Battle lines drawn for a construction cost war

The unprecedented ferocity of the union attack on Grocon epitomises why our construction and minerals sector has become uncompetitive, and politicians need to take a stand.

We have become uncompetitive in construction and operating mineral projects. Unless we face the truth it is going to get a lot worse because of dramatic developments now taking place in our capital cities.

This is the first of several comments I plan on why we have got into so much trouble and what needs to be done.

In our capital cities it is possible to reduce large project construction costs by 20 to 25 per cent. In other words we can build more hospitals, schools and roads etc. for the same amount of money. But to do that requires managers who manage projects and not unions.

In most mining companies the costs are often inflated by much larger amounts (Lightning risk to the Australian dollar, November 20), but the battle to reduce the costs must first be won in the capital cities.

And here the current battle ground leaves no prisoners. Currently in the front line is Grocon and a smaller builder from WA operating in Geelong.

In my life I have never seen a union attack on a company (Grocon) that is clearly designed to threaten the very survival of that company. Not only are anti-Grocon posters appearing alongside freeways, but now the union is attempting to starve the company’s projects of funds using the CBUS superannuation funds. Even in the depths of the Patrick dispute with the waterfront unions, the unions never threw the superannuation threat into the ring.

In Geelong when the small builder attempted to control his site, press reports say personal threats were made. We now have the situation in Australia where the building unions are as bad if not worse than the BLF (Builders Labourers Federation) in the 1980s. But at that time there emerged politicians of great calibre including Bob Hawke and Paul Keating in Canberra and Steve Crabb in Victoria. They worked together to destroy the BLF and lower our construction costs. We desperately need politicians of that calibre in both the state and federal spheres.

The Victorian Baillieu government has instituted measures to insist that managers (not unions) manage on Victorian Government construction sites and therefore allow them to reduce costs by 20 and 25 per cent. If Queensland and Western Australia adopted the Baillieu measures their costs would also fall by 20 and 25 per cent and this would at least make it possible to consider new mining investments in Australia.

But the building unions are determined to make an example of Grocon and the Victorian government so that nobody will follow them. But using superannuation in this way goes completely against the whole spirit of the superannuation movement.

Politicians, Australia needs your help. And we also need a union leader of the calibre of Bill Kelty who played a big role in reforming the process.

The battle to get more dollars for infrastructure and to restore mining competitiveness is not going to be easy to win. But it must be won (Obama spearheads an Asian coup, November 20).