts of independent truck drivers. Effectively this destroyed the competitive structure of independent truck drivers’ businesses. The Tribunal stayed quiet until 2016 when it finally imposed ‘safe’ rates. The result was the threatened (and in many cases actual) bankruptcy of some 50,000 owner-drivers. The Turnbull government repealed the legislation in 2016 but not early enough to avert a string of owner-driver suicides. Details here.

Independent tradies are to the housing sector what owner-drivers are to the transport sector. They are the competitive, productive lifeblood of an efficient sector that delivers for the people of Australia. These workers are their own bosses. It’s this factor – workers being their own boss – that is a central component of a thriving Australian economy and lifestyle. But this is to end under the Albanese government’s promised law.

What we can expect to see in this new law (if not blocked in the Senate) is legislative wording that effectively declares a commercial contract to be an employment contract. The government proposal is to put ‘guardrails’ around this to restrict the law to ‘gig workers’ or only some type of gig workers. The problem is that once commercial contracts are legislatively redefined as employment contracts (however it’s done), supposed ‘guardrails’ are a sham easily dropped over time.

What will inevitably unfold will be a repeat of the Road Safety Remuneration Tribunal. A new law will be created which will overturn long-entrenched legal fundamentals with a new bureaucratic structure established to administer it. Little will be done initially. The construction unions will bide their time. They are a patient mob! Then they will move in. Watch the supposed guardrails fall away. Independent tradies will be forced into a union power surge capturing the housing construction sector. Based on past experience the escalation of costs will be major.

In 2016 the Turnbull government established the Australian Building and Construction Commission (ABCC). Its task was to bring some measure of lawfulness to the commercial construction sector. In the build-up to the Commission’s establishment there had been considerable research conducted on the cost of commercial construction in Australia. A significant part of this research compared the commercial construction with the domestic housing sector.

The evidence from around 2014 was that commercial construction was somewhere between 20 and 30 per cent more expensive than domestic housing construction. This was based partly on data from the respected research body Econtech. But sometimes case studies provided telling evidence.

In 2006 the Melbourne Commonwealth Games Village was constructed using building union labour and construction union agreements. The village was built as a residential complex of predominantly free-standing homes. These were sold off after the Games as residential dwellings. The Victorian government contract to build the village had a 34 per cent cost escalation clause to subsidise the builders for the fact that they were required to use commercial construction union workers on this domestic housing project.

And to dispel any misunderstandings: it’s not that independent tradies are paid less than union construction workers. The evidence is that the cost differentials are identified in the efficiency and productivity of independent, self-employed tradies.

Just about the first thing that the Albanese government did in 2022 was to close down the ABCC. There is no known continuing comparative analysis between commercial construction costs and housing construction costs. But there is no reason to believe that the cost differential remains and remains stark.

The Albanese government’s agenda on this issue involves a major upheaval of the very structure of the Australian economy and how it is regulated and operates. The consequences of this agenda only sink in if one understands the detail of how this will play out in practice.

The loss of the commercial contract independence of Australia’s ‘I’m my own boss’ tradies is just one example. But it’s a stark one.

Ken Phillips is Executive Director of Self Employed Australia and is on Substack

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