Public Hearing, Senate Select Committee on the Cost of Living

Event: Public Hearing, Senate Select Committee on the Cost of Living

Date: 16 August 2024, 11:00am AEST
Speaker: Shaun Schmitke, Deputy CEO and National Director IR, Contracts, Safety, Master Builders Australia

Topics: CFMEU, building and construction industry

Thank you, Senator.

As always, Master Builders Australia is grateful for the opportunity to appear today and assist the committee with its inquiry.

The committee is aware that we have previously filed submissions at an earlier stage in this inquiry.

And like the HIA we’ve been invited to provide particular information with respect to the impact of the activities of the CFMEU on the cost of construction.

It is to that topic that I seek to direct my comments today, particularly in relation to my background in industrial relations.

Now, I wish to record my apologies at the outset for not filing a written submission which I had intended to do before appearing today.

The reason for that is that I have been overtaken by events dominating the debate in the Senate.

Obviously, that’s a very important issue for our industry and our members, but I will provide a written submission as soon as I can.

I thought the best way I could assist the inquiring today and assist the committee is to just talk through three or four key points that I’d like to make.

I’m happy to expand on them and provide further detail in our written submission.

The first point I would make is that there is no doubt in Master Builders’ mind that the CFMEU and its activities have driven up the cost of construction.

The circumstances under which this occurs are wide and varied, but effectively, we would say it’s about the CFMEU misusing and exploiting their rights as a union to force builders to sign pattern agreements.

Those pattern agreements contain a range of provisions which are designed to allow the CFMEU to wield control or influence over the sector, funnel money back to the CFMEU through various means, or create other restrictive practices which have no place in a modern industry like construction.

I would be happy to provide the committee with some examples, real life examples of particular clauses in those pattern agreements which are live right now, that builders are being faced with at the moment and pressured to sign, and obviously I would also like to take you through the practical effects of those clauses and what it means for the cost of construction.

Second key area I’d like to touch upon would really be to note that not only are the costs arising from this borne by the taxpayer, governments, the community, the clients, et cetera, but they have ripple effects throughout the rest of the industry, and in fact the broader economy, all of which we would say add pressure to the cost of living.

And again, I’d be happy to take you through the wide range of ways in which these ripple effects manifest.

The third key point I’d like to make today is that my evidence will probably come as no surprise to you in terms of the impact of the CFMEU in the building and construction industry because their conduct and that union has been the subject of much earlier inquiry and reporting.

We’ve had dozens of government reports, specific reviews and inquiries.

We’ve got hundreds of federal court judgements, and we’ve had four separate Royal Commissions of inquiry.

We’ve had the Whittaker Royal Commission in 1982, the Gyles Royal Commission in 1993, the Cole Royal Commission in 2003, Heydon Royal Commission in 2015.

The combined total length of those reports from those royal commissions is 11,566 pages long, which is almost roughly exactly 10 times longer than Tolstoy’s War and Peace.

Now I’m going to save you the trouble of reading those Royal Commission reports, although I do commend them to you, but I would be happy to expand upon their common findings.

Key of which is that in the building and construction industry there is a long standing, ingrained poor culture, underpinned by widespread disregard for the law.

I’d be keen to unpack what drives that culture, what it means and how that culture allows corruption and criminality to flourish.

And that brings me to the fourth area, which obviously will touch upon the government’s moves, recent moves to clean up the CFMEU and weed out criminal and corrupt behaviour from our industry.

The committee will know that Master Builders Australia strongly supports the moves of the government in this regard.

We have been calling and doing our best to ensure that the Bill before the Senate at the moment regarding the administration of the CFMEU can pass and past swiftly.

There is absolutely no doubt that our industry is under pressure and that pressure is growing, and that Bill needs to be passed.

Unlike previous attempts where governments have made change in this area, had royal commissions, the union tends to perhaps reduce its activities.

But I can tell you in this situation they’re not. They are becoming worse and it’s worsening by the day. The pressure continues.

They are not backing off and the longer that the Bill is delayed, the greater the concern amongst industry participants and the bigger the pressure that is mounting.

So, we obviously want that Bill passed, but I would also say this. The passage of that Bill and the placing of the CFMEU into administration is not the be all and end all to fix the problems that exist in the building and construction industry.

In fact, yes, it’s a strong first step, but it is a first step.

There’s two other important steps that need to occur in order to drive genuine, meaningful, lasting, tangible change in the building construction industry.

The first would be to make sure that businesses who put their hand up and cooperate with regulators over the coming period can do so in a way where they’re going to be free from repercussions and reprisals, which we know will happen if they’re not protected.

But the second area is that the government needs to consider, and both parties need to consider a range of changes to the law which are industry specific, that target all of the causes and drivers that give rise to the culture in our industry.

Because it’s that culture which allows the corruption and criminality to flourish, and unless you tackle them, the criminality and the corruption will always exist.

We know this and I can say with 100 per cent confidence that unless these measures are taken, then the current process and the current Bill before the Senate will make absolutely no difference in the long term.

And I say that because of history.

We’ve had four previous Royal Commissions, various measures implemented to fix this issue, and they haven’t worked.

And in fact, it’s resulted in the problems reoccurring and getting worse.

This is a unique opportunity where we can actually put in place some decent, lasting, tangible law reform that will deliver positive cultural change to our industry and effectively solve the problems that we all know exist in the building and construction industry and have existed for decades.

This is a great opportunity.

Now, in doing that, I would indicate that Master Builders have thought long and hard about what that law reform looks like.

So, I’d be happy to table with the committee today a response and options for the Government to consider and the Opposition.

And in fact, by submitting this document, I would encourage the Committee to give consideration to recommending that the measures outlined in the document be pursued by Government and adopted by the Parliament as a high priority.

And the reason we say that is that if you make lasting cultural change in our industry, it is a big industry, it is a very big industry. 1.3 million people directly employed. 440,000 business entities in building and construction, 98 per cent of those are SME’s.

In fact, we have more small businesses in the building construction industry than any other sector of the Australian economy, where nine per cent employment, over 10 per cent of GDP, we do work to the value of in excess of $260 billion each year. So, it’s a significant sector.

Small changes result in big differences and a positive cultural change in our industry will deliver not only for our industry and our members, but also for the broader community and the greater Australian economy.

The other thing I want to say is this, Master Builders Australia is the oldest industry association in Australian history. We were the very first union of employers to be registered under industrial laws back in, I think 1848 in New South Wales as a registered organisation. Our NSW office has a certificate number one, as a registered organisation.

I say that because it demonstrates that we understand and appreciate industrial relations laws.

We understand and appreciate the importance in the economy that they play.

And we understand and appreciate that unions also play an important role in that system.

Master Builders is not against the unions in any way, shape or form.

What we want in the building and construction industry are good unions that are responsible, that look after the interests of their members and act like 99.9 per cent of all other unions act like where they can achieve outcomes for their members in a way which complies with workplace laws.

That is all we’re seeking, and in fact, I’m aware if I’m to look at Senator Grogan and Sterle, I have worked with your unions in the past.

I think it was the Misso’s back in the day and certainly with the Transport Workers Union in New South Wales. They are good and decent unions.

The people there aren’t out breaking the law. You can do deals with them. You can come to understandings. They’re sensible. They understand how the law works.

The CFMEU is completely different, completely different.

We do not want a union like that in our sector, but we do want good responsible unions in the sector. Thank you.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au