A nail in the construction cartel coffin

An inquiry into corrupt practices on building sites will give the government the power it needs to finally end the cosy construction deals between major builders and the unions.

The inquiry that Tony Abbott launches into the construction unions will be different to any previous union inquiry. This one will also look at the management practices of Leighton, Lend Lease, Multiplex and the other big builders that may have allowed their building sites to be abused.

I must emphasise in the strongest terms that there is no suggestion whatsoever that the management of Lend Lease, Leighton, Multiplex and the other big builders have been in any way involved in any corrupt deals, drug offences and the other allegations currently being canvassed against the unions.

But these terrible events took place on or around the work sites of the big builders.

Leighton, Lend Lease, Multiplex and the other big builders signed bad agreements that gave the unions power over who could be subcontractors, who could allow entry on site and play a key role in what happened on these sites.

It would now seem that the unions have used these enormous powers that big builders gave them for activities other than for the benefit of workers.

The government inquiry and the revamped Australian Building and Construction Commission will force Leighton, Lend Lease, Multiplex and the others to completely change their construction management practices. We have a unique situation where the Australian, Victorian, NSW and Queensland governments are uniting to change the management practices of some of our largest companies when applied to government contracts .

Some of these companies will not have the skills to make the change and will suffer losses or be forced out of government contracting.

I have been writing about these 'cartel-style' agreements between unions and big builders for many years (I suspect readers thought it was becoming like an old record) but abolishing them is important for the nation because these cartel-style agreements added between 10 and 30 per cent to the cost of building our hospitals, some inner city apartments, infrastructure etc. In home building, where the industry operates without these cartel style agreements there have been enormous improvements in productivity that have not happened in commercial building.

Like everyone else, I heard that strange things were happening on these building sites as a result of the power given to unions. But I had no hard evidence. However I was mildly surprised that while the police raid frequently official bikie head offices, they rarely raid building sites. A Royal Commission will discover whether some building sites are where the “action” is.

The one large contract builder that refused to sign the cartel-style agreements that handed key elements of control over subcontractors and large parts of the sites to the unions was Grocon. Not surprisingly, the unions then campaigned against Grocon with blockades and billboards. The unions had one aim: drive Grocon out of business. They even tried to withdraw workers’ savings from the Cbus superannuation fund, which has been funding some Grocon projects.

When the democratically elected Victorian government passed legislation some two years ago that blocked these agreements on government projects, Lend Lease provocatively snubbed the Victorian government and deliberately signed an agreement with the unions that was in breach of the guidelines. Accordingly it was prevented from bidding for new government contracts while that agreement applied.

The construction unions then went to the Federal Court to try and effectively neuter the legislation. Fortunately the full Federal Court overturned an adverse initial Federal Court ruling by a single judge. Lend Lease did not intervene on the Victorian government side but allowed the unions to effectively act its behalf.

The new Federal Court ruling means that Victoria’s East West Link can be erected with no cartel style agreements (Construction sweetheart deals face the wrecking ball, December 20, 2013).

What is going to make it very hard for Lend Lease, Leighton and Multiplex is that their management is designed around arranging for building to take place under the umbrella of these agreements.

The federal government has brought together Nigel Hadgkiss and John Lloyd to run the revamped Australian Building and Construction Commission which will come into power once the Senate meets after July (Lend Lease and Leighton will be quaking, October 18, 2013).

There is no one better equipped to rid Australia of these agreements in government contracts than Nigel Hadgkiss and John Lloyd. The bans will quickly spread to the non-government sector.

We are going to have a lot more hospitals, roads etc.