Restoring the ABCC a poor foundation for Malcolm Turnbull to build an election on

The Prime Minister uses discredited analysis to exaggerate reasons to reinstate the Australian Building and Construction Commission.

Of all the unlikely reasons to call an election. Industrial relations has never been anything like the most important issue facing Australia in Malcolm Turnbull's mind. Most of his speeches, including his first in Parliament, barely mentioned it.

Instead that speech talked about the green hills and golden beaches of his Sydney electorate, "strung like jewels between the harbour and the sea". It talked about the republic, how Australia's head of state should be one of us. It talked about climate change and the need to better manage water, it talked about the importance of marriage, families and having children.

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And it talked about the importance of boosting productivity. But it said nothing about unions or workplace relations, except perhaps this: a reference to Turnbull's first job, loading bananas in the Sydney markets.

He told me about it a few years later: "I think I had been sacked or I was having some problems with my employer so I went down to the Trades Hall to ask for help. [Labour council secretary] Barry Unsworth listened with a modest amount of interest and said, you should see another Trades Hall official, Bob Carr."

Andrew Liveris's Easter dinner host: Prime Minister Malcolm Turnbull.
Andrew Liveris's Easter dinner host: Prime Minister Malcolm Turnbull. Photo: Andrew Meares

"Bob didn't seem particularly interested in my employment issues in the market, but then uttered the line I've never forgotten, which was: 'Do you know, I've just read a fascinating book on the politics of Eastern Europe, would you like to borrow it?'"

Carr went on to become foreign minister, Turnbull prime minister. Neither spent much of their careers complaining about unions. Until now.


"Unlawful conduct on building sites around Australia is holding back our economy," Turnbull told Monday's press conference. The extra costs were "a serious handbrake on economic growth".

What changed? Labor abolished a Howard-era "cop on the beat" named the Australian Building and Construction Commission (ABCC) and replaced it with a cop called the Fair Work Building and Construction (FWBC). Whereas the ABCC could compel witnesses to appear and answer questions (contrary to common law principles in the view of the Law Council) after a three-year transition period the FWBC could not. Whereas the ABCC could reopen disputes after they had been settled, the FWBC could not.

These modest changes, along with changes to penalties and the right of union officials to enter workplaces, amounted to something of a silver bullet, in the view of the Prime Minister. "When the Australian Building and Construction Commission was in force, productivity in the sector grew by 20 per cent," he said on Monday. "Since it was abolished, productivity has flatlined."

It's an extraordinary statistic. Rarely does anything have such a clear-cut effect. Turnbull gave a hint as to where it came from when he told  the ABC's 7.30 that there was "plenty of work been done on this by Independent Economics that shows there was an increase in productivity following the introduction of the ABCC".

Independent Economics, formerly known as Econtech, did the work for the ABCC itself. After academics from Griffith University uncovered errors in the analysis, the ABCC removed it from its website. Then the Master Builders Association commissioned Independent Economics to update it. The Productivity Commission examined the findings in 2014 and disassociated itself from them in unusually strong terms.

"When scrutinised meticulously, the quantitative results provided by Independent Economics or others do not provide credible evidence that the Building Industry Taskforce – Australian Building and Construction Commission regime created a resurgence in aggregate construction productivity or that the removal of the ABCC has had material aggregate effects," the Productivity Commission said. "Indeed, the available data suggests that the regime did not have a large aggregate impact."

The absence of a big effect was "neither surprising nor inimical to the need for further reform". It thought productivity in some parts of the industry probably had improved during the ABCC era, and it recommended boosting penalties and adequately resourcing the body that replaced it. But it stopped short of recommending the re-establishment of an organisation with the power to compel witnesses to answer questions. It's a power denied to courts and denied to the Australian Security Intelligence Organisation.

Turnbull's office says his claim about a 20 per cent jump in productivity came from the Australian Bureau of Statistics. It's there all right, if you use 2012-13 as the end date for the ABCC even though it finished at the end of 2011-12. But over the same period productivity in the entire market sector jumped 14 per cent. Something other than the ABCC was at play. In the post-ABCC era productivity in the construction sector climbed 3 per cent. Productivity in the entire market sector climbed 7 per cent.

Industrial disputes are indeed high in construction. In the 14 quarters since the ABCC they've totalled 180 working days lost per 1000 workers. But in the previous 14 quarters during the ABCC era, they totalled 164 working days lost.

This week's Essential Poll finds more Australians support reinstating ABCC than oppose it, even among Labor and Greens voters. Civil liberties aside, the ABCC ought not to be particularly controversial, certainly not enough to build an election around.

Peter Martin is economics editor of The Age.

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