Employers in the construction industry have always heavied each other through price-fixing and collusive tendering, as Adam Smith said they must.

Contractors who offered to settle industrial disputes in defiance of the Employers’ federation had their supplies cut off.

The pressure to toe the line extends beyond the building sector itself. In May, 1971, the NSW unions struck for improved accident pay. An insurance firm withdrew its offer of coverage under advice from its industry peak body.

The history of the building industry is peppered with inquiries into price-fixing by suppliers. Labor governments set up state brickworks to break the price cartel. Brisbane’s Archibishop Duhig attacked the brick-makers in 1931 for driving up the costs of his churches.

The Inter-State Commission found in 1919 that, although there was “no formal agreement between the cement manufacturers, but there is an understanding between the principal manufacturers and they fix prices”.

In 1968, the three majors in ready-mix concrete launched a price-cutting war to force small competitors to sell out. At the time, Consolidated Quarries had 30% of the Victorian Market. Its directors alleged:

The interstate companies are now implementing a price war and quoting predatory cuts at prices below cost of production. Current cartel price for 3000 psi strength was $15.80 but they offered it at $12-13 to win customers and bankrupt competitors.

The big three then dropped their price $9 a cubic yard. Consolidated fell to Pioneer.

Collusive tendering is the other strong arm of employers belting up on their own kind. The 1990 NSW royal commission into the building industry came off the rails into a bog of bid-rigging around the Master Builders’ Association.

The federal Coalition learnt from that debacle when it wrote the terms of reference for the Cole Royal Commission. Hence, Commissioner Cole did not follow up the convictions of ready-mix concrete companies for price-fixing throughout the early 1990s.

Current head of the Competition Commission, Graeme Samuel, describes such activities as “a silent extortion that in many instances do far more damage than many of worst consumer scams. They steal billions of dollars both here and abroad from business, taxpayers and ultimately from you and me as consumers”.

So, there is plenty of work for the construction ‘Stasi’. They might start by seizing the “commercial-in-confidence” files of the law firms advising the Coalition on matters relating to the Property Council and the Master Builders. Armed with that information, the ‘Stasi’ could turn their powers of interrogation against the officers of these organisations to confirm how history is repeating itself.

Who should be hand-picked to head a royal commission aimed at the intimidation of employers by employers? Justice Jim Staples remains fighting fit.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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