Fixing culture of the building industry as easy as ABCC

A respectful workplace culture is essential for the improved productivity needed for our long-term prosperity.

A collaborative and respectful workplace culture is an essential precondition for the improved innovation and productivity that is needed for our long-term prosperity as a nation.

That is why reinstating the Australian Building and Construction Commission is so important — it is the best option we have to drive the fundamental and systemic cultural reform of Australia’s vital building and construction industry. The building and construction industry is a key contributor to Australia’s economy, but it has been shown to be a sector with a culture defined by “systemic corruption and unlawful conduct, including corrupt payments, physical and verbal violence, threats, intimidation, abuse of right of entry permits, secondary boycotts, breaches of fiduciary duty”.

This conclusion of Justice Heydon’s recent royal commission is alarming, but it is not new. These cultural issues have existed for at least 40 years as illustrated by the three previous royal commissions that considered issues in the building and construction industry in 1982, 1992 and 2003.

It is worth noting that everyone in an enterprise — workers, managers and unions — have a responsibility to create a healthy and productive culture, and it only takes bad behaviour from one of these groups to drag enterprise culture down.

But what these inquires have also shown is that the victims of a toxic industry culture are surely the workers. And in the long run the consumer pays the price for poor culture because a vital industry is not as productive as it could be.

In the debate about the ABCC, consumers and workers are often forgotten so let’s consider the impact of the industry’s culture on these groups.

When businesses operate in a global market and their goods are traded internationally, they face competition from all parts of the world. This competitive pressure forces businesses to become more productive, and this ultimately leads to lower costs for consumers.

While parts of the business and construction industry compete in the global economy, significant components of the industry do not have to compete internationally.

This means the industry is not subject to international competitiveness pressures in the same way that other industries, such as mining, retail or agriculture, are. This means there is greater scope to pass higher costs on to end users. It also means the industry faces less incentive to change its culture and restrictive practices as a result.

A more productive industry would mean lower costs of construction, with flow-on benefits to user industries and ultimately lower prices for consumers. A less productive industry reduces industry competitiveness and imposes higher than necessary costs on consumers, and our economy more broadly.

While the lack of productivity may not affect a worker’s daily experience, the culture of the industry does.

The building and construction industry is the third-largest industry in the Australian labour market. In 2015, just over 1 million workers were employed in building and construction, behind 1.2 million workers in retail trade, and close to 1.5 million workers in healthcare and social assistance.

This is also an industry where training occurs through an apprenticeship model. That means it employs a significant number of young people, and their apprenticeship experience is often their first exposure to the world of work. In 2015 close to 20 per cent of young workers in full-time employment were in building and construction.

This means that more than 1 million Australian workers, and close to 20 per cent of first-time workers, turn up to work every day and potentially face a culture of physical and verbal violence, threats and intimidation.

That is simply unacceptable. In this country there should be no workplace, let alone an industry employing more than 1 million people, where workers are subjected to such an environment. And young people, the future of our country and some of our most vulnerable workers, should not begin their working lives learning this model of behaviour.

While workers and consumers are negatively impacted by the dysfunction of the building and construction industry, neither have the power to change the industry’s culture.

Unions and businesses have the capacity to achieve an improved culture across the industry but they need an incentive. The re-establishment of the ABCC is that incentive.

There are no doubt leaders in construction unions and businesses who want to change this culture, but they are facing generations of ingrained custom and practice that will take another generation of workers to undo. The ABCC can start this process now.

There is a suggestion that we need a national corruption body, rather than the ABCC. The problems of the building and construction industry are broader than corruption. They go to the heart of the day-to-day operations of the industry, and a national corruption body would not have the time to devote to the cultural change needed.

Additionally, if we were to weigh up the scope and powers of all the watchdogs across all governments such as the Crime Commission, the ACCC, ASIC, ICAC, and IBAC you would have to question if there is a gap that requires a national corruption body.

We know there is a gap in the building industry and the ABCC is needed to fill that gap now. Developing a national corruption body would take at least 12 months, and the industry cannot wait.

Some detractors may argue that the image I’ve painted of the industry is a far cry from their experience, and not a true reflection of the industry’s culture. But, the stories about the negative worker experiences are not anecdotes or urban myths.

What we have before us is the evidence and conclusion of four different royal commissions, and they cannot simply be dismissed. We have a problem industry, and a clear solution in the ABCC to begin to clean up the industry.

The ABCC is the impetus for cultural change, and it is the body that will support the industry in its much-needed transition. The ABCC is the key to improving the culture and productivity of the industry, and should be progressed immediately.

Jennifer Westacott is the chief executive of the Business Council of Australia.