Australia: The Future Of The Building & Construction Industry And The ABCC

Last Updated: 8 October 2009
Article by Alex Manos

In February 2010 the Australian Building and Construction Commission (ABCC) will be disbanded and replaced by a new independent building and construction division in the Office of the Fair Work Ombudsman (FWO). The compulsory examination powers of the ABCC will be retained in a modified form under the proposed legislation and the maximum penalties will be reduced in line with those of other industries.


The building and construction industry was revolutionised by the findings made by the Cole Royal Commission in 2003. As a result of the findings of unlawfulness which were prevalent on building and constructions sites the Building and Construction Industry Improvement Act 2005 (BCII Act) was enacted. The BCII Act has been enforced by the Australian Building and Construction Commissioner.

The BCII Act has attracted controversy because it has imposed laws in the building and construction industry which have not applied to any other. The higher maximum penalties which have applied under the BCII Act, and the compulsory examination powers (which require people to attend and answer questions under oath at the risk of potential prosecution), have been the subject of an unrelenting campaign of criticism by the CFMEU and other unions.

Wilcox Report

In April 2009, Murray Wilcox QC released his report into the building and construction industry (Wilcox Report). The former Federal Court Judge's 99 page report into the future of industrial relations regulation in the construction industry recognised that there remained a level of industrial unlawfulness in the industry, especially in Victorian and Western Australia, and that it would be inadvisable not to retain the compulsory examination powers. However, the Wilcox report recommended that a number of new safeguards be introduced in order to reduce the potential for abuse of the examination powers.

The Wilcox report was met with vocal criticism by a number of unions, many of whom argued that the compulsory interrogation laws should be abolished as there should be one law for all industrial relations stakeholders. The Federal Government publicly resisted these claims and maintained that there was still a need for specialised laws and a specialised enforcement agency to change the culture of the building and construction industry.

Future of the Building and Construction Industry

On 17 June 2009, the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009 (BCII Amendment Act) was introduced into Federal Parliament. The BCII Amendment Act proposes to abolish the ABCC and replace it with the Fair Work - Building Industrial Industry Inspectorate (Inspectorate) from 1 February 2010.

The Inspectorate would have functions broadly similar to that of the FWO but would only operate in the building industry. Many of the Wilcox Report's recommendations have been incorporated into the proposed BCII Amendment Act.

Compulsory examinations

The Inspectorate retains the ability to compel a person to attend a compulsory examination and to answer questions. However the circumstances in which this can occur have been modified. A notice will only be able to be issued requiring compulsory attendance at an examination after an application is approved by a presidential member of the Administrative Appeals Tribunal (AAT).

The AAT member must be satisfied that issuing a notice is warranted after taking into account the importance of the information sought, the evidence or documents likely to be obtained from the person to be summoned and the seriousness of the suspected contravention. Following the examination a transcript of evidence will need to be sent to the Commonwealth Ombudsman for review by a member of a specialist team in that office. All expenses, including the cost of representation and travelling to an examination, will be reimbursed to the person required to attend the interrogation.


A matter which was not canvassed in the Wilcox Report but which represents an important compromise on the compulsory examination powers, is the decision to introduce an 'Independent Assessor – Special Building Industry' who will be able to 'switch off' compulsory examination powers on certain building sites. On projects that commence on or after 1 February 2010, an interested person can apply to the independent assessor to switch off the coercive powers in relation to a specific project. The Independent Assessor will be able to switch the compulsory examination powers back on if, on a project where the coercive powers have been switched off, the site experiences industrial unlawfulness.

The proposed legislation means that maximum penalties for contravening the industrial relations laws will be reduced from $22,000 to $6,000 for individuals and from $110,000 to $33,000 for organisations.

The Inspectorate will ensure building industry participants comply with general workplace laws under the Fair Work Act 2009. This includes investigating breaches to do with the underpayment of wages, sham contracting arrangements, coercion and misrepresentation in the workplace.


The reforms to the building and construction industry mean that while a specialist Inspectorate will continue to educate and ensure compliance it will be enforcing the same laws which apply to all industrial relations participants and, if contravened, the same penalties will apply. A modified version of the compulsory examination powers will be retained subject to increased checks and balances.

The power of the Independent Assessor to 'switch-off' the coercion powers on certain building sites is unlikely to be controversial in practice because the site must have already proven to be one where unlawful activity is not occurring. In these circumstances, it is doubtful whether the Inspectorate's services would be required.

The FWO has, in recent years, proven itself to be an involved industrial player. Its role and impact will be closely scrutinised by all industry stakeholders as it enters the arena in a climate where right of entry laws have been relaxed and unions have greater access to workplaces.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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