The federal government has made clear it plans to establish a specialist building and construction industry division of Fair Work Australia, to take the place of the Australian Building and Construction Commission.

But it still faces a major dilemma in how to actually go about it.

FWA is the new body created by the Rudd government to replace the Australian Industrial Relations Commission and several other agencies under a “one stop shop”.

The ABCC was responsible for enforcing compliance with the previous government’s industrial relations laws in the building and construction industry. Retaining it until early 2010, then absorbing it into FWA, was part of Kevin Rudd and Julia Gillard’s platform for the last election.

Their problem is a major clash of cultures between FWA and the ABCC.

FWA is intended to be an impartial body with bipartisan appointments. According to the Act, it must “exercise its powers in a manner that is fair and just” and that “promotes harmonious and cooperative workplace relations”. In this way it inherits the bipartisan and balanced culture of the Industrial Relations Commission.

The culture of the ABCC is not and has never been impartial. It has concerned itself almost exclusively with transgressions by unions, or by employers who have facilitated or acquiesced to transgressions by unions.

Yet once a specialist division is established within FWA, it must take on an impartial, non-partisan role that promotes harmonious and cooperative relations. It is difficult to see how this can be achieved if that part of FWA is actively punishing employers who engage in harmonious and cooperative relations with unions.

This is important for productivity in the industry. With the ABCC’s confrontational approach, the productivity performance of the construction industry over the past three years has been middling at best. The key source the ABCC relied on for its well publicised claims of large productivity gains — a 2007 report it paid a consultancy firm to prepare — was found to be “deeply flawed” by Justice Murray Wilcox, who said it should be ‘totally disregarded’. Sustained improvements to productivity in the industry need more cooperative relations than the ABCC presently delivers.

Likewise, if FWA is to attract and retain high quality personnel, including to the building industry division, it will need to be seen as impartial and non-partisan.

If officers of the ABCC were to be transferred holus bolus to the ABCC, they would bring with them a culture of partisanship unless major changes take place. This is a potentially critical problem for the effective functioning and credibility of FWA if it is not resolved in the planning stage.

FWA could not retain the confidence of the parties and survive as an impartial, bipartisan institution if it contains within it a partisan division whose actions and culture are antagonistic to those of the rest of FWA.

So, what can Julia Gillard do to resolve this conflict of cultures – to ensure that the building division internalises the impartial culture that FWA must have?

For a start, it must be made clear that the building industry division will use its powers equally, including the coercive powers that Gillard has signalled will be retained. If it is going to fine unions who strike to resolve a dispute about underpayment, it must treat equally harshly the firms who underpay workers’ entitlements in the first place.

If it is going to haul before the courts a union member who refuses to tell them about what happened at a meeting to discus safety breaches by the employer, it must also haul before the courts the employers who breach the safety laws in the first place.

This is no trivial matter. There were 36 fatalities in the construction industry in 2007-08, twice as many as in 2004-05, immediately before the ABCC commenced operations in late 2005. Under the ABCC, construction became the industry with the highest number of deaths. As observance with occupational safety tends to be lower where unions are weaker, this trend is not surprising. But nor should it be allowed to continue.

Not only will the new building division need to enforce the law on both sides of the street, it will also need to have a culture that makes this happen.

So, it will be essential to ensure that specialist division officers are supervised in a way that ensures they act impartially. Any staff transferred from ABCC to FWA must accept the impartial, non-partisan culture of FWA and not bring the culture of the ABCC.

There should also, then, be no presumption that the current senior leadership of the ABCC would transfer into FWA. The senior positions in the specialist division, including the Divisional Manager and other senior SES-level staff, should be openly and competitively advertised.

This should be done in plenty of time before the transfer occurs, so that no acting arrangements are necessary at the time the division is formally established after the end of January 2010.

A supervisory board has been recommended by the Wilcox Inquiry, and it would need to have genuinely tripartite representation. And there must be effective arrangements, at a minimum as recommended by Wilcox, to minimise abuse of the coercive powers.

The employers would prefer the ABCC to just be rebadged and reincarnated within FWA. The unions would prefer to see the ABCC and all traces of it abolished. But if Minister Gillard is going to make FWA work, she is going to need to make sure the building division genuinely fits within FWA. Otherwise, there will be ongoing conflict between the culture of the specialist division and that of the rest of FWA, making for a very fractured organisation as the institutional centrepiece of her new industrial relations laws.

Peter Fray

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