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'Sham' contracting rife: commission

BUILDING industry employers and contractors face renewed legal scrutiny after the industry watchdog said it would crack down on the proliferation of employment disguised as contracting.

BUILDING industry employers and contractors face renewed legal scrutiny after the industry watchdog said it would crack down on the proliferation of employment disguised as contracting.

After a year-long inquiry the Australian Building and Construction Commission said it would use compliance notices and enforceable undertakings against the practice of "sham" contracting. Failure to comply could result in civil action and fines. Sham contracting is when the relationship between an employer and worker is misrepresented as one where the employee is providing a contract for services. Employers can use it to avoid the payment of superannuation or leave.

Commissioner Leigh Johns said the commission would work closely with other parts of government, such as the Tax Office, the Australian Securities and Investments Commission and the Department of Immigration, to crack down on the practice. It would put out a tender for further research into the extent of the problem and there would also be an education campaign, he said.

Mr Johns said he hoped unions would join the process after they boycotted the inquiry. The Construction, Forestry, Mining and Energy Union's Dave Noonan said in response: "I'd rather boil my head."

Mr Noonan said the report was a "fiasco" and a "sham, sham contracting report". "They think they need to do more study, they've had 12 months to do that. Blind Freddie knows the extent of the problem but apparently the ABCC don't."

Research this year by the union found sham contracting was rife, with up to 168,000 people employed in that way. Mr Johns said the union's data was questionable.

About a third of the 1 million people who work in construction are contractors and Mr Johns said he was surprised at the lack of hard data on how widespread sham contracting was. He said the inquiry found it was driven by employers, but also by some more skilled employees.

It comes as opposition workplace relations spokesman Eric Abetz said in a speech that the Coalition, if elected, would revive the soon to be abolished ABCC. On the issue of workplace productivity, Senator Abetz said the Fair Work laws had been a "spectacular failure".

Labour productivity growth has been poor under the Fair Work laws continuing a trend that started in the final years of the Howard government although there is debate over how much of a role workplace laws have played in this.

Senator Abetz said Labor's individual flexibility agreements were not working. He was also critical of union claims for job security at companies such as Qantas. Despite the wide-ranging critique, the Coalition, which did not release a policy for the 2010 federal election, is yet to outline what it would do. Senator Abetz said it would "find practical solutions" for "practical problems".


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