Insights / December 22nd, 2016

Return of the Australian Building and Construction Commission

On 30 November 2016, the Building and Construction Industry (Improving Productivity) Bill passed the Senate. As a result, the Office of the Fair Work Building Industry Inspectorate (known as Fair Work Building and Construction) ceased on 1 December 2016 and will now become the ABCC.

The Bill aims to provide a stronger foundation to enforce laws prohibiting coercion and unlawful industrial action in the building and construction industry.

The ABCC first came into being in 2005 under the Building and Construction Industry Improvement Act 2005 (BCII Act). While in existence, productivity and performance of the building and construction sector improved.

The ABCC was later abolished in 2012 when the BCII Act was replaced by the Fair Work (Building Industry) Act 2012 and the Commission was replaced by the Office of the Fair Work Building Industry Inspectorate.

It has been claimed that the abolition of the ABCC led to an increase in lawless and violent behaviours, a disregard for the rule of law and a significant decline in productivity and performance. These claims led to the introduction of the new Bill.

The key aspects of the Bill are:

  • The ABCC’s power to conduct compulsory witness examinations and undertake investigations and other enforcement action having regard to industry conditions for each category of building industry participant;

  • The establishment of a working group to look into Security of Payment for contractors;

  • An expanded definition of ‘building work’ which covers transportation and the supply of goods to building sites and offshore resources platforms;

  • Increases to penalties for unlawful industrial actions by individuals and corporate entities, including unions;

  • The creation of a prohibition on unlawful industrial action, including picketing;

  • An expansion of the existing offence of coercion;

  • Greater powers for the Courts to order injunctions to stop unlawful action, including picketing; and

  • The creation of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (“Building Code”), which will apply to all enterprise agreements past 29 November 2018.

The Building Code will commence when the Bill becomes an Act and will apply to business arrangements with contractors and subcontractors, and grant the Commonwealth greater control over industrial practices for companies tendering for Federally-funded projects.

For Government projects over $4,000,000 from March 2017 changes to procurement rules will require businesses to identify:

  • Locally produced material content for the project;

  • The contribution to local employment;

  • The whole-of-life cost of the project;

  • That materials will comply with Australian product standards; and

  • How the company is growing local skills.

It will be important to become familiar with the Building Code and to take the time to review contractual arrangements with contractors and subcontractors to ensure that your agreements comply with the Code. You will also need to review of your tendering and procurement models to ensure that they meet the new requirements for Government-funded projects over $4,000,000.

If you would like any advice in relation to your obligations, please contact one of our team.