Annexure A: Recommendations

This Interim Report makes two recommendations. These are for the Queensland government to:

In this Annexure A, I deal with the content of the code (sections 1.2 – 1.4) and explain the recommendation in relation to the regulator (section 1.5).

The Draft Guidelines draw heavily from the 2013 Implementation Guidelines. However, the Draft Guidelines differ from the 2013 Qld Guidelines in ten respects. I deal with these next in section 1.3 of this Annexure by explaining the additions to the 2013 Qld Guidelines. In section 1.4 of this Annexure, I then explain changes that I have made to the Draft Guidelines so as to become the Recommended Code.

I set out the submissions of Counsel Assisting at Section 8 with additional observations following those submissions as pertinent:

Having regard to the various submissions made by parties I see merit in making some changes to the code as proposed by Counsel Assisting.³⁶⁴ They are as follows (and are reflected in the Recommended Code (Annexure D of this Interim Report)):

The 2013 Implementation Guidelines were read in conjunction with a separate code of practice. For simplicity, I refer to the Recommended Code as the Queensland Code of Practice for the Building and Construction Industry.

It is a matter for the Queensland government as to whether it seeks to reintroduce a ‘Code’, in which case the Recommended Code can be referred to as a set of ‘guidelines’ as it did back in 2013.

Given the code relies on the 2013 Implementation Guidelines, I see merit in raising the value of the thresholds. However, I consider this a matter for the government having regard to the pipeline of projects and their value. Clearly, the higher thresholds the more the benefits of the code are diluted. But I accept that a balance has to be struck between ensuring the efficacy of the code with the needs of industry, appreciating that the WRMP creates something of an impost. Having regard to inflation, perhaps a doublling or trippling of the dollar values might be appropriate.

The Recommended Code applies from the date that party first expresses an interest in, tenders for, or enters into a contract to perform public building and construction work to which these Guidelines apply.

However, in respect of any Olympics related infrastructure, the Recommended Code will apply from the date on which it comes into effect.

This exception is warranted in light of the scale of infrastructure construction needed for the 2032 Brisbane Olympic and Paralympic Games, the critical time frame for delivery of that infrastructure and the public funds involved. The Commonwealth and Queensland Governments have agreed to fund a $7.1 billion Games Venue Infrastructure Program to deliver 17 new or upgraded venues across Queensland.³⁶⁵

These include 7 new venues and 10 upgraded venues, to be overseen by the Games Independent Infrastructure and Coordination Authority (GIICA). The new venues include the new Brisbane Stadium (to seat 63,000 people), the new National Aquatic Centre, the new Para Sport Facility at the Chandler Sports Precinct, and the Moreton Bay and Logan Indoor Sports Centres. The upgraded venues include the Brisbane Aquatic Centre and the Chandler Sports Precinct, Anna Meares Velodrome, Queensland Tennis Centre and the Sunshine Coast Stadium.³⁶⁶

The Commonwealth has committed $3.435 billion towards the program, with the remainder to be funded by the Queensland Government.³⁶⁷

Early construction works have begun at the Brisbane Stadium site and initial works have begun at the National Aquatic Centre, according to the GIICA’s website.³⁶⁸  Given the scale of construction works scheduled at all of these venues in the next 5 years, and the international spotlight that will be on Queensland in the lead-up to the 2032 Brisbane Olympics, it is imperative that the efficiencies and protections that the Recommended Code will provide be in place as soon as possible so as to minimise delays and costs.

The scale of the infrastructure program is compounded by the fixed deadline for its completion. The Olympic Games are scheduled to commence on 23 July 2032, immediately followed by the Paralympic Games on 24 August 2032.³⁶⁹ With major infrastructure projects to be built, there is a limited period in which to complete the required works, leaving no time to waste. The Queensland and Commonwealth Governments have committed to delivering the Games projects “on time and within budget”.³⁷⁰

Queensland must therefore deliver a substantial program of major construction works within a fixed timeframe, leaving little room for error. This places significant pressure on the planning and delivery of these projects. As the Commission has heard, productivity must increase if Queensland is to meet its current infrastructure needs and deliver the 2032 Olympic Games.³⁷¹ The timely completion of these works is a matter of critical public importance. The immediate implementation of the Recommended Code from its date of taking effect, in respect of Olympic-related infrastructure, is justified accordingly.

To the extent that this exception causes a contractor difficulty in circumstances where it may already have Workplace Arrangements in place, it will be for the regulator to administer the Recommended Code in a way that balances the need for its objectives to be met in the long term with any practical challenges faced in meeting its requirements in the short term.

Extending the application of the code to private work is a key ingredient in ensuring sustained benefits across the construction industry and in the words of Mr Hadgkiss “[t]o fully realise the benefits of a code”. ³⁷²

However, an amendment will be made to the Recommended Code to make clear when the requirement will extend to privately funded work, lest there be doubt about this.

Clauses 4(e)(iv) and (g) of the Recommended Code provide respectively as follows:

4(e)(iv)

Parties shall not negotiate or implement Workplace Arrangements that restrict the efficient performance of work or contain provisions that restrict productivity improvement. Without limiting the foregoing, the following will be non-compliant with the Queensland Code and these Guidelines if the Workplace Arrangement is not otherwise required by a relevant Commonwealth or state law:

…

(iv) no restrictions on labour. A Workplace Arrangement must not contain a provision that restricts an employer’s short or long-term labour requirements (including casual labour; part-time labour; labour hire or the source of labour etc) nor provisions that stipulate the terms and conditions for the labour of any person not a party to the industrial instrument. Accordingly, a Workplace Arrangement must not include provisions that require an employer to consult or seek the approval of a third party to the employment relations (such as a union) over the number, source, type (for example casual, contract) or payment of labour required by the employer.

4(g)

An employer must not allow, and an instrument must not provide for, a person or entity that is not covered by the instrument to monitor its operation. Monitoring does not include activity required or permitted under Commonwealth or State law, or monitoring by a Queensland Government or Commonwealth Government agency to ensure compliance with the Queensland Code.

The restriction on project agreements is aimed at preventing all contracting entities on a project from being subject to the same workplace conditions and thereby allowing for a more competitive market. The language in clause 6 speaks of a time when such agreements were readily made and with legislative support. There remains good sense in avoiding such agreements. However, clause 6 cannot curtail the use of project-specific greenfield agreements under the FW Act and, in any event, there are other requirements in place that effectively guard against project-wide Workplace Arrangements. I propose to replace clause 6 with:

In clause 7.1, there are obligations to report “any threatened, possible, probable or impending dispute...”.

An amendment will delete “possible, probable” lest this calls for a degree of speculation that goes beyond the intention here. However, an assessment as to when a dispute ought be notified is a matter for judgement. The aim here is prevention and notification ought be conditioned accordingly.

The code has certain reporting obligations on contractors. In light of the evidence to date, I see merit in reporting obligations extending to Misconduct (as defined in the Terms of Reference to mean any act (or threat of) or omission that amounts to abusive, blackmailing, bribing, bullying, corrupt, criminal, harassing, inflammatory, intimidatory, menacing, misogynistic, offensive, threatening, uncooperative, unlawful, violent or otherwise morally reprehensible behaviour, and without limitation to the above, also includes any scheme or arrangement designed to circumvent any law).³⁷³

An addition is made at clause 7.3 to this end.

The Recommended Code does not expressly call for the reporting of breaches or suspected breaches of right of entry by union officials. Whilst the amendment above in relation to Misconduct effectively captures this, an express requirement to this effect is sensible.

An addition should be made to clause 9 as follows: “The head contractor must report to a BCCB the breach or suspected breach of right of entry by a union within 24 hours of this arising.”

In clause 9, certain practices are mentioned which do not promote freedom of association. These include “refusing to employ, or terminating an employee’s employment because of their union status.” I see benefit in adding the word “engage” which can therefore relate to a particular piece of work, together with this guidance being extended to “non-union status”. Accordingly, it shall read (with the addition in mark-up) “refusing to employ, or engage, or terminating an employee’s employment, because of their union or non-union status.”

These references will be removed in light of both the “National Code” and “Fair Work Building and Construction” no longer being in existence.

In addition, at this interim stage, I recommend that the code should be an administrative rather than legislative instrument, to allow for flexibility in the early stages of its adoption and implementation.

I recommend the establishment of a regulator to oversee the implementation and application of the Recommended Code. I envisage the regulator will issue guidance to, and educate industry, about the application of the Recommended Code in practice. The role will include scrutiny of relevant conduct and the taking of any necessary and appropriate action as part of its compliance role. In keeping with the 2013 Qld Guidelines, I have continued to refer to the regulator as the “BCCB”, and its head as the “Director”. However, this is a matter for the State government.

As to tender oversight, it will be imperative that the regulator has the ability to ensure that procurement processes of State government departments do not undermine or avoid the requirements of the Recommended Code. If these were easily bypassed, its benefits would be substantially diminished.

I recommend that for an initial interim period, like the code itself, the regulator be an administrative body with its own powers rather than enshrined in legislation, to allow for flexibility to adapt while the new system is bedded down.

As to the independence of a regulator, this objective has merit. However, to the extent the existence of a regulator sitting within a government department raises or might raise questions as to its independence, I do not see this as a reason not to proceed now with such a body. What is important, is that the regulator has suitable scope to perform its functions effectively having regards to the relevant interests. As mentioned above, this extends to ensuring it has the requisite authority in respect of government procurement processes.

I accept that the regulator must be adequately resourced to discharge its functions effectively. Mr Hadgkiss opined in his evidence that a code capable of delivering meaningful improvements depends on an “active, empowered, and independent regulator”.³⁷⁴ Mr Hadgkiss identified the regulator’s principal functions as educating industry, investigating possible non-compliance, recommending sanctions and taking enforcement action in courts and tribunals.³⁷⁵

The evidence of Mr Hadgkiss and Mr Jenkinson provides useful guidance as to the appropriate staffing levels of the regulator. Mr Jenkinson considered that an effective regulator might require “20 or 30 people”.³⁷⁶ He estimated that the Brisbane office of the ABCC had approximately 30 staff, comprising 10 inspectors, three lawyers, several officers dedicated to the 2016 Code, an administrative officer and a communications team.³⁷⁷ By way of comparison, the FWBC employed 135 people nationally, including 17 in Brisbane as at 30 June 2014, increasing to 145 people nationally, including 16 in Brisbane as at 30 June 2017.³⁷⁸ I have also considered Mr Jenkinson’s evidence as to the initial staffing levels of the BCCB. This was the body which administered the 2013 Qld Guidelines. Mr Jenkinson said that the BCCB had five administrative and investigative staff during its early stages. Although that was initially adequate, it constrained the BCCB’s ability to deliver the desired reform, and the body operated only briefly with very limited resources.³⁷⁹ The proposed regulator should therefore be established with sufficient resources from the outset. I consider that staffing of between 20 to 30 people provides an appropriate starting point for the regulator. Ultimately, the regulator’s staffing should reflect the extent of its workload and statutory functions.

The regulator’s geographic footprint must reflect the scale of Queensland’s construction industry. Mr Jenkinson considered that, in addition to a Brisbane office, the regulator should have an office in either Townsville or Cairns.³⁸⁰ I accept that the regulator should maintain an appropriate presence in North Queensland so that its investigative, compliance and education functions are not confined to South-East Queensland. The evidence heard in Cairns supports that conclusion. A regulator with a presence in the far north of this State is better placed to service the industry in North Queensland.

The regulator should have a multidisciplinary workforce. It will require investigators and administrative staff, in-house lawyers and access to external lawyers, and personnel capable of performing other specialised functions. Industry experience is vital. In Mr Jenkinson’s words, the regulator should contain “a wide range of people in the agency doing different things” and should not be short-staffed.³⁸¹

The regulator’s investigative capability will be particularly important. Investigators should be able to interview witnesses, take statements, conduct records of interview and compile briefs of evidence. They may be recruited from police, customs, Australian Securities and Investments Commission, the Australian Taxation Office, state agencies or other investigative bodies, although police experience is not essential, and aptitude, work ethic and willingness to learn may be more valuable than lengthy industry experience.³⁸²

The regulator must also have a substantial legal function. Mr Jenkinson opined that a future regulator would “need a team of lawyers”.³⁸³ I accept that the regulator should have ready access to legal expertise sufficient to support investigations, advise on the exercise of regulatory powers and conduct enforcement proceedings.

Finally, the regulator will require dedicated education, communication, audit and compliance capabilities. Mr Hadgkiss regarded education as essential given the varying size and sophistication of industry participants and the cultural and operational change required.³⁸⁴ The regulator should also have personnel dedicated to assessing WRMPs, conducting site inspections and auditing contractors’ performance against their stated commitments.³⁸⁵

Finally, the Recommended Code needs to be administered in a commonsense, practical way having regard to the needs of the construction industry. To create a code that caters for every eventuality would be unwieldy. I expect the Regulator will provide regular and updated guidance on the application of the Recommended Code and with due on-going consultation with industry stakeholders.

The Unions submit that the Recommended Code will have an impact on enterprise bargaining.³⁸⁶ The upshot of this is that enterprise agreement content, whether current or to be negotiated, and which is otherwise lawful under the FW Act, will be restricted if the Recommended Code is to be complied with.

As to this, it is not the intent of a code to impinge upon bargaining rights per se. It is the intent to encourage workplace arrangements that facilitate more positive outcomes than would otherwise be the case, absent a code. This includes seeking to achieve greater flexibility, innovation and productivity within the State's building and construction industry with the ultimate aim of ensuring that the Queensland Government maximises taxpayer value for money on publicly funded building and construction projects, consistent with the objectives of prior codes, including the 2013 Qld Guidelines.