Federal election 2016: Lend Lease calls for IR reforms

Global developer and infrastructure giant Lend Lease has called for urgent industrial relations reform before the federal election.

Global developer and infrastructure giant Lend Lease has called for urgent industrial relations reform before the federal election, after it defied the construction union’s stranglehold in Victoria, which is threatening to drive up wage costs on taxpayer-funded projects.

Lend Lease is among the top-tier contractors, developers and major builders that have historically struck pattern agreements with the Construction Forestry Mining and Energy Union.

Lend Lease said yesterday it had decided not to sign up to the CFMEU’s enterprise bargaining agreement in Victoria, which will increase wages by 15 per cent over three years, stressing that the company bore “the industrial relations risk”. The company, which is leading the $1.6 billion Victorian Sky Rail project, said construction firms had been forced into union-­compliant agreements, or suffer the consequences.

“The current industrial relations landscape is very challenging given we are heading into an election and a more stable industrial relations environment would be welcome,” said a spokeswoman for the company.

“Lend Lease is required to work within a framework and at times that can be challenging. We bear the cost of industrial relations risk on projects and as a listed entity we negotiate for the best outcome for our securityholders.”

Business leaders have conceded top construction firms are striking deals with the militant construction union that are driving up wages and blowing out the costs on taxpayer-funded projects.

However, companies said they had “no choice” in the face of union lawlessness on building sites and commercial pressures to finish jobs on time and under budget.

The peak industry lobby said yesterday pattern workplace deals, where one employer signs an enterprise agreement with a union that covers an entire industry, should be outlawed, despite the nation’s biggest builders signing off on the lucrative agreements. AI Group chief executive Innes Willox said the agreements had “a major, negative impact on productivity, flexibility and competitiveness”.

“These agreements typically contain a raft of excessively costly, inflexible and unproductive provisions,” Mr Willox said.

A log of claims served by the CFMEU on South Australian builders demanded 6 per cent annual pay rises. Agreements also include Easter and Christmas holiday leave beyond the national standard and add $800 million to the cost of projects, according to figures released last week by Deloitte Access Economics.

Brookfield Multiplex, Cimic and Mirvac declined to comment on whether they were complicit in blowing out the cost of roads, shopping centres, hospitals and schools,

Business figures said yesterday construction firms were strongarmed into the deals.

Former Business Council of Australia president Tony Shepherd said firms were “not jumping into it and doing it voluntarily, they’ve got one arm very clearly behind their back”.

The Federal Court yesterday fined the CFMEU and six officials in WA $21,225 for illegally blockading the $80m Perth Airport ­arrivals expansion project in 2013.