'Truffles' Turnbull and his reasons for bringing back the ABCC

Prime Minister Malcolm ‘Truffles’ Turnbull has made it clear that if the Senate refuses consent, for a bill re-establishing the federal  Office of the Australian Building and Construction Commissioner (ABCC) with even greater legislated power, he will call a double dissolution election for 2 July 2016.

Turnbull is effusive in his praise for the effectiveness of the ABCC:

Turnbull's office says his claim about a 20 per cent jump in productivity came from the Australian Bureau of Statistics. It's there all right, if you use 2012-13 as the end date for the ABCC even though it finished at the end of 2011-12. But over the same period productivity in the entire market sector jumped 14 per cent. Something other than the ABCC was at play. In the post-ABCC era productivity in the construction sector climbed 3 per cent. Productivity in the entire market sector climbed 7 per cent.

So is he right about the ABCC?

The Office of the Australian Building and Construction Commissioner (ABCC) commenced operating on 1 October 2005 under the Howard Coalition Government. It possessed significant investigative and regulatory powers in relation to the Australian building and construction industry.

In the four years up to the 2011-12 financial year the ABCC reportedly cost taxpayers somewhere between an est. $135 to $165 million, depending on who you’re talking to.

From 1 June 2012 the Gillard Labor Government replaced the ABCC with the  Fair Work Building and Construction (FWBC) regulator.

According to the Productivity Commission Inquiry Report: Public Infrastructure, Volume 2 (27 May 2014) data covering approximately ten years:

The Commission has carefully reviewed the studies and the empirical evidence on aggregate productivity (appendix I).

This assessment covers the evidence from IE and MBA (sub. DR211), and the Commission’s own synthesis of studies and data.

The Commission’s view is that given the case studies, industry surveys and other micro evidence, there is no doubt that local productivity has been adversely affected by union (and associated employer) conduct on some building sites, and that the BIT/ABCC is likely to have improved outcomes.

However, when scrutinised meticulously, the quantitative results provided by IE or others do not provide credible evidence that the BIT/ABCC regime created a resurgence in aggregate construction productivity or that the removal of the ABCC has had material aggregate effects. Indeed, the available data suggests that the regime did not have a large aggregate impact….

There is no robust evidence that the new industrial relations environment specific to construction had significant effects on the costs and productivity performance of the construction industry as a whole. There is likely to have been more important effects for the non-residential building segment of the industry, but any such effects would be hard to discover in the aggregate construction productivity data.

The report also said this:

FWBC can take matters to court or refer them to other enforcement agencies. Its own enforcement powers relate only to civil matters (as did the ABCC).

Up until February 2014, the ABCC/FWBC had formally referred 21 matters to the State or Federal Police. Data on FWBC’s investigations and court actions suggest that it has commonly found breaches by employers as well as employees (or their nominated agents).

In 2012-13, out of just over 1100 investigations, its four main areas of investigation related to recovering employees’ wages and entitlements (31 per cent), freedom of association (13 per cent), coercion (13 per cent) and unprotected industrial action (12 per cent).

Most investigations have not resulted in actions before the courts. In 2012-13, there were 13 cases before the courts under the FWA, which involved unlawful industrial action (4), wages and entitlements (4), coercion (3), sham contracting (1) and adverse action (1) (FWBC 2013a, pp. 29, 38–39)….

the issue of notices dropped significantly after 2009-10, even though the ABCC was still in place and possessed the same statutory powers (Independent Economics 2013, p. 10)….

What the report shows is that any increases in building and construction industry productivity are more likely to be localised to individual companies/building sites and overall productivity levels cannot be safely attributed solely to the existence of the ABCC.

It also highlights that on average only two matters per year were referred to the courts by either the ABCC or FWBC over an approximately eight-year period.