Abbott must not yield to construction villains

Ending cartel-style agreements in the building sector will have a high political cost for the Coalition, particularly in NSW, but Tony Abbott must take on these vested interests for the good of Australia.

The stakes could not be higher for the Australian nation and the Abbott government. Before coming into office and since being elected to government, there has been one policy that has been consistently paramount on the agenda: the end to the cartel-style agreements between commercial building groups and unions. It is these agreements that make Australia one if the highest-cost places in the world to erect a commercial building, including resource projects and apartments.

The major beneficiaries of these cartel-style agreements are not just the building giants, but a vast number of sub-contractors who have been ‘approved’ by their union partners. These contractors can tender knowing that non-union approved contractors cannot compete and everyone has the same labour practices. Productivity is thrown out the window; Australian commercial building costs are between 15 and 30 per cent higher than they otherwise would be.

The big and small NSW players in building can see the opinion polls and do not want their favourable arrangements with the unions to be destroyed. So in NSW, they have taken on the federal government. They plan to sign a uniform agreement that covers a large number of those in commercial building, which is in blatant breach of all the key government guidelines.

The unions have all their old powers over productivity, competition and site control, as well as getting 5 per cent pay rises. The pay rises are less important than the anti-productivity clauses in the proposed agreement. It is clearly aimed at retaining the cartel-style agreements that keep competitors out in exchange for union power. 

The required Commonwealth legislation has not passed parliament but is highly likely to do so. And even if it is not passed, there are regulations that can do most of the job if required. Big parts of the NSW commercial building industry have decided to take on an elected government to maintain their lifestyle. For a politician in either party, one thing is certain: in time you will lose an election. 

The polls say that for Abbott, an election loss will come in 2016, but it’s too far out to be certain. Theoretically, if they are to lose the next election, Coalition politicians need to be able to tell their grandchildren that they did something to benefit the nation while in office. Joe Hockey will say: “I started the process to try and make our spending match our income”; Andrew Robb has revamped Australian trade and investment agenda. Bruce Billson has started deregulation, but the rest of his agenda is still in the pipeline. 

Without in any way downgrading Messrs Hockey, Robb and Billson, the task of Employment Minister Eric Abetz in ending the cartel-style agreements is more important than their prominent tasks.

Messrs Hockey, Robb and Billson are wasting their time if, for example, Australia can’t erect new mineral projects because cartel agreements make it too costly. Sometimes you have to act for the nation and take on vested interests. Don’t blame the unions because, in this case, the villains are the employers and their bad managers.

It is nonsense to say builders are caught between a rock and a hard place. All they need is good managers. Go across to WA where builders have learned from their mistakes (How builders could tower over union power, May 26).

It is NSW building employers that have decided to take on Tony Abbott to retain their cartel-style agreements. But the political costs for Abbott are high. It means that initially, NSW will not get the infrastructure boost that was planned for the state because so many of the existing contractors will be on the sidelines and be forced into mass retrenchments because they are in breach of the Commonwealth guidelines.

The builders believe Abbott will cave, but I doubt it. It will take time but new operators will enter the lucrative NSW market as the bad builders are deservedly put out of business. The other states will not be as stupid and can use NSW money until new people enter the NSW market.

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