Australia: The Future Of The ABCC And The Wilcox Review

The establishment of the Australian Building and Construction Commissioner (ABCC) followed a recommendation of the Cole Royal Commission into the building and construction industry, which commenced in August 2001 and reported in February 2003.

It found there was widespread lawlessness and corruption in the industry, and that threatening and intimidating behaviour was commonplace. The ABCC was set up to ensure that workplace relations in the industry were lawful and was invested with far reaching powers to enforce this objective. Supporters of the ABCC claim that it has resulted in a boost to industry productivity of at least 10%, compared to the pre-ABCC era.

While the ALP went to the 2007 federal election promising to "tear up" WorkChoices, it adopted a far more cautious approach in dealing with the building and construction industry, particularly the ABCC.

To reassure the electorate that it would govern from the centre and would not be beholden to union interests, the ALP made a number of commitments relating to Australia's building and construction industry. One of these was a commitment to retain the ABCC until 31 January 2010.

The ALP also proposed to establish a specialist division within the inspectorate of its planned "industrial relations one stop shop", Fair Work Australia, to take over the ABCC's functions and powers. The specialist division is scheduled to commence operation from 1 February 2010. However the question of whether and to what extent these functions and powers will be retained remains the subject of much debate and uncertainty.

The Wilcox Review

Consultation on the structure, independence, powers, resourcing and other matters including the precise role and powers of the new specialist division is being administered by the Honourable Murray Wilcox QC, a former Australian Federal Court justice. Written submissions for the review closed on 5 December 2008. Justice Wilcox's final report is due to be released on 31 March 2009.

The government provided draft terms of reference for the review and allowed six weeks for submissions and consultation. Despite submissions and consultation, the final terms of reference did not change.

The terms of reference require the review to cover:

  • operational structure of the special division and its relationship with other parts of Fair Work Australia;
  • independence and accountability of the specialist division;
  • external monitoring of the specialist division;
  • the scope for investigations and compliance activities to be undertaken by the specialist division;
  • responsibilities of officers of the specialist division;
  • resolution of disputes and complaints about the activities of the specialist division;
  • commencement of proceedings by the specialist division; and
  • interaction of the specialist division with other federal enforcement agencies.

A preview of the Reviewer's view?

Justice Wilcox has vigorously refuted allegations by some Coalition MPs and industry figures of a pro-union bias and has dismissed these as "a ridiculous assertion". He has also stated that he will not be raking over the findings of the Cole Royal Commission. While promising to take the findings into account, he did say that he considers these findings to be history.

So what views has he expressed on the review? To date, these include:

  • a rejection of union calls that there be no special workplace regulator for the building and construction sector;
  • criticism of the existing arrangements for monitoring the ABCC's use of its compliance powers and flagging the need for stronger external oversight;
  • an insistence that the new body be both independent and accountable as well as free of ministerial intervention;
  • considering time limits on investigations and prosecutions; and
  • suggesting that the new body may keep many of its powers, but conceding that it discriminates against building workers on the basis that "these rules treat building workers more harshly than people in other industries."

The Discussion Paper he issued in October 2008 in particular presents an illuminating insight into his views on the role and powers of the ABCC and what we can expect in his final report.

Tellingly, he states that he has "detected a tendency for many people, on both sides of the employment divide, to assume any new Specialist Division would be much like the ABCC; the ABCC rebadged." He then goes on to say, perhaps somewhat ominously "however, as the song says, 'It ain't necessarily so."

Further, while Justice Wilcox has acknowledged that there has recently been a "better atmosphere" and improvements in the building and construction industry, including significant reductions in days lost due to industrial action, he has queried whether this is due to the ABCC's tough approach to industrial policing. He says there are "a host of reasons" for this.

He has stated that the reduction in time lost in the building industry from 1996 onwards was not necessarily attributable to the ABCC, and that ABS statistics showed there was also substantial reduction in time lost in other industries during the same 12-year period. He suggested that "community-wide" factors may have been responsible for most, if not all, of the reduction in lost time in the construction industry.

Union response – a "human rights" issue

The CFMEU has poured resources into a national advertising campaign advocating the immediate abolition of the ABCC. It argues that construction workers should not be subject to a special industrial relations regime that does not apply to other workers – and has called the current arrangements "a breach of human rights."

Construction unions have also been lobbying MPs. The ACTU has contributed $500,000, and there have been apparently "significant" contributions from CFMEU, AMWU, AWU and CEPU, and television commercials are already well under way.

The unions have made it clear that they will accept nothing less than a complete withdrawal of the federal government's plans for an industry watchdog, arguing that construction industry workers should not be subject to special laws any different from those for other employees and that such treatment amounts to discrimination. There have also apparently been union threats to oppose pre-selection for those who do not support the union position.

In its 5 December 2008 submission to the review, the ACTU states that while "the building and construction industry was characterised in the Cole Royal Commission as being dominated by powerful unions, who are able to impose their wishes upon 'vulnerable' employers...the evidence shows that the true picture of the building and construction industry is one of an industry dominated by large, sophisticated employers and four unions that have been progressively weakened during 12 years of a Coalition government." The ACTU also singled out apprentices and foreign workers as being particularly vulnerable to exploitation on wages.

The Master Builders Association on the other hand has refuted these claims and considers that "building workers have been enjoying wages well ahead of the average Australian for a large number of years now." According to the MBA, construction wage costs were currently increasing by 4.6% a year, and workers in the industry were experiencing higher wage growth than other Australian workers.

Implications for building and construction industry employers

The ongoing existence of a construction watchdog with all of the same powers as were wielded by the ABCC should by no means be taken for granted. Whatever recommendations Justice Wilcox ultimately includes in his report, the final decision will be up to Cabinet.

Since the ALP first revealed its plans for the ABCC, pressure has been steadily building from within Caucus for the government to rein in the ABCC. To date, both Kevin Rudd and Julia Gillard have insisted that the government will not bring forward the abolition of the ABCC or reduce its current powers. They have also clearly stated that the Code and Guidelines and the Building and Construction Industry Improvement Act 2005 will stay until 2010.

Then there is also the likely constitutional challenge to the ABCC's successor on "separation of powers" grounds. These will include questions regarding:

  • whether it is constitutionally valid for the one body to be both prosecutor and judge; and
  • the means by which it will be able to enforce the sanctions and penalties it imposes.

Taking all of these factors into account, it is therefore quite likely that some of the ABCC's current powers, particularly those that relate to investigation and compliance, will be watered down when it commences operation as the specialist division from 1 February 2010. In addition, the specialist division may also be subject to some form of enhanced external monitoring and oversight.

Whether construction industry employers can still rely on a formidable and well-resourced industry watchdog to police Australia's most turbulent industrial landscape from 2010 and beyond may lie in the words - 'it ain't necessarily so'.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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