Fact check: Did industrial disputes fall under the ABCC and rise after it was abolished?


April 18, 2016 10:26:43

The claim

Prime Minister Malcolm Turnbull has said he will call a double dissolution election if the Senate fails to pass the Government’s legislation to restore the Australian Building and Construction Commission (the ABCC).

Employment Minister Michaelia Cash told a media conference on April 7 that delays in construction increase costs.

“When you look at days lost due to industrial action, if you look at the construction sector compared to the all-industries average, prior to the ABCC being introduced by the former Howard government, it was five times the all-industries average,” she said.

“When the ABCC was introduced, it dropped to two times the all-industries average. As soon as the former Labor government abolished the ABCC and watered down the regulator… in terms of days lost it jumped back to four times the all-industries average.”

Did the rate of industrial disputes in construction compared with all industries halve when the ABCC was in force and then double when it was abolished? ABC Fact Check takes a look at the data.

The verdict

Senator Cash accurately quoted ABS data on industrial disputes, but there’s more to it.

Fact Check’s analysis of Australian Bureau of Statistics data shows that the average days lost to industrial disputes per 1,000 workers was five times higher in construction compared with all industries before the Howard government introduced the ABCC in 2005.

Disputes were twice as high in construction during the seven years it operated, and then four times higher in the years since.

However, all of the experts Fact Check spoke to said the factors influencing industrial action were complex and linking them to the ABCC was problematic.

This view is also reflected in two government-commissioned independent reports on the construction industry, which concluded that it was “reasonable” and “likely” to conclude that the ABCC might have reduced industrial dispute rates but rates were variable and one-off strikes and enterprise bargaining cycles could have explained the differences.

What is the ABCC?

The Coalition Government has introduced a bill to re-establish the ABCC and increase penalties to regulate the building industry, as promised before the 2013 election.

Established in October 2005, its principal role was to make sure building work was carried out “fairly, efficiently and productively” for the benefit of everyone in the building industry, and the wider economy.

The Building Industry Taskforce, an interim agency to investigate and police breaches of the law in the industry, operated from October 2002 to October 2005.

The legislation establishing the ABCC also broadened the range of unlawful industrial action and increased penalties in the industry.

Labor prime minister Julia Gillard replaced the ABCC with a new regulator, Fair Work Building and Construction (FWBC), in June 2012.

According to the Fair Work (Building Industry) Act 2012, FWBC’s role is to provide for “cooperative, productive and harmonious workplace relations in the building industry”.

The Act watered down the regulator’s powers, removing all building industry specific strike provisions, including the penalties.

Tracking industrial disputes

Industrial disputes are tracked by the Australian Bureau of Statistics if a work stoppage amounts to 10 or more working days lost.

Examples include 10 employees stopping work for a day, or 40 workers attending a two-hour stop work meeting.

The data includes a range of different stoppages, but not work-to-rules (inflexible working outside normal duties), go-slows or overtime bans.

The Productivity Commission, in a public infrastructure inquiry, noted that days lost per 1,000 workers was “the single most useful measure of industrial disharmony”.

Fact Check has used this measure to look at industrial dispute rates over time.

In her media conference, Senator Cash did not indicate a timeframe for her phrase “prior to the ABCC being introduced”.

Fact Check has taken the pre-ABCC period as the beginning of the Howard government in 1996 until the ABCC came into force.

ABS data on industrial dispute rates shows that during that period, the all-industries average number of days lost per 1,000 workers per quarter was 15.9 and the construction industry average was 88.3, five times higher, as stated by Senator Cash.

From the December quarter 2005, when the ABCC started, to the June quarter 2012, when it was abolished, the average number of days lost per 1,000 workers per quarter was 4.2 across all industries and 9.6 in the construction industry — a twofold difference.

The most recent available data for the period since the abolition of the ABCC, from September 2012 until December 2015, shows that the quarterly average was 2.9 in all industries and 12.8 in the construction industry, more than four times higher.

This is the data a spokesman for Senator Cash provided to Fact Check in support of her claim.

Did the ABCC reduce industrial disputes?

Senator Cash’s claims about the rate of industrial disputes in construction compared with all other industries before, during and after the ABCC was in operation is in agreement with ABS data.

She did not explicitly state in her claim that the ABCC reduced industrial disputes in construction but in several interviews she has referenced the lower industrial dispute rate during the ABCC’s tenure in calling for the regulator to be reintroduced.

However, government-commissioned independent reviews have noted the difficulties of making a link between the ABCC and industrial dispute rates.

Former Federal Court judge Murray Wilcox noted in his 2009 report to the Labor government, Transition to Fair Work Australia for the Building and Construction Industry, that the data available at the outset of his inquiry was “inconclusive” in supporting a link between “industry harmony” and the Building and Construction Industry Improvement Act (BCII) and the ABCC.

“Disappointingly” submissions during the inquiry did not include much hard evidence on the matter, he said.

He noted that the ABS data showed a significant reduction in time lost due to industrial action in recent years, which could have been affected by community-wide factors.

“I believe most of the improvement in days lost in the building and construction industry would have occurred anyway, even if the BCII Act had never been enacted,” he said, though he acknowledged the ABCC’s role in settling wildcat strikes that did not show up in ABS statistics.

The Productivity Commission noted that days lost to disputes per employee in construction has been consistently higher than other industries over nearly five decades.

“Looking over the past two decades, the share of days lost per 1,000 employees was relatively lower during the period of the operation of the ABCC, although outcomes were highly variable,” it said.

To assess whether there was a causal link between the ABCC and the lower industrial disputes recorded during its operation, Fact Check has explored some of the complexities beyond the ABS industrial dispute data.

“Legitimate” industrial disputes

Not all strike action is illegal and one of the ABCC’s roles was to police “unlawful” industrial action in the building industry.

The concept of legitimate or lawful strikes, termed “protected” industrial action, was first introduced into Australian law by the Keating Labor government in 1993.

It allowed employees to go on strike or implement a work ban during the protected bargaining period when they were negotiating a collective workplace agreement with their employer.

Employees taking this type of industrial action were protected from legal action and would not be in breach of their contracts.

The Howard government’s 1996 workplace relations legislation narrowed the definition of protected action and made it harder to access, which was further restricted by the Work Choices Act in 2005 and then again when the ABCC was introduced.

ABS data shows how many disputes were enterprise-bargaining related and therefore “protected”, but does not break it down by industry so it is not possible to look at how many of days lost to industrial disputes in construction industry was related to “protected” enterprise bargaining strikes.

The ABCC had no power over protected strikes and not being able to separate the two types of strikes complicates the task of determining the actual effect of the ABCC on industrial action.

All of the experts Fact Check spoke to said that the timing of enterprise bargaining agreements could have influenced the changes in days lost due to industrial disputes, as did the Productivity Commission.

Phillip Toner, a senior research fellow in the department of political economy at the University of Sydney, told Fact Check industrial dispute rates were “incredibly volatile” and “almost invariably” related to enterprise bargaining cycles.

Mark Bray, professor of employment studies at the University of Newcastle’s business school told Fact Check the number of industrial disputes rose in 2012 across the economy as a whole because three year agreements made when the Fair Work Act was introduced on July 1, 2009 were due to expire, which is evident in Department of Employment data on enterprise agreements lodged in each quarter.

But without data on when enterprise agreements expired, it is therefore difficult to conclude whether industrial dispute rates during the ABCC’s operation were due to the regulator itself, or the timing of enterprise agreement expiry dates.

Variability in industrial dispute rates

While the Productivity Commission noted that the share of days lost per 1,000 employees was “relatively lower” during the time the ABCC operated, “days lost per employee rose steeply after the end of 2008, despite the existence of the ABCC, raising questions about the extent to which it had produced enduring changes in workplace cultures”.

David Peetz, professor of employment relations at Griffith University told Fact Check that the huge variation in quarter to quarter dispute numbers needed to be considered in assessing Senator Cash’s claim.

“The question has to be asked, are the changes in dispute levels between periods with different policy and legal regimens in place statistically significant, or could they have occurred by chance?” he said.

Trends in industrial disputes

  • The ABS data was fitted by Associate Professor Olivier to a time series interrupted by the ABCC.
  • In this model, different levels or slopes indicate an effect of the ABCC
  • A logarithmic scale was used to smooth out the spikes in industrial disputes and find the trend
  • There was an 84 per cent drop in the industrial dispute rate in construction when ABCC introduced, as well as sharp drop across all industries
  • But construction rate trends could be impacting on all industry rate trends

Fact Check asked Jake Olivier, an Associate Professor at the University of NSW School of Mathematics and Statistics, to analyse the variability in industrial dispute rates over time.

“The rate of working days lost per 1,000 employees is highly variable among construction workers. This is not quite as evident across all industries,” he said.

The modelling shows that the industrial dispute rate across all industries was declining steadily before the ABCC was introduced in late 2005, but was relatively flat in the construction industry.

Associate Professor Olivier said there was a slight increasing trend of 0.7 per cent per quarter in construction after the ABCC started operating and a steady increase of 2.6 per cent per quarter across all industries.

“There is no significant shift in the rate of disputes in construction following the dissolution of the ABCC, although there is a decreasing trend of 2.6 per cent per quarter,” Professor Olivier said.

“This could be interpreted as though the dissolution of the ABCC was actually beneficial, however this decreasing trend was much greater across all industries.”

All industries rates declined by 7.6 per cent per quarter after the ABCC was abolished.

“Taking these combined results into account, it appears there are fewer working days lost per 1,000 employees in construction; however, this decline has not kept up with all industries average following the dissolution of the ABCC,” he said.


Number of days lost to industrial disputes per 1,000 workers (trend)

Navigate left and right to explore the data for construction and all industries.
Source: Jake Olivier
Navigate left and right to explore the data for construction and all industries.
Source: Jake Olivier

Strikes and economic conditions

Professor Bray told Fact Check that Associate Professor Olivier’s analysis of ABS data did not suggest there was a big increase in disputation in construction after the abolition of the ABCC.

“It corresponds with a decline in union membership across the board,” he said.

“Trends in industrial disputes are complicated and caused by many things. You can’t argue that it was changes in the law that led to that decline after 2012.”

Phil Lewis, director for the centre for labour market research at the University of Canberra, agreed with Professor Bray that the decline in industrial disputes from mid-2012 corresponded with declining union membership.

“The other thing is that the economy has been performing generally poorly,” he said.

He said the stimulus package after the global financial crisis of 2008 would have stimulated building activity but wage growth had slowed by 2012.

“If you’ve got wage moderation, you don’t expect the industrial disputes because (the unions) are not going to go for higher wages,” he said.

One-off disputes

Professor Bray told Fact Check that two spikes in industrial dispute rates, one in the June quarter of 2011 a year before the ABCC was abolished, and one in the September quarter of 2012 just after it was abolished, probably corresponded to two very serious disputes.

The ABS collects data on the number of disputes per quarter but does not break them down by industry, so it is not possible to see whether the spikes in days lost in construction were a result of multiple strikes or large one-off disputes.

Industrial disputes are quite a legitimate union activity … The point of the ABCC was to investigate and to try and prevent unlawful activity, which is a different thing altogether.

Professor Phil Lewis

The spike in the June quarter of 2011 coincided with an unlawful strike on Queensland building sites, and also a strike involving 1500 workers at Victoria’s desalination plant.

The spike in the September quarter of 2012, just after the ABCC was abolished, coincided with linked strike action on building sites in the Northern Territory, Queensland and Adelaide, and also a strike at the Myer Emporium site in Melbourne, for which the CFMEU was later fined millions of dollars.

However, these strikes all related to unprotected industrial action and it is not possible to rule out that the spikes in these quarters resulted from other large “protected” strikes and were therefore unrelated to the ABCC.

Link between the ABCC and industrial disputes?

The Productivity Commission said the ABCC created a disincentive for unprotected industrial action, the single most common source of the penalties it imposed.

“Accordingly, a direct connection of lower industrial disputes to the operations of the ABCC appears highly plausible,” it said.

However, it also said: “On the other hand, the outcomes associated with the Building Industry Taskforce, often regarded as the start of a tougher industrial relations regimen, were comparatively poor. This may have reflected a lag between greater enforcement and behavioural change, and the use of industrial action to secure agreements prior to the introduction of WorkChoices.”

The Productivity Commission concluded that “on balance it is likely that the ABCC reduced industrial disputes” and that while still low, days lost to disputes nearly doubled after the establishment of Fair Work Building and Construction but that one-off events could have contributed to this.

Similarly, Mr Wilcox concluded that the modest improvement building industry labour productivity during the ABCC years was partly due to improved on-site industrial relations.

“And it is reasonable to attribute part of this improvement to the existence of the ABCC, and its promptness and skill in resolving on-site problems,” he wrote.

Professor Lewis said the implication that the ABCC was supposed to stop industrial disputes was open to question.

“Industrial disputes are quite a legitimate union activity,” he said. “The point of the ABCC was to investigate and to try and prevent unlawful activity, which is a different thing altogether.”

He said it was difficult to draw any definitive link between the ABCC and industrial activity from the available data.








First posted

April 15, 2016 06:42:45

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