Intrusion impending: what contractors need to know about proposed abolition of the ABCC

By John O’Kane, Mark Dunphy and Ben Cotter

The Federal Government has submitted its plan to dissolve the powers of the Australian Building and Construction Commission (ABCC) originally set up to regulate building industry participants involved in Commonwealth-funded building work.

The Government has proposed to amend the Code for the Tendering and Performance of Building Work 2016 (Building Code 2016) by the end of the year (Amended Code).

The consequence? In short, situations of coercion, unlawful entry, and unlawful picketing will no longer be regulated by the ABCC. Litigation previously initiated by the ABCC will be handed over to the Fair Work Ombudsman (FWO). Any dispute relating to union conduct will be referred to the FWO and may be subject to delays.

What is, or rather, what was the Building Code?

The Building Code was enacted in 2016 by the then Liberal-National Party Government to govern the standards of conduct for all building industry participants that seek to be, or are, involved in Commonwealth-funded building work. The Building Code 2016 created the ABCC as a Commission to regulate conduct relating to, among other things, the tender requirements, subcontractor compliance, Workplace Relations Management Plans, standards of conduct on site, right of entry, and dispute settlement requirements.

Prior to the current Labor Government’s proposal, any building contractor or building industry participant who tendered for or expressed interest in Commonwealth funding building work was referred to as a ‘code covered entity‘ (Code Covered Entity). Any Code Covered Entity who failed to meet the requirements prescribed by the Building Code 2016 would be excluded from tendering for Commonwealth-funded building work for up to one year.

The likely impact of Labor’s proposed Amended Code

Compliance

The Amended Code provides that a Code Covered Entity will not need to comply with the previous rules and regulations prescribed by the Building Code 2016. As discussed below, there will be two exceptions, which relate to the engagement of non-citizens and non-residents, and domestically sourced building material.

Unions are back

The industry should be prepared to see a potential increase in union activity on construction sites as the Amended Code removes the policing of union militancy by the ABCC. Such activity could cause costs, delays, and disruption to infrastructure projects.

Disputes done differently

Construction disputes previously brought by the ABCC focused on instances where construction unions, and their officials, have targeted contractors, subcontractors, and workers with unlawful industrial tactics to bully, coerce, and intimidate them into signing up to union deals.

Rather than rely on the ABCC to investigate this conduct, it will be the FWO, and health and safety regulators’ job to enforce the Fair Work Act 2009 (Cth), and safety matters in the building and construction industry. A Code Covered Entity will need to avail themselves of the protections of the Fair Work Act regarding matters such as Right of Entry and unlawful industrial action and file a claim with the FWO of their own volition.

Resourcing of the FWO and its prosecution of construction matters will be dealt with in October’s budget; however, the Federal Labor Government has confirmed that the FWO will not receive as much funding as the ABCC because it will not be commencing as many prosecutions.

What remains?

A Code Covered Entity will need to continue to comply with two obligations including:

• to prohibit the engagement of non-citizens and non-residents undertaking building work including advertising requirements as set out in section 11F of the Building Code 2016; and
• require a preferred tenderer for building work to provide particular information to a funding entity, including information relating to whether building materials are domestically sourced, whether they comply with the relevant Australian Standards, the whole-of-life costs of the project, and the impact on jobs and skills growth.

The Amended Code also adds a new provision to preserve any exemptions given by the ABCC for essential service providers and essential infrastructure services prior to the Amendment Code’s commencement and preserves the effects of any exclusion sanctions.

What is removed?

A Code Covered Entity is no longer required to:

• seek Determinations of Compliance from potential subcontractors;
• have an Enterprise Agreement that do not contain clauses which:
  • prescribe the number of employees and subcontractors that may be employed or engaged on a particular site;
  • limit the number of casual and daily hire employees;
  • require an employer to consult with, or seek the approval of, unions (and other associations) in relation to the source or number of employees to be engaged (and type of employment offered); and
  • sets out the terms and conditions on which subcontractors are engaged (including terms and conditions of employees of subcontractors).
• comply with a Workplace Relations Management Plan;
• require downstream code compliance from subcontractors;
• comply with the security for payment provisions of the Code, including reporting disputed or delayed progress payments under State security of payment laws to the ABCC;
• maintain any policies with respect to freedom of association;
• restrict the rights of entry of an officer of a building association to rights provided under the FWA and relevant work health and safety laws;
• carry out any drug or alcohol testing under the Code or maintain a policy about drug and alcohol testing;
• report actual or threatened industrial action to the ABCC; and
• report any code breaches to the ABCC.

The Amended Code also removes the Commission’s role under the Building Code 2016 in relation to granting exemptions and recommending exclusion sanctions.

Key takeaways

Contractors should keep a close eye out for the passing of the Bill through Parliament later this year.

While the ABCC remains in play, the Commission continues to launch fresh court actions against unions. A fortnight after the Amended Code was proposed, the Commission commenced legal action against the Construction Forestry Maritime Mining and Energy Union. However, the FWO has declined to answer whether it plans to continue, assess, or end the ongoing matters.

If you would like to discuss the impact of these changes further and how it may impact your business, please reach out to discuss.

This article was prepared with the assistance of Caroline Sakinofsky, Law Graduate.