Cover Story: The building industry's Royal Commission
by Peter Westmore
News Weekly, August 11, 2001
The Federal Government's decision to appoint a Royal Commission into the culture of corrupt and intimidatory practices in the building industry is an overdue attempt to restore confidence to an industry which for decades has been marred by violence and standover tactics.
The building industry's culture of violence came to the fore with the Builders' Labourers Federation (BLF), when led by Peking-line communist, Norm Gallagher, in the 1970s and 1980s. The BLF was ultimately deregistered by the Hawke Labor Government in 1985, but the union's members were subsequently absorbed back into other unions, particularly the construction division of the Construction, Forestry, Mining and Energy Union (CFMEU), where they remain active.
A former NSW Supreme Court judge, Terry Cole QC, will conduct the inquiry, whose terms of reference call for an investigation of the nature, extent and effect of unlawful practices in the industry, including fraud, corruption, collusion or anti-competitive behaviour, coercion, violence or wrongful payments in the industry.
Mr Cole will be well qualified to conduct the inquiry, having practised in the field of construction disputes, and having responsibility for the construction and engineering list of the Supreme Court of New South Wales.
In a statement released with the announcement of the Royal Commission, Employment Minister Tony Abbott, cited a recent report by the Employment Advocate, dated May 2001, which referred to allegations about strike pay being extorted from employers, coercion in agreement making, de facto compulsory unionism enforced by some union organisers, payment of bribes and secret commissions, and allegations of the misuse of industry super funds.
Some Labor spokesmen denounced the Royal Commission as politically motivated, and in this, were joined by sections of the media which described it in terms such as a "pre-election building industry Royal Commission".
However, the General Secretary of the construction division of the CFMEU, John Sutton, recently condemned "criminal elements, including standover men" within the industry. Last year, he called for the National Crime Authority to investigate allegations of corruption within the NSW branch of the union.
For saying this, he was attacked by the Victorian Secretary of the union, Martin Kingham, who said, "John Sutton will be remembered as the Secretary ... who by his own comments gave the conservatives a rationale for calling the Royal Commission" (The Australian, July 28, 2001).
The fact that the Royal Commission will have until the end of next year to report back clearly indicates it has little, if anything, to do with the next election.
One important element of the inquiry will be the extent to which employers have failed to deliver on their obligations to their employees.
One of the reasons why union militants have been able to get away with standover tactics is that some maverick employers operate within the industry, and in the downturn in the housing industry after the introduction of the GST, thousands of building workers lost their entitlements when the firms which employed them went bankrupt.
In his recent report to the Minister, the Employment Advocate, Jonathan Hamberger, documented a range of appalling allegations - in particular, coercion and intimidation by union delegates - which bedevil the industry in several states.
He reported that last year, 66 per cent of all complaints received by the Office of the Employment Advocate concerned the building and construction industry, while this year, the figure has risen to 76 per cent. Almost all of these, he reported, were from the large commercial sector of the industry, rather than the cottage (home builder) sector.
Among the allegations made are that "a particular CFMEU organiser is the safety officer for a major building and is responsible for ensuring that any prospective tenders have appropriate safety action plans ... [which] are rejected unless all workers employed by the company join the CFMEU."
On some building sites, there is a policy of "No Enterprise Bargaining Agreement - No Start", while in other jobs, there is a policy of "No [Union] Ticket - No Start". In Western Australia, he reported, the election of the State Labor Government "has led to the re-appearance of No Ticket - No Start' signs on Perth central business district sites."
The Employment Advocate also reported that on some occasions, "threats are made of impending industrial trouble, or disruption of the site with occupational health and safety issues, unless the head contractor no longer engages the target' sub-contractor."
A range of other allegations, including secret commissions and criminal activity within particular unions, were also reported; but the Employment Advocate lacks the power to investigate these allegations, and potential witnesses are unwilling to come forward, due to fears of reprisals.
The Royal Commission will have real difficulty getting to the bottom of these allegations, but it would seem to be the only way in which these issues can be addressed.
- Peter Westmore is President of the National Civic Council