Wednesday, September 03, 2008

ABCC passes public interest test

The Australian Building and Construction Commission operates an oppressive kangaroo court.  It victimizes innocent construction workers and unionists, forcing them to give evidence or they face jail.  It's shocking that a government institution should have such powers and be so evil.

This is the message Australia's construction unions and the Australian Council of Trades Unions has been hammering at Rudd government backbenchers over the past few weeks.  They have pushed this theme through the national press and are funding a national TV advertising campaign against the ABCC.

They want the ABCC's powers cut.  They want it neutered.  ABCC inspectors are allegedly being attacked at worksites.  Unions have timed their campaign to influence the current review looking into the mechanics of shifting the ABCC powers into Fair Work Australia in 2010.

Let's be clear.  It is shocking that the ABCC has these powers.  It's more shocking that it needs them.

It's been done to break the Mafialike grip unions and union-colluding construction firms had over the sector before the ABCC was created.  Less than five years ago the sector operated through competition destruction agreements, both formal and secret that mostly harmed construction workers and small businesses.

In policy terms industrial relations systems and agreements are anti-competitive.  They sanctify price fixing (of wages) on the public interest grounds of preventing worker exploitation.  There's an inevitable conflict with the other public interest need of ensuring competition in commercial activities.  Mostly the divide between the two conflicting public policy needs is maintained.  Industrial relations commissions handle employment issues.  The Australian Competition and Consumer Commission enforces competition policy.

Long ago however, this divide broke down in the construction sector.

First, industrial agreements extended well beyond employee issues to control vast areas of management and commercial decision making.  The agreements dictated to companies when, how and even where they could operate.  Pattern industrial relations agreements forced all employers onto exactly the same arrangements.  This neutralised competitive differences and competition.  Industrial relations became a mask for anticompetitiveness.

Unions enforced this but not on their own.  The real trick to understanding the system was that it gave cover for many construction executives and firms to control and limit their competitors.  Many a construction executive career was built on the system.  Pay-offs to and between unions, union officials and construction executives were endemic but never "illegal" because the system protected what would normally be illegal.  Examples abound of company contributions to "training" and "Christmas picnic funds" that in fact amounted to pay-offs.

The entire structure was protected by a culture of intimidation and silence.  At its worst people were bashed or property was damaged as a warning.  Mostly, individuals' careers were limited or destroyed if they spoke out.  Those working in the industry understood and accepted "reality" if they wanted to survive.  This mafiastyle ugliness was exposed and documented in the 2003 Cole royal commission report into the sector.

Cole recommended the setting up of a specialist policeman with powers not far removed from a standing royal commission.  It's these powers that have been delivered to the ABCC.  One power allows the ABCC to force people into interviews.  It's draconian but there's a twist.  Anyone required to attend an interview becomes immune from prosecution.

There's good sense behind this.  Cole recognised that the culture of silence had to be broken for illegality to be tackled and competition restored.  The interview powers are in fact whistleblower protection powers.

In undertaking investigations the ABCC can pull in large numbers of people.  No one can refuse.  Importantly executives and union officials who conduct intimidation can't find out who exposed them.  Intimidation and illegality loses its protection and becomes risky.  These powers have been used by the ABCC to great effect.  It's not necessarily the number of prosecutions that's important but rather the protection given to honest people against illegal and dishonest people in construction.  It's a key power that changes cultures.

The ABCC has been operating less than three years.  The change has been dramatic and beyond expectations.  Productivity, worker numbers, profitability and wages have soared.  Cultures of honesty and trust are emerging.  But with the job far from complete unions seek its undoing.


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