Building inquiry reveals more than expected

by Peter Mac

The Royal Commission into the Building and Construction Industry has 
released the Tax Office's submission to the inquiry. As expected, the 
submission alleges widespread tax avoidance within the industry.

The building industry comprises some six percent of Gross Domestic Product, 
and businesses within the industry account for some 13 percent of 
Australian Business Numbers.

The Commissioner for Taxation, Michael Carmody, commented that "the 
industry warrants close attention due to both its size and evidence of 
practices such as bogus labour hire arrangements, undeclared cash payments 
and phoenix companies that indicate a high risk of non-compliance with tax 
obligations."

The scale of the problem is evident from the Taxation Office's successful 
prosecutions over the last four years, which have netted some $140 million 
in fines and unpaid taxes concerning the operation of "phoenix" companies 
(successive company structures used to evade payment of taxes).

Moreover, the Taxation Ofiice and the National Crime Authority have jointly 
raised some $120 million since 2000 in prosecutions of some 400 companies 
involved in the promotion of bogus labour hire arrangements or "bodgie" 
projects.

The problem is so widespread that the Taxation Office has received many 
expressions of concern from construction firms that feel they cannot 
compete with tax-avoiding companies.

Trade union evidence

The Commission was told that a Federal Liberal parliamentarian, Joanna 
Gash, had interfered in contractual arrangements, pressured contractors to 
exclude unionists and organisers, and formed a close working arrangement 
with the Office of the Employment Advocate in a campaign to exclude unions 
from the building industry on the NSW South Coast.

An organiser from the Construction, Forestry, Mining and Energy Union 
(CFMEU) told the Commission that a construction firm which had testified 
against the union had recently transferred workers covered by an Australian 
Workplace Agreement on to a non-union agreement which required a 50-hour 
week at normal rates, no accrual of sick leave and no rostered days off.

Another CFMEU organiser reported that he had been the subject of an attempt 
to run him down with a motorcycle and that he had been assaulted while 
carrying out union business on a construction site.

On the South Coast of NSW an anti-union campaign in the region had resulted 
in a climate of fear in the industry. Building workers had been intimidated 
out of making health and safety complaints against employers.

Nor has the sanctity of the court proved a barrier to intimidation. Two men 
were removed from the public gallery for questioning by Federal Police, 
after making threats against a CFMEU organiser.

An excavation contractor who claimed that he and his family had been 
intimidated by union organisers later told the court quite openly named a 
CFMEU organiser who the contractor told the court had a "bullseye on his 
forehead" and that "sooner or later someone is going to put a hole there 
because of the way he treats people".

None of this evidence is welcome news to the Howard Government, which 
wanted the Commission to focus exclusively on allegations made against 
building and construction unions, in particular the CFMEU.

It remains to be seen what action, if any, will be taken against those 
making such threats. Unions have openly raised their concerns about the 
likely outcome of the $60 million Commission, and the Federal Government's 
union-bashing agenda.

The Minister for Workplace Relations, Tony Abbott, is opposed to the 
introduction of issues at the inquiry other than the alleged misdemeanours 
of the unions.

Abbott has in the past complained that Australian construction workers are 
paid more than construction workers in South-east Asia and strongly opposes 
the CFMEU's efforts to reduce the level of accidents and deaths in the 
industry.

An average of one worker per week dies on Australian construction sites; in 
1999 more than 475,000 working days were lost through injury.

For his part Commissioner Cole seems unwilling to examine a number of major 
issues, including the following:

* underpayment of wages and workers' compensation premiums;

* phoenix operations and tax evasion, misuse of independent contractors;

* abuse of migrant labour and super-exploitation of illegal migrants;

* cash-in hand payments and white collar crime;

* unsafe work sites;

* victimisation of and threats against workers and unionists;

* insolvent companies refusing to pay employees for work which has been 
performed and for which the company has been paid.

Commissioner Cole has accepted the Commissioner of Taxation's submission to 
the inquiry, but has so far given no indication that he will deal with it, 
or for that matter with any of the other issues which he has so far deemed 
to be beyond the scope of the Commission's inquiry.

Nor does the background of some of the Commission's personnel offer much 
hope. The Commissioner's Secretary, Colin Thatcher, for example, was the 
assistant director of the Business Council of Australia, and an adviser to 
conservative state governments on the introduction of anti-union 
legislation.

The expected bill for the Royal Commission currently stands at $60 million, 
an 850 percent increase in the Howard Government's original cost estimates. 
That sum is more than twice the amount allocated to the inquiry into the 
HIH disaster, the biggest corporate collapse in Australian history. The 
Commission's media budget is five times that allocated for the HIH inquiry.

So why is the Government willing to spend such a huge amount on this 
Commission?

A recent article in the Australian Financial Review, gave some clues to 
that question. It complained that despite all the work put into industrial 
"reforms" by the former Minister for Industrial Relations Peter Reith, the 
CFMEU had successfully bargained its way to a 36-hour week.

The government's aim is to destroy the CFMEU and other trade unions in the 
building and construction industry, and thus give employers open slather to 
stand over workers, pay slave wages, hire and fire at will and never mind 
their entitlements or health and safety.

Nevertheless, the course of the Commission's inquiry has demonstrated that 
you can't keep the lid on employer corrupation and malpractices. The 
government might have aimed for a stick with which to beat (and preferably 
break) the unions, but so far it is getting a lot more stick than it 
bargained for.