How did the small business community react to the re-introduction of the ABCC? A SmartCompany Q&A

It’s the last day of school for Australian politicians and after a big week of legislation for the business community, the Australian Building and Construction Commission Bill has passed both houses of parliament after the government made key concessions to Senator Nick Xenophon.

Business groups have hailed this as a win for productivity and transparency on Australian construction sites, but how did we get here? And what does the future hold? Here are three things you need to know.

What is the bill about, again?

The Australian Building and Construction Commission (ABCC) was born out of the Cole royal commission in 2003, which made a recommendation to establish a body to oversee the “lawlessness” of the building and construction sector.

The ABCC has existed before, but was abolished by the Gillard government in 2012, when it was replaced by “Fair Work Building and Construction”. Legislation to re-introduce the commission was used by Malcolm Turnbull as a trigger for July’s double dissolution election, and passing it through both houses of the federal parliament has come right down to the wire as the government spent time negotiating with independents until the second last sitting day of parliament.

You can read the legislation here. 

Last week the government also secured passage of the Fair Work (Registered Organisations) Amendment Bill, which will mean unions will be subject to the same regulations as Australian corporations and will be overseen by a new regulator.

What were Nick Xenophon’s demands?

The government relied on South Australian senator Nick Xenophon’s support for the ABCC legislation, and this prompted a number of negotiations that were finally resolved yesterday morning.

Initially Xenophon said he would hold out on voting through the legislation until a deal was brokered to secure 450 gigalitres of water as part of the Murray Darling Basin plan, but that was later dropped as a demand when a compromise was reached with the government earlier this week. Instead, the legislation gained the Senator’s support with another concession Xenophon asked for on the federal government’s procurement plan.

The bill was passed with the Coalition’s announcement they had agreed to overhaul procurement regulations so that organisation bidding for government projects in excess of $4 million will have to explain how they will source materials locally and what positive impact the contractor will make on local job numbers. This change will come into effect in March 2017.

Xenophon also secured a concession from the government on security of payment laws for building subcontractors, a move small business ombudsman Kate Carnell also pushed for, saying too often contractors were not paid on time or at all by head contractors in the construction sector.

Prime Minister Malcolm Turnbull hailed the bill a vindication of the government’s decision for a double dissolution election, while federal Small Business Minister Michael McCormack said it will restore “confidence and stability” for small business owners.

“Australia’s construction sector has more than 340,000 small businesses and around 97 percent of the construction sector businesses are small,” said McCormack, highlighting that while the focus of the legislation has been on big construction providers, he believes bullying tactics and intimidation on projects in which SMEs are independent contractors will be curbed by the passing of the bill.

How has the business community reacted?

Australian Small Business and Family Enterprise Ombudsman Kate Carnell agrees with McCormack, saying the re-introduction of the body will help family businesses get access to a greater number of building projects.

“The re-establishment of the ABCC will ensure there’s a tough cop on the beat; it will prevent union coercion and put a stop to bullying, ensuring mum-and-dad small businesses have greater access to major construction projects, which will ultimately bring down rapidly rising building costs here in Australia,” she said in a statement.

The Australian Chamber of Commerce and Industry described the passing of the legislation as a win for everyone “except for construction union thugs”. Australian Chamber chief executive James Pearson said taxpayers and workers will benefit, as well contractors in the industry.

“Contractors, who are often small businesspeople and tradies, will have the benefit of a regulator with stronger powers to address closed shop practices that exclude them from work opportunities because they chose not to sign up to a trade union or require their staff to do so,” Pearson said.

“Amendments agreed during the bill’s passage through parliament will further protect subcontractors by giving them greater security of payment.”

What happens next?

The effects of the re-introduction of the ABCC will include increasing the maximum fines applicable for illegal industrial action, and extend the powers of the body to workers involved in offshore building projects. However, critics of the commission, including the federal opposition and the Greens, have warned about the potential scope of the legislation and have raised concerns about the lack of oversight over the ABCC’s powers.

Different parts of the legislation will be rolled out at different times over the next two years. However, a note from Clayton Utz yesterday advised businesses to start looking at their contracts in light of the new legislation, including the revised Building Code, which will come into effect in 2018.