Originally published in The Australian Financial Review on 1 December 2016
Consider this the triumph of pragmatism over principle in the long-running attempt to reform Australia’s militant union-dominated construction industry. But the Turnbull government had no choice.
The Coalition needed to deal with the demands of the independents – backed by many of the major builders – to ensure the Australian Building and Construction Commission could be re-established.
The political benefit to the government is clear. A win is a win is a win. And this was a particularly crucial one.
The cost is protracted delay and unfairness in applying the new industrial relations laws.
The delay is any need to change the power and conditions negotiated in non-compliant agreements by the Construction, Forestry, Mining and Energy Union for another two years at least.
The unfairness is because those companies that refused to accept the recent union terms and conditions as part of the latest enterprise bargaining negotiations will now have to cave in to the CFMEU as well or risk being further disadvantaged by the union.
But these days, the political reality is that the Senate too often becomes a policy graveyard. It’s less a case of not letting the perfect be the enemy of the good and more of not letting the barely acceptable be the enemy of any progress at all.
The need to restore the ABCC and the rule of law in the construction industry was the primary trigger for the double dissolution election, let’s not forget. That’s even if Malcolm Turnbull promptly managed to forget talking about this issue for most of the election campaign.
The Prime Minister, backed up by his determined minister Michaelia Cash, has been more focused on selling that message of the cost of the current system to the whole community since election night.
But given the election result also produced such a mishmash of a Senate crossbench, it’s taken enough horse trading to fill a stable in order to get the numbers by the parliamentary year deathknock.
This didn’t prevent criticism from Brendan O’Connor, opposition spokesman on industrial relations as well as brother of the CFMEU national secretary Michael O’Connor. He declared in tones of confected outrage that Malcolm Turnbull had revealed the fact that he was “mercenary” and a “horse trader by nature”. Pass the smelling salts.
What else is a government supposed to do given the diversity of individual senators’ whims it must now manouevre its way through – certainly without any assistance from Labor? The more valid criticism of the Coalition has been its difficulties in managing this messy process by coming to terms with the need to hold its nose and get a deal done. But it is learning those lessons.
That meant many companies that had recently negotiated what are effectively pattern four-year agreements would no longer have been eligible to bid for government work unless they immediately renegotiated.
Naturally the CFMEU opposed this. After all, they had already ensured these agreements included plenty of restrictive clauses like requiring companies to employ non-working union officials and to ask union consent for the number of staff on site and, most importantly, to have effective veto rights over contractors and sub-contractors.
This also split the companies into those – like Lendlease – willing to sign such agreements, complete with generous annual pay rises of 5 per cent, versus other companies that had resisted signing.
The result was more than 1500 agreements would have been in breach of the new code, locking out those building companies from tendering for government work until these had been renegotiated.
This led to furious lobbying of the cross benchers by companies that has completely their enterprise “bargaining” agreements and by some major industry groups for a delay. They claimed this was “retrospective” legislation despite the government’s consistent warnings of its intentions for more than two years.
The compromise means there will be a two-year “transition” period from November 30 before renegotiation of non-compliant agreements is needed. The ABCC decisions will also be subject to judicial review.
That’s clearly going to end any prospect for any immediate shift in the sort of behavioural change across the industry the government wants.
The new code will now also place extra restrictions on the use of 457 visas in the construction industry. The potential for all of this being used to delay and impose additional costs on projects is obvious.
But most employer groups and companies are still pleased the ABCC and new building code are finally in prospect, years after the ABCC was abolished by the former Labor government.
The Australian Industry Group declared a significant increase in penalties for unlawful conduct should ensure the CFMEU changes its unacceptable approach of blatantly disregarding industrial laws. The Australian Mines and Metals Association expressed relief the new rules will finally cover “industrial extortion” in the offshore resources sector. Even small steps look better than going backwards.