Crossbenchers carve ABCC bill into the biggest protectionist turkey in decades

Senators Mitch Fifield, Mathias Cormann and Michaelia Cash celebrate the passing of the ABCC bill

In its determination to achieve a perceived legislative win with the ABCC bill, the government has agreed to a remarkable slate of crossbench measures that deliver a huge shift toward protectionism in the construction industry.

With protectionist parties like Nick Xenophon Team and One Nation holding the whip hand in the Senate and the government desperate to end the year with a legislative win, it agreed to a series of changes that establish local preference rules for the building industry as part of the price for passage of the bill, which passed the Senate this morning. The sector already faces additional costs running into the billions from bipartisan anti-dumping laws aimed at keeping out cheaper foreign steel. Now it will face even more red tape and cost burdens.

[Keane: government caves in and guts building watchdog powers]

Last night, as part of its deal with Senator Nick Xenophon, the government announced new Commonwealth procurement rules that will place additional requirements on Commonwealth tenderers to explain how they will meet Australian standards in any building projects. The new rules also require bureaucrats to investigate whether a tenderer complies with industrial relations, occupational health and safety and environmental regulations, and require independent assessments of compliance with Australian standards.

Most significantly, a new section requires public servants to “consider the economic benefit of the procurement for the Australian economy” — although within the context of existing agreements such as free trade agreements. As a result of the amendments, public servants and tenderers will both be required to undertake more paperwork, and the former will be required to consider tenderers on the basis of whether they will help the local economy, not just cost effectiveness.

[Want to cut construction costs? Try dumping.]

Labor, the Greens and the crossbenchers also combined to force on the government a remarkable amendment from Labor Senator Doug Cameron that will require the Building Code (the regulatory document at the centre of the government’s construction industry regulation that establishes requirements for any companies hoping to win government work) to provide that

“no person is employed to undertake building work unless (a) the position is first advertised in Australia; and (b) the advertising was targeted in such a way that a significant proportion of suitably qualified and experienced Australian citizens and Australian permanent residents (within the meaning of the Migration Act 1958 ) would be likely to be informed about the position; and (c) any skills or experience requirements set out in the advertising were appropriate to the position; and (d) the employer demonstrates that no Australian citizen or Australian permanent resident is suitable for the job.”

This is a massive imposition on the construction industry, and the move will effectively ban 457 visa workers unless their employer demonstrates not merely that the job was advertised widely but that there are no Australians suitable for the job — not simply that no one applied for the job.

[When will the government stop lying about the ABCC?]

Under an amendment accepted by the government from senators Derryn Hinch, Jacqui Lambie and One Nation’s Rod Culleton — Culleton is now regularly voting independently of Pauline Hanson — the Building Code will now also require the government to demand that successful government project tenderers explain how much domestically sourced and manufactured building materials will be used, whether all materials comply with Australian standards (materials not complying with Australian standards will now be banned), the jobs impact of the building work, and “whether the project to which the building work relates will contribute to skills growth”.

Another amendment from Hinch and Xenophon — and accepted by the government — will effectively turn the ABCC into an Australian content and standards regulator, required to “monitor the compliance of products used in building work with relevant Australian standards published by, or on behalf of, Standards Australia”.

All of these Australian content requirements are intended to discourage construction companies from using imported steel — often accused of failing to meet Australian standards, although there’s a new industry certification process to address that — and will drive up costs if companies end up using more locally-sourced steel in major projects.

The changes cap a remarkable transformation of the ABCC. Based on the history of the body in the Howard years, it will have no productivity impact — productivity only increased in the construction sector after Labor killed it off in government — and now the body will be tasked with enforcing protectionist local content rules and increased red tape for companies required to demonstrate their adherence to them. Moreover, the strongest powers of the ABCC have been given up by the government as part of the price for passage of the bill.

That’s before we get to grips with what could be a massive impact from the Cameron amendment effectively establishing an absurdly high hurdle for any construction company looking to bring in 457 visa holders.

[The cost in dead workers of the government’s construction ‘watchdog’]

The ABCC was always about crippling the CFMEU and damaging Labor rather than doing anything genuinely effective to help the construction sector. It was red meat for the right of the Liberal Party rather than a genuine economic reform. But now it has been turned into a vehicle for protectionism in one of our biggest industries, which instead of getting a tough regulator to control unions will now face much stiffer local content rules and a lot more red tape. This much-touted economic reform of Malcolm Turnbull’s will lead to less competition and higher costs in construction. Still, at least the Prime Minister will get his “ABCC win” headlines.