Royal Commission into the Building and Construction Industry

The Royal Commission into the Building and Construction Industry (2001–2003) was a Royal Commission

Royal Commission

In Commonwealth realms and other monarchies a Royal Commission is a major ad-hoc formal public inquiry into a defined issue. They have been held in various countries such as the United Kingdom, Australia, Canada, New Zealand, and Saudi Arabia...

established by the Australian government to inquire into and report upon alleged misconduct in the building and construction industry in Australia

Australia

Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

. The establishment of the Commission followed various unsuccessful attempts by the Federal Government to impose greater regulation upon the conduct of industrial relations in that industry. Although the Commission found no evidence of organised criminal activity, it did articulate a case that the industry was characterised by lawlessness in the conduct of industrial relations. It recommended sweeping changes to industrial relations laws applicable to the industry. The government's attempts to implement those recommendations stalled in 2004, but were revived in 2005 after the Howard government secured control of the Senate.

Federal government industry reform policy

In May 1997 the Federal Government, with agreement from the States, prepared a National Building Industry Code of Practice.http://www.workplace.gov.au/Workplace/WPDisplay/0,1280,a3%253D6614%2526a0%253D0%2526a1%253D517%2526a2%253D678,00.html The government supplemented the Code with Implementation Guidelines.http://www.workplace.gov.au/Workplace/WPDisplay/0,1280,a3%253D6623%2526a0%253D0%2526a1%253D517%2526a2%253D678,00.html Fundamentally, the Code and the Guidelines were an attempt to regulate the conduct of industrial relations on construction projects funded by government, through the medium of contract rather than legislation.

In July 1997 the (then) Department of Employment, Workplace Relations and Small Business formed a 'Workplace Reform Group' targeting four industries for reform: the meat processing industry, the coal mining industry, the building and construction industry and the waterfront industry. The Workplace Relations Act and the Trade Practices Act 1974 were to provide the legal tools to deliver reform. The 1998 waterfront dispute

1998 Australian waterfront dispute

The Australian waterfront dispute of 1998 was a watershed event in Australian Industrial Relations history, in which the Patrick Corporation undertook a restructuring of their operations for the purpose of increasing the productivity of their workforce...

was a reflection of the focus placed on these important industries. http://parlinfoweb.aph.gov.au/piweb/view_document.aspx?id=23105&table=estimate

Conflict within CFMEU

At about the time that the Royal Commission was announced, there had been, for some time, open conflict within the Construction and General Division of the CFMEU. On the one side, led by Divisional Secretary John Sutton and NSW Divisional Branch Secretary Andrew Ferguson, forces associated with the old Building Workers Industrial Union were seeking to maintain their control over the Division. On the other side, led by Victorian and WA Divisional Branch Secretaries, Martin Kingham and Kevin Reynolds

Kevin Reynolds (unionist)

Kevin Reynolds is the Western Australian state secretary for the Construction, Forestry, Mining and Energy Union . Prior to this he was involved with the Builders Labourers Federation in the 1970s and 1980s where he formed an association with Norm Gallagher.Reynolds today holds considerable...

, forces associated with the old Builders Labourers Federation

Builders Labourers Federation

The Builders Labourers Federation is an Australian trade union organisation which existed from 1911 until 1972, and from 1976 until 1986, when it was permanently deregistered in various Australian States by the federal Labor government and some state governments of the time. This occurred in the...

were seeking to exert greater influence with in the union. The battle for control over the Divisional Conference led to a range of court cases. At one point, the Divisional Secretary, John Sutton, made allegations of organised criminal activity within the union. These allegations were aired on the ABC 4Corners program, and widely cited by government ministers as justifying the calling of a royal commission.

ABC television '4 Corners' report

Report of the Employment Advocate

In April 2001 the Minister for Workplace Relations, Tony Abbott

Tony Abbott

Anthony John "Tony" Abbott is the Leader of the Opposition in the Australian House of Representatives and federal leader of the centre-right Liberal Party of Australia. Abbott has represented the seat of Warringah since the 1994 by-election...

, asked the Employment Advocate to provide a report "regarding behaviour in the building industry". In May 2001, the Employment Advocate provided a report which summarised statistics concerning complaints received by his office relating to alleged breaches of Freedom of Association

Freedom of association

Freedom of association is the individual right to come together with other individuals and collectively express, promote, pursue and defend common interests....

provisions of the Workplace Relations Act; 'coercion' in agreement making, right of entry and strike pay provisions of the Act.

The report criticised other law enforcement agencies, alleging that complaints "will simply not be actioned with any priority, or at all".

This criticism mirrored certain criticisms levelled at the Victoria Police

Victoria Police

Victoria Police is the primary law enforcement agency of Victoria, Australia. , the Victoria Police has over 12,190 sworn members, along with over 400 recruits, reservists and Protective Service Officers, and over 2,900 civilian staff across 393 police stations.-Early history:The Victoria Police...

, after the 1998 waterfront dispute

1998 Australian waterfront dispute

, to the effect that police should have been more aggressively involved in a picket-breaking role, rather than merely keeping the peace. http://www.hrnicholls.com.au/nicholls/nichvo19/Wood.html

The report alleged that, "ill willed" people have ample opportunities to "cause major disruption to a site" by misuse of occupational health and safety procedures.

The report alleged misuse of various industry funds, including trust funds established to preserve employee entitlements such as leave pay and superannuation: "There have been allegations that senior union appointed trustees have sought to influence the investment decisions of at least one of these trusts for political and/or industrial purposes."

Most dramatically, the report alleged that union officials accepted secret commissions, engaged in bribery, and criminal corrupt conduct.

The report concluded that 'there certainly appears to be a case for a broader investigation of the industry', and that 'it would require special investigative powers to gather and elicity information beyond that normally available to a government authority'.

Employment Advocate's report, 11 May 2001.

Appointment of Commissioner

By Letters Patent dated 29 August 2001, the Honourable Terence Rhoderic Hudson Cole RFD QC was appointed a Royal Commissioner to inquire into certain matters relating to the building and construction industry.

The Letters Patent identified "the Constitution of the Commonwealth of Australia, the Royal Commissions Act 1902 and other enabling powers" as sources of the power of the Governor-General

Governor-General

A Governor-General, is a vice-regal person of a monarch in an independent realm or a major colonial circonscription. Depending on the political arrangement of the territory, a Governor General can be a governor of high rank, or a principal governor ranking above "ordinary" governors.- Current uses...

to make the appointment.

Prime Minister's announcement

Terms of Reference

The Commissioner was appointed to investigate certain matters in relation to the building and construction industry. Those matters were defined in the Letters Patent as follows:
the nature, extent and effect of any unlawful or otherwise inappropriate industrial or workplace practice or conduct, including, but not limited to:

(i) any practice or conduct relating to the Workplace Relations Act 1996, occupational health and safety laws, or other laws relating to workplace relations; and

(ii) fraud, corruption, collusion or anti-competitive behaviour, coercion, violence, or inappropriate payments, receipts or benefits; and

(iii) dictating, limiting or interfering with decisions whether or not to employ or engage persons, or relating to the terms on which they be employed or engaged;

the nature, extent and effect of any unlawful or otherwise inappropriate practice or conduct relating to:

(i) failure to disclose or properly account for financial transactions undertaken by employee or employer organisations or their representatives or associates; or

(ii) inappropriate management, use or operation of industry funds for training, long service leave, redundancy or superannuation;

taking into account your findings in relation to the matters referred to in the preceding paragraphs and other relevant matters, any measures, including legislative and administrative changes, to improve practices or conduct in the building and construction industry or to deter unlawful or inappropriate practices or conduct in relation to that industry.

Link to external copy

Terence Cole

The Honourable TRH Cole RFD QC

Cole was made an Officer of the Order of Australia on 26 January 2005, for "services to building industry reform". http://www.itsanhonour.gov.au/honours_list/resultDetail.cfm?awardsID=1057558

Royal Commissions Act 1902

Royal Commissions, appointed pursuant to the Royal Commissions Act or otherwise, have powers to summon a person to appear before the Commission at a hearing to give evidence or to produce documents specified in the summons; require witnesses to take an oath or give an affirmation; and require a person to deliver documents to the Commission at a specified place and time: see section 2 of the Royal Commissions Act http://www.austlii.edu.au/au/legis/cth/consol_act/rca1902224/s2.html. A person served with a summons or a notice to produce documents must comply with that requirement, or face prosecution for an offence. The penalty for conviction upon such an offence is a fine of $1,000.00 or six months imprisonment: see section 3 http://www.austlii.edu.au/au/legis/cth/consol_act/rca1902224/s3.html. A Royal Commission may authorise Federal Police to execute search warrants: see section 4 http://www.austlii.edu.au/au/legis/cth/consol_act/rca1902224/s4.html.

Royal Commissions Act 1902 via AustLII

Procedures and Methods

At the opening of public hearings in October 2001, the Commission published a proposed 'practice note' which would govern how parties were to be granted leave to appear before it. The practice note required that any party wishing to be represented and to appear before the Commission must, as a condition of such grant of leave, provide the Commission with a statement setting out all matters within that person's knowledge as to the subject matter of the inquiry. Robert Richter QC (appearing on behalf of a WA official of the CFMEU) described the proposed practice notes as requiring that parties submit to a "stalinist obligation to inform". http://www.theage.com.au/articles/2002/05/06/1019441475557.html http://www.abc.net.au/7.30/content/2001/s400434.htm

The Commission conducted open hearings on 171 days, and private (closed) hearings on 22 days.http://www.royalcombci.gov.au/docs/finalreport/V02Conduct_PressFinal.pdf#page=33

See generally

Volume 2 of the Final Report
Practice Notes http://www.royalcombci.gov.au/hearings/practicenote.asp

Criticism

ACTU
Australian Council of Trade Unions
The Australian Council of Trade Unions is the largest peak body representing workers in Australia. It is a national trade union centre of 46 affiliated unions.-History:The ACTU was formed in 1927 as the "Australian Council of Trade Unions"...

Submission to Senate inquiry http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/2002-04/building03/submissions/sub017.doc (Word)
David McElrea, Cole Royal Commission: the case for bias http://www.nswccl.org.au/docs/pdf/Cole%20Royal%20Commission.pdf (PDF)
CFMEU
Construction, Forestry, Mining and Energy Union
The Construction, Forestry, Mining and Energy Union is Australia's main trade union in construction, forestry and furnishing products, mining and energy production....

Construction & General Division submission to Senate inquiry http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/2002-04/building03/submissions/sub037.doc (Word)
Jim Marr, First the Verdict: The real story of the Building Industry Royal Commission (Pluto Press, 2003) [ISBN 1-86403-240-5]

Legal challenges

There were two legal proceedings brought against the Cole Commission during 2002. The first, brought in the name of Martin Kingham and others, was conducted on behalf of the Victorian Building Unions Divisional Branch of the Construction and General Division of the CFMEU. The second, brought in the name of Andrew Ferguson and others, was conducted on behalf of the NSW Divisional Branch of the Construction and General Division of the CFMEU. Neither of these challenges were successful.

Kingham v Cole

The applicants sought administrative law relief to prevent the Commissioner conducting the Royal Commission in accordance with the provisions of pars 12 to 15 of the Commission's Practice Note 2. His decision to do so was challenged under ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth).

The Practice note sought to impose conditions on a person's right to cross-examine witnesses appearing before the Royal Commission. Justice Heely summarised the applicant's argument this way:

Senior counsel for the applicant attacked the validity of par 12 of the Practice Note on two grounds. First it was put that at common law Royal Commissions have no coercive powers: McGuinness v Attorney-General for Victoria (1940) 63 CLR 73 at 98-99, Herald & Weekly Times Limited v Woodward [1995] 1 VR 156 at 159. Any coercive powers must be found in the relevant statute under which the Royal Commission is established. Nothing in the Act compels the provision of a witness statement or its adoption in the witness box as prescribed in the Practice Note. It is impermissible to require, as a condition precedent to the exercise of the right to cross-examine, the performance of an obligation which is beyond the power of the Commissioner to impose. Paragraph 12 of the Practice Note is an attempt by the Commissioner to do indirectly what he cannot do directly: Wragg v New South Wales (1953) 88 CLR 353 at 387-8, Caltex Oil (Australia) Pty Ltd v Best (1990) 170 CLR 516 at 522. Further, it was said that the Commissioner did not have an unfettered discretion to grant or refuse leave to cross-examine. Secondly, it was put that the rules of natural justice may in some circumstances include the right to cross-examine a witness giving evidence adverse to a person affected. Paragraph 12 of the Practice Note was in absolute terms and applicable to all cross-examination, including cross-examination which was an exercise of rights conferred by the rules of natural justice.

These arguments were rejected:

Of course, if in the exercise of his discretion under s 6FA the Commissioner imposed a condition that had no reasonable connection with his function under the Act or the Letters Patent, that would not be a valid exercise of power. To take an extreme example, a direction that leave to cross-examine would not be granted unless an applicant made a donation to a political party would be plainly invalid. But par 12 on its face seems rationally and reasonably related to the efficient performance of the obligations of the Commissioner. Paragraph 12 is a means of ascertaining whether or not an applicant has demonstrated a sufficient interest in challenging the evidence of a particular witness. Further, a statement under par 12 will alert the Commissioner and all others concerned as to the true extent of factual disputes and thus promote the efficient resolution of those disputes. In a large and complex administrative enquiry where there is no equivalent to the pleadings and particulars used in civil litigation, the par 12 procedure has an obvious utility.

Further, I am not persuaded that par 12 creates unfairness in the broad sense which the law relating to natural justice postulates.

The applicants filed an appeal to the Full Court of the Federal Court of Australia

Federal Court of Australia

The Federal Court of Australia is an Australian superior court of record which has jurisdiction to deal with most civil disputes governed by federal law , along with some summary criminal matters. Cases are heard at first instance by single Judges...

, but this appeal was abandoned shortly afterwards.

Kingham v Cole [2002] FCA 45 (1 February 2002) AustLII copy of decision

Ferguson v Cole

On 29 August 2002 the applicants made an application to the Commissioner that he disqualify himself from, in effect, making findings of fact or recommendations in relation to New South Wales which may have an adverse impact on the applicants. On 6 September 2002 the Commissioner published reasons for his decision to dismiss the application made to him.http://www.royalcombci.gov.au/docs/Judgment%20re%20Disqualification.pdf

In this proceeding the applicants claimed that the Commissioner has shown actual bias towards them or, alternatively, by his conduct has given rise to a reasonable apprehension that he is biased towards them. They also asserted that they have been denied procedural fairness by reason of the process of inquiry adopted by the Royal Commission.

The Court dismissed the application. The Court rejected the contention that the Commissioner by the First Report made findings which directly and adversely affected the interests of the applicants. The Court also rejected the contention that the First Report shows that the Commissioner was, or could reasonably be apprehended to be, so committed to conclusions which he had already formed that he would be incapable of altering those conclusions.

Ferguson v Cole [2002] FCA 1411 (20 November 2002) AustLII copy of decision

Interim Report

Interim Building Industry Taskforce

Interim Report 15 August 2002 (pdf)
Building Industry Taskforce

Final Report

The Royal Commissioner presented his final report to the Governor-General on 24 February 2003.

The Final Report was tabled in Parliament on 26 and 27 March 2003.

Outcomes

Government response to the 212 recommendations of the Royal Commission http://www.workplace.gov.au/WP/Content/Files/WP/WR/PublicSector/Governments%20Response%20to%20RC%20recommendations.pdf

Budget allocation of more than $136 million for 2004-05.http://www.dewrsb.gov.au/publications/budget/2004/factSheets/Budget%20fact%20Sheet%20BCI.pdf

Colin Thatcher appointed as a member of the Australian Industrial Relations Commission

Australian Industrial Relations Commission

The Australian Industrial Relations Commission, or AIRC , was a tribunal with powers under the Workplace Relations Act 1996. It was the central institution of Australian labour law...

http://www.airc.gov.au/documents/transcripts/..%5CTranscripts/220803thatcherc.htm

On 2 April 2003, Federal Cabinet decided to extend the operation of the Building Industry Task Force, pending the establishment of the proposed Australian Building and Construction Commission ('ABCC'). Cabinet also supported separate legislation to regulate the construction industry. On 25 March 2004, the Minister announced that the taskforce would become a permanent body, and would 'continue to operate until the Building and Construction Industry Improvement Bill (and the establishment of the ABCC) is passed by this Parliament'.

Source: Kevin Andrews (Minister for Employment and Workplace Relations), 'Ministerial statement: Royal Commission into the building and construction industry', House of Representatives, Debates, 25 March 2004, p. 27297.

Legislation

Building and Construction Industry Improvement Bill 2003

Legislation tabled in Parliament Large PDF
Explanatary Memorandum circulated by Minister Large PDF
Minister's Second Reading Speech http://www.workplace.gov.au/WP/Content/Files/WP/WR/PublicSector/second%20reading%20speech%206%20nov%2003.pdf
Analysis published by Parliamentary Library HTML PDF 575KB

In October 2003 the Senate

Australian Senate

The Senate is the upper house of the bicameral Parliament of Australia, the lower house being the House of Representatives. Senators are popularly elected under a system of proportional representation. Senators are elected for a term that is usually six years; after a double dissolution, however,...

referred the Building Industry Improvement Bill 2003 to the Employment, Workplace Relations and Education References Committee for inquiry and report. The Committee received submissions, conducted hearings, and tabled its Report on 21 June 2004. The Committee, by a majority composed of Senators from the Australian Democrats

Australian Democrats

The Australian Democrats is an Australian political party espousing a socially liberal ideology. It was formed in 1977, by a merger of the Australia Party and the New LM, after principals of those minor parties secured the commitment of former Liberal minister Don Chipp, as a high profile leader...

and the Australian Labor Party

Australian Labor Party

The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...

, recommended that the Senate

Australian Senate

oppose the government's legislation. Government senators on the Committee, in minority, recommended that the legislation be passed.

The Coalition government was returned at the 2004 federal election and, unexpectedly, secured control of the Senate with effect from July 2005.

On 4 November 2004, the Minister for Workplace Relations Kevin Andrews

Kevin Andrews (Australian politician)

Kevin James Andrews is an Australian politician and member of the Liberal Party of Australia. He is a member of the House of Representatives and was Minister for Immigration and Citizenship in the Howard Government, having previously been Minister for Employment and Workplace Relations from 7...

announced that the legislation would be reintroduced into the new Parliament.

Cost

The Commission's own estimate of its expenditures, as at the date of publishing its report, was that it had spent approximately $60 million. This figure makes the Royal Commission one of the most expensive in Australia's history.

See Chapter 5 of Volume 22 of the Final Report (PDF)

External links and sources

BCI RC Website
Building Industry Royal Commission: Background, Findings and Recommendations (Australian Parliament, Department of the Parliamentary Library, Current Issues Brief No.30 2002-2003) PDF
Jim Marr, First the Verdict: The real story of the Building Industry Royal Commission (Pluto Press, 2003) [ISBN 1-86403-240-5]

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.