The domino effect that will crush the building cartels

After years of disgraceful cartel-style agreements between Australia's major builders and unions, suddenly there has been a dramatic breakthrough that could change everything.

The disgraceful cartel-style agreements between big builders, building union approved sub-contractors and the building unions that have forced Australians to pay between 15 and 30 per cent more than we should for our hospitals, roads schools as well as apartments and office blocks are breaking down.

It’s long overdue. As revealed exclusively in Business Spectator and The Australian, Lend Lease and its sub-contractors have decided to abandon their old practices and obey the federal and state governments’ required code, which ends the cartel-style agreements on Lend Lease sites. (Lend Lease's about-turn leaves the unions seething, July 3.)

That revelation has had a domino effect. In a dramatic breakthrough, Brookfield Multipex has informed Business Spectator that "Brookfield Multiplex and any subcontractors working for Brookfield Multiplex will be required to comply with federal code and states codes as applicable."

"In essence, our position is no different to that of Lend Lease," Multiplex announced.

I immediately phoned Australia’s largest builder Leighton and told them of the Multiplex announcement. A Leighton spokesperson replied via email late yesterday:

"Thanks for your call this morning and for giving us the opportunity to comment.

 "However, we don’t have anything to add at this time. I will certainly let you know if that changes."

The simple truth is that the present state rules in Victoria, NSW and Queensland will ban Leighton from successfully tendering for government work in those states and if the Commonwealth code passes the Senate, Leighton and their sub-contractors will be excluded from all future government work unless they change the way they operate. The Spanish who now control Leighton have not yet woken up that the game has changed.

I have been writing about the cartel-style agreements for some years. Very few industry people supported me. But yesterday before the building union royal commission, Boral chief executive Mike Kane explained in the clearest possible language that there was a cartel operating between the builders, their subcontractors and the unions to prevent Boral getting work because Boral supplied non-cartel member Grocon.

And remember Grocon was not an industrial dispute because no Grocon employees were involved and they publicly opposed the protests. Grocon’s sin was not joining the cartel. Some big builders almost certainly funded the 1,000 person blockade on Grocon’s Myer site attack by paying their employees to stop a non-cartel rival operating.

Thanks to Boral’s chief executive Mike Kane we now know those cartel companies were involved and, not satisfied with funding the blockade to force Grocon to join the cartel, then refused to use Boral concrete. Their 'excuse' was that the unions demanded they did this.

What an awful indictment this scandalous situation is for the chairman of the Australian Competition and Consumer Commission, Rod Sims. He should be hauled before the royal commission and asked why he turned a blind eye to the building industry cartels and how they inflate costs.

And to underline the failure of Sims and his people, when Kane had finished his evidence John Lloyd, chairman of the Fair Work Building Industry Inspectorate advisory board, emailed me:

"Your article today on the Boral secondary boycott and its implications was spot on.

"The ACCC's reluctance to enforce the secondary boycott provisions means they are ineffectual in combating the rogue tactics of the CFMEU. Such action by the CFMEU in Victoria is regular and flagrant.

I made a submission to the Harper Competition Policy Review calling for the ABCC to be given the power to enforce the secondary boycott provisions.

“Your article was timely because Boral's Mike Kane gave brilliant and compelling evidence to the royal commission this morning.

"What is needed now is for the Senate to pass the ABCC legislation, the legislation to give the ABCC the secondary boycott role and other contractors and clients of the industry to show the same backbone as Boral and Grocon."

The good news is that I believe we are at last changing, but I fear that because for such a long time the only people who could be sub-contractors to builders were those who paid homage to the unions, a huge number of good people have left the industry.

Many of the managers of the big builders are chosen because simply they can work with the unions. These managers will have to be retrained or replaced. It will all take time but I know reputable people are planning to enter the industry to replace the rogue sub contractors who were chosen by the unions.