The Construction Industry in Australia.

Introduction

As a crucial driver of Australia’s economic activities, there are over 200,000 businesses in the building and construction industry, and these offers employment to 700,000 Australians; which is close to 7.5 percent of the country’s workforce. In addition, the industry contributes to a 5.5 percent of the nation’s GDP, and in excesses of $ 40 billion every year in terms of economic activities (Howard 2005).

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During the 2000/2001 financial year, non-residential buildings erected in the whole of Australia were valued at $12.24 billion. At the same time, the engineering building work done was pegged at $ 17.55 billion. In terms of company numbers in the construction industry, these were estimated to be 194, 000 during the 1996/1997 financial year (ACTU 2003).

The construction industry in Australia commands some significant linkages with other key sectors, and this has led to its major impact on the economy, to the extent of extending to well over just the direct contribution of activity of construction per se. according to the Australian bureau of statistic’s estimates, if an initial extra output in the sector of $ 1 million could be deployed, this would translate into a $ 2.9 million output on the overall economy, thereby creating 9 and 37 extra jobs in the construction industry and the economy as a whole, respectively (Commonwealth of Australia 2005).

Despite witnessing the best years over the past generation, participants in the industry reckons that there has been little or no effort to rectify what is now being touted as unacceptable culture in the industry. For one, the royal commission has provided that the industry lacks in the utilization of its full potential, despite finding itself in a productive and cost-efficient sector (Bramble 1998).

Other than builders and contractors, who have a direct interest in the industry, there are thousands of other individuals and business owners whose viability and living standards and custom relies on the efficient operations of the industry. These normally range from investors to manufacturers and sellers of building and construction products and services (Howard 2005).

Industrial Organisations in the Building and Construction Industry

The industry covers such major unions as the construction, forestry, mining and energy union (CFMEU), the union of Australian workers (AWU), communications, electronics, electrical, information, plumbing, information, postal and allied services (CEPU), and the manufacturing workers union of Australia (AMWU) (CFMEU 2003). CFMEU is Australia’s main trade union that addresses grievances of workers in the construction, forestry, mining, and energy production. With offices in all of Australia’s capital cities, as well as major regional centers, the union boasts of 120,000 members, with a fulltime workforce of 400 (CFMEU 2003).

In terms of structure, CFMEU has three main divisions; construction and general division, forestry and furnishing, and the energy and mining division. Formed in the early 1990’s, the construction and general division was a culmination of the industry’s desire to create as single union in the industry. The rationale behind this move was for a better representation of its members, as opposed to the traditionally crafted unions. Building Workers Industrial Union (BWIU) is the largest amalgamation union, following numerous amalgamations over the periods between 1946 and 1992 (Commonwealth of Australia 2005).

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With regard to coverage, its members includes a multitude of craft unions, and which represents building trade people such as carpenters, tillers, bricklayers, stonemasons, as well as other skilled construction workers without a trade (Andrews 2005). When the Builders Laborers Federation (BLF) was deregistered of in the 1980s, BWIU increased its coverage, and could now accommodate such other construction workers as steel fixers, construction laborers, trades assistants, and concreters (CFMEU 2003). Some of the members of the division also work off-site, like in shopfitting workshops, the prefabrication of construction materials and joinery shops.

In addition, there are also members who work in the pottery, tile and brick manufacturing, while in Queensland, furnishing traders are covered as well, as a result of a lack of a forestry division in the state (Commonwealth for Australia 2003).

Politically, the construction division has an association with the Australian labor movement west wing, with the government representatives themselves being former union officials. Presently, the division is battling out for membership with the Australian Workers Union (AWU), in the matters of construction projects. According to the rules of the two unions, both have the mandate to cover civil construction (Bramble 1998). Consequently, demarcation disputes have occasionally erupted, with employers negotiating for the best deals from either party.

CFMEU’s division of forestry and furnishing products was originally registered as the federated woodworkers, sawmill and timber-yard association of Australia’s employees, in 1907.

By 1913, the union’s name had changed to the Australia’s Amalgamated Union of Timber Workers, and eventually to the timber workers union of Australia in 1918. A further amalgamation in 1990 led to the unification of this union with the Australia Federation of Pulp and Paper Workers (CFMEU 2003). By mid 1991, yet another endorsement of the new union led to an amalgamation with the Building Workers Industrial Union (BWIU). The unfolding events hence helped set the stage for a future development of what is today regarded as CFMEU.

Nationally, the division of forestry and furnishing product has 20,000 members. Another division is that of mining, which also has a number of amalgamated unions. The miners’ federation, previously referred to as the coal and shale employees’ federation of Australia (ACSEF), has a history that dates back as far as 1915 (CFMEU 2003). The mining and energy division covers such industries as the coal, metalliferous mining, oil and gas, electric power generation, and small coke industries (Howard 2005). In 2001, the Cole Royal Commission was initiated into the building and construction industry by the Howard government, in a bid to investigate corruption claims that were being associated with the union.

According to the royal commission findings, an abuse of state and occupational health and safety laws was identified, in the name of employers forcing their employees to join the union. In fact, one union organizer was jailed owing to court contempt.

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Following the commissions findings, the building and construction commission had top be established. The new establishment was also equipped with a range of powers, such as the forcing of people to provide answers to directed questions under oath (CFMEU 2003). Further, a breach of the Building and Construction Improvement Act 2005 would see the culprit paying a fine of $ 22,000 and $ 110, 000, for individuals and corporations respectively. As a result of these developments, employers, unions and construction workers, all face a four fold increase in fines compared to other sectors, in the event that their actions are deemed illegal (Commonwealth of Australia 2005).

Problems in Australia’s building and construction industries

The industry is dogged by such issues as the underpayment of wages, as well as a failure to remit superannuation contributions. When one of Australia’s high profile Construction Company (Stockport Civil) underwent liquidation, some of its workers never got their full entitlements. The company was the biggest earth moving company in Canberra, and had initially won the tender for the city’s airport runway project (CFMEU 2003). Tax avoidance is another problem that the industry has to grapple with, as well as the misuse of ABN’s, and especially in such areas as plastering, painting and fixing of ceiling (Andrews 2005).

Despite having acquired an enterprising agreement, some contractors will only engage those individual workers that have ABN’s. Some lucky workers will have the company paying for redundancy, long term leave, or even superannuation. Most often though, all they receive is an all-in hourly rate. Recently, a national company that specializes in the manufacturing and installation of insulated panels to cold stores, fell victim to this practice.

The company also handles factory and warehouse wall/roof cladding panels. The company has passed an expiry date on the EBA it has with the union’s six site workers (Bramble 1998). These have been with the company for between 5 and 11 years, and the company now wants them to turn into contractors. On their part, the workers are skeptical about the changes, while at the same time being wary of their plight, should theory lose their jobs.

On the surface, it might appear as though the company is doing the workers a favour. On the contrary, the company, though paying its workers their wages, ends up not paying payroll tax, workers compensation premium, long service leave, and superannuation (Howard 2005). Thus, the company ends up saving money. In case authorities later find out a worker to be more of an employee, then he/she is liable to higher tax penalties. On the part of employers, there seem to be no disincentive in the choice of this practice (Commonwealth of Australia 2005). If only the government would institute strong penalties against employers, then this kind of subcontracting would be stamped out.

In a bid to still avoid tax, some steel fixing as well as tilt-up construction companies that are unable to get skilled workers ends up paying their workers in cash. Another emerging practice in the industry is that of companies that do not even have workers tendering for jobs. Once they win such a tender, they then source for cheap labour, in a bid to maximize profits. As a result, this makes decent companies that pay the proper statutory funds like the workers cover, train apprentices and employ workers almost uncompetitive (CFMEU 2003).

Owing to a lot of non-compliance in the construction and building industry, workers compensation still poses as a major problem. In fact, most companies now do not even demand to see the certificates of workers insurance compensation. When an accident does occur in this case, the employer, instead of advising workers to file for a compensation claim, will normally send such employees to the company’s ‘friendly doctor’. For a while, the employer pays for the medical bills and wages of the workers, only to terminate these after sometime (Howard 2005).

As far as occupational health and safety is concerned, the workers union is daily having to grapple with unacceptable practices in the industry. As a pointer to this, the ETSA Apartment project, a $ 50 million job was riddled with controversy from the begging. Firstly, the building was laden with blue asbestos, and the previous owners had to contract a company to demolish the building, as well as remove the asbestos (Commonwealth of Australia 2003). Then when the job started, there was no safety induction, or even a safety supervisor on the site. In spite of the numerous site visits by the workplace services, the problem still persisted. The next contractor took 12 months to remove asbestos. Six months on and with the job having begun, asbestos still continues to be found (Howard 2005).

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With regard to training and apprenticeship of the industry workers, there exists an insufficient entry to meet the current as well as future demands for skilled workers. Subcontractors are also lacking in the ability to engage apprentices. When the government outsourced its departments, the training responsibilities were offloaded to the private sectors, and no account was made for the coping ability of the building industry following this move. In addition, the industry has witnessed a dilution into smaller companies, resulting in massive sub-contracting (Commonwealth of Australia 2003). This has only worsened the situation, leading to a housing crisis that is currently being witnessed.

Although there has been an increase in the number of group training schemes, this only accounts for 25 percent of apprentices. At the same time, the rise in the number of the apprentices has come at a price; at the expense of apprentices who are directly employed. A significant number of skilled workers have also moved the other industries as the years by. Due to such problems as dangerous work, lack of job security, non-payment of wages, and unsafe practices that plagues the industry, the migrating workers are always reluctant to return (Howard 2005).

Principle employer organizations in Australia’s building and construction industry

The Australian Constructors’ Association (ACA)

Formed in 1994, ACA advances the interests of key contractors in the construction business. Its mission is to transform the Australian construction industry into an efficient and competitive entity, in a bid to enabling it contributes to Australia’s development. This is achievable through sound and positive leadership, a commitment to the infrastructure, and an open communication (Bramble 1998). With a combined annual revenues exceeding $ A 15 billion, the members companies offers employment to over 49,000 people, both in Australia and internationally. In terms of operation, the companies are in contract mining, infrastructure development, engineering construction, telecommunications, oil and gas maintenance and operation, environmental services, and process engineering (Dabscheck 2003).

Master Builders’ Association (MBA)

The association of Master Builders was founded in the 1870s, and is touted as the country’s largest industrial association (Commonwealth of Australia 2003). It quickly grew from a movement into an association with representatives in each and every region of the country.

By 1890, it was already a federated on a national basis. As a major building and construction industry association in Australia, MBA has a primary role to promote the interests and viewpoints of in the sector. In addition, the association provides a wide range of services to its members, such as training, industrial relations, economic and international relations affecting the industry, legal services and standards and codes in building (Dabscheck 2003).

Currently, the association has over 31, 000 member companies, and is represented in each and every state and territory (CFMEU 2003). MBA’s membership includes civil contractors, commercial and residential builders (both national and international), as well as professional advisors in the industry, and suppliers. In fact, the MBA movement’s membership is a 95 percent representation of all the sectors found within the building industry. With over 340 qualified staff, these employees have a wealth of experience in accounting, safety, industrial relations, international business training, marketing, economics, law and engineering (Howard 2005).

Civil Contractors’ Federation (CCF)

As a representative body of contractors in civil engineering, CCF provides expertise and assistance in industry relation, as well as contractor development. Currently, CCF is the largest civil construction companies’ representative body, and is charged with the responsibility of aiding in the delivery of Australia’s infrastructural projects (CFMEU 2003). Such would include roads, subdivisions, sewerage, water, telecommunication, drainage, and bridges. CCF has so far developed a civil construction code, whose basis rests on Australian international quality standards, environmental; and safety systems of management.

This code has so far been customized to the needs of the industry’s civil construction division (Andrews 2005). In addition, the code enables companies to be in a position to demonstrate compliance with a code that is recognized, without the need of being certified to such quality systems as ISO 9001, AS/NZS4801, and ISO 14001 (Commonwealth of Australia 2005).

National Electrical and Communications Association (NECA)

NECA, the electro-technology contracting industry national voice, is the sole association that represents Australia’s electrical and communications contractors’ interests. This includes business owners, employers and technicians as well (CFMEU 2003).

Attempts by the government to salvage the industry

Through the formation of enquiry commissions into the building and construction industry, there has been an uncovering of entrenched problems therein. In addition, solutions have been have proved hard to find, as well as to implement. What has then emerged clearly is that in spite of being commercially vulnerable to industrial actions, the industry has on its own, failed to initiate coercive reform conduct, and which would otherwise not be tolerated in other sectors (Dabscheck 2003). Over the years, the industry has sought for the assistance of the government, in an effort to offer redress to its marauding industrial problems.

In early 2001, a whistle blower, who happened to be a union official, was quoted in public as offering a warning to the effect that there was some criminal element whose intention was to infiltrate a major union association (ACTU 2003). At about the same time, there were inter-union struggles all over, and they were also being played out in the building sites. In a bid to reach at some industrial peace, there resulted inefficiency in the work practices and labour costs increased. This was all happening under the guise of agreements (Dabscheck 2003).

At the same time, there were no such concepts as the freedom of union membership choices, or even the freedom to make agreements (Dabscheck 2003). Although freedom was the law of the land, still there was no freedom about how, who or when to employ. In response to the cries of the industrial players, government restored the secondary boycott laws, and those requiring the freedom to associate, back to the Trade Practices Act in 1996 (Commonwealth of Australia 2003).

In the late 1990s, Peter Reith who was then a federal minister in the Australian government identified in public the need to bring reforms to the building and construction industries, along with the mining, meat, and waterfront sectors.

Consequently, this led to the establishment of the Employment Advocate Office. The aim was to aid in the enforcement of the freedom to associate (Howard 2005). In addition, the commonwealth guidelines and procurement codes were created, and the state government adopted these. In addition, all the industrial awards were henceforth subjected to simplification. Eventually in 2001, there was established an Interim Law Enforcement Taskforce in the National Building Industry.

In 2002, the federal government appointed a royal commission to investigate the compliance and workplace practices in the building and construction industry in Australia. Dubbed the Cole commission, the enquiring, which was headed by a Terrence Cole; a former NSW judge of the Supreme Court. Eventually, the commission submitted its report in February, 2003. In its 23 volume report, the commission provides not only a sobering report, but also presents a challenge to policy makers, employers and union members, in terms of evaluating the issues of industrial relation, culture and conduct in the building and construction sector.

In response, the industry has had divergent views to this issue. while some players have supported these observations, there are still other members who are skeptical about whether or not things will ever change in this industry, with the arguments that the royal commissions recommendations are not only far reaching, but are controversial too. On its part, the federal government has embraced ambitious industrial reforms in the industry. In fact, the government has vowed to prevail on parliament to implement the recommendations proposed by the Royal Commission chaired by Cole. (ACTU 2003).

The current situation in the construction industry in Australia is one whereby, some construction companies building unions colludes, leading to the workers doing excess overtime. A case in point is the deal that was struck between Grollo, ranked among the largest construction companies in Australia and a building industry union in Victoria (Andrews 2005). The deal which was reached by CFMEU and Grollo was a far cry from the liberal approach previously fronted by the building union; that of ensuring that their workers worked no more than 36 hours per week. In essence, this move is seen as having perpetuated the current scenario being witnessed in the building and construction industry.

Currently, 56 hours is the average at most sites in Victoria. Broken down, this translates into 10 hours everyday; from Monday through Friday, and an extra 6 hours on Saturday. The new agreement was meant to introduce a 36-hour per week arrangement, but it appears as though the workers will now have to make do with working for longer overtime hours. The reduced working hour package was meant to appease the union, to prevail on its members not to engage in such situations as strikes and work cessations. In addition, this would also allow the deployment of workers from weather affected areas to another site. On its part, the construction company was to offer the workers an increment of 18 percent, and this was to be spread out over three years (Dabscheck 2003).

However, there has been criticism on this issue, with arguments to the effect that CFMEU not so much bothered about the issue of reduced working hours, but is out to demonstrate its member employers that thus far, it is the only establishment that is in a position to deliver their demands. Like in any other capital intensive industry, par rate is not the central issue in the construction industry. Rather, the major concern is having a situation whereby there are no interruptions in the workflow. In addition, shifts ought to be around the clock, as well as a demonstration of full flexibility in as far as working arrangements are concerned (Andrews 2005).

Works Cited

ACTU (2003) “The Royal Commission into the Building and Construction Industry. A Howard Government Attack on the Construction Industry”. Web.

Andrews, K. (2005) “The New Employment and Industrial Ball Game”, Address to Master Plumbers Association National Conference. Web.

Bramble, T. (1998) War on the Waterfront, Brisbane Defend our Unions Committee.

Building and construction industry improvement Act 2005.

CFMEU (2003) “An Analysis of the Cole Royal Commission into the Building and Construction industry”, CFMEU.

CFMEU (2005) “A New Threat to Your Family’s Living Standards”, CFMEU Construction and General Division.

Commonwealth of Australia (2005) “WorkChoices: A New Workplace Relations System”. Web.

Dabscheck, B. (2003) “Two and Two make five: Industrial Relations and the Gentle Art of Double Think”, Sir Richard Kirby Lecture, Industrial Relations Society of Victoria.

Howard, J (2005) “Workplace Relations Reform: The Next Logical Step”, Address to The Sydney Institute. Web.

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