Australia: Building and Construction Industry (Improving Productivity) Bill 2013

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The Building and Construction Industry (Improving Productivity) Bill 2013 (the Bill) was introduced into Parliament on 14 November 2013.

The stated aim of the Bill is to substantially replicate the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act).

In light of recent press regarding alleged corruption and links between construction unions and organised crime and the royal commission into union activities, we thought it would be useful to set out the general intent of the Bill. This update also provide further detail regarding key requirements applicable to Commonwealth funded construction and infrastructure projects.

Background to the Bill

The BCII Act responded to the workplace relations recommendations of the Cole Royal Commission, which reported in 2003, and was aligned with the workplace relations regime under the Workplace Relations Act 1996 (Cth). Among other things, the BCII Act established the Australian Building and Construction Commission (ABCC) to regulate the building and construction industry.

Following the change of government in 2007 and the replacement of the Workplace Relations Act 1996 (Cth) with the Fair Work Act 2009 (Cth), the BCII Act was replaced with the Fair Work (Building Industry) Act 2012 (Cth) (FW(BI) Act). The FW(BI) Act replaced the ABCC with the Office of the Fair Work Building Inspectorate, removed certain of the regulator's powers and also removed the building industry specific laws which provided high penalties for breaches of industrial laws.

What the Bill does

The Bill:

  • replaces the Office of the Fair Work Building Inspectorate with the ABCC;
  • provides the ABCC with the powers that, according to the Explanatory Memorandum, 'proved strong and effective under the BCII Act'; and
  • includes building industry specific provisions relating to unlawful action and coercion and restores higher penalties for contraventions of those provisions (the maximum penalty amount for breach by corporations under the Bill is $170,000, compared with $51,000 under the Fair Work Act).

The introduction of the Bill is part of the Government's agenda to deal with what has been described as union militancy in the construction sector.

The Bill also deals with two key requirements, each of which applies to building work funded, whether directly or indirectly, by the Commonwealth or a Commonwealth authority, namely:

  • OHS Accreditation Scheme; and
  • Building Code 2013.

OHS Accreditation Scheme

The OHS Accreditation Scheme (Scheme) is established under the FW(BI) Act.

Apart from a change in terminology (from occupational health and safety to work health and safety) there are no material changes to the Scheme under the Bill. The transitional arrangements expressly preserve the Scheme.

Building Code 2013

Under the FW(BI) Act, the Minister may issue a code of practice that is to be complied with by persons in respect of building work. The Building Code 2013 (the Code) was issued in January 2013 and commenced on 1 February 2013.

The Minister's power to issue a code of practice under the Bill is largely unchanged. However, there is a new provision in the Bill which permits the ABCC to direct persons required to comply with the Code to provide information detailing the extent of compliance.

Unlike the Scheme, there is no express preservation of the Code under the transitional arrangements. This is consistent with the Government's previous statements that it intends to re-write the Code to align it with the equivalent codes issued by Victoria, Queensland and New South Wales.

In his Second Reading speech, Minister Pyne explained that a new statutory code is being developed that was intended to commence at the same time as the re-established ABCC on 1 January 2014. For the reasons set out below, that date has not been met.

Extended application of the Bill

The Bill also amends the definition of 'building work'. This is significant, as the Scheme and Code each apply to 'building work' as defined. Under the Bill 'building work' is amended to:

  • expressly include off-site prefabrication of made-to-order components which form part of any building structure or work. Under the FW(BI) Act, only on-site pre-fabrication is specified as an example of preparatory work; and
  • include the transport or supply of goods, to be used in building work, directly to building sites where that work is being or may be performed. The Explanatory Memorandum states that this is not intended to cover the manufacture of such goods.

These changes would significantly expand the application of the Code and, to a lesser extent, the Scheme. This is because while the Scheme applies to head contractors only, the Code applies to head contractors and all subcontractors at any point in the contracting chain. The rationale behind these changes, as explained in the Second Reading speech, is to ensure that large resource construction projects cannot be indirectly disrupted through co-ordinated 'go-slows' on the supply of materials.

Finally, the Bill provides that it applies to any resources platform and certain ships in Australia's exclusive economic zone or in waters above the continental shelf. This new provision aligns the application of the Bill with the Fair Work Act 2009 (Cth).

What to expect next

Labor and the Greens oppose the Bill and are expected to prevent the legislation from passing the Senate before the make-up of the Upper House changes on 1 July 2014. On this basis, none of the FW(BI) Act, the Code or the Scheme are expected to change before mid-2014.

To counteract this opposition, the Government is said to be considering the extent to which it can implement change without parliamentary approval. In late 2013, the Minister appointed Nigel Hadgkiss (formerly Deputy Commissioner of the ABCC) as Director of the Fair Work Building Inspectorate and the Hon. John Loyd (formerly Commissioner of the ABCC) as Chair of the Fair Work Building Inspectorate's Advisory Board.

Mr Hadgkiss has been reported as saying that he will go back to the future and take a hard line approach to the building industry. Building industry participants will no doubt be watching closely the approach taken by Mr Hadgkiss and the Fair Work Building Inspectorate, as it operates within the FW(BI) Act, at least for now.

We will continue to monitor developments relevant to the Bill and provide you with future updates.

Topics:  Australia, Construction Contracts

Published In: Construction Updates, Elections & Politics Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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