The Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009 was publicly released today. The Bill will amend the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act) to abolish the Australian Building and Construction Commission (ABCC) and replace it with a new agency, the Office of the Fair Work Building Industry Inspectorate (Building Inspectorate). The BCII Act will also be renamed the Fair Work (Building Industry) Act 2009 (Cth).
Whilst the Bill will retain the so-called ‘coercive powers’ to compel persons to give evidence in relation to investigations, these will be subject to new restrictions. The Bill will also introduce the ability for a new ‘Independent Assessor’ to ‘switch off’ the coercive powers on ‘peaceful’ building projects.
The Bill makes no changes to the existing Code of Practice for the Building and Construction Industry and the related Implementation Guidelines for the Code.
New regulatory arrangements
The Building Inspectorate will assume the responsibilities of the ABCC from 1 February 2010.
In line with the recommendations of the Wilcox Review, the Bill abolishes the higher penalties currently contained in the BCII Act for breaches of industrial laws in the building industry. The same maximum penalties will apply to breaches of the Bill as those which apply for breaches of equivalent provisions of the Fair Work Act 2009 (Cth) (Fair Work Act).
The Bill also abolishes the existing rules under the BCII Act in which industrial action may be unlawful in a broader range of circumstances than under the Fair Work Act.
The broad definition of ‘building work’ under the BCII Act has been amended to exclude off-site pre-fabrication of made-to-order components. Pre-fabrication that occurs at permanent off-site facilities will be excluded, though pre-fabrication at ‘auxiliary’ or ‘holding sites’ separate from the primary site will remain covered. The Bill will also allow for Regulations to be made to further expand or limit the definition of ‘building work’.
The Bill also establishes a new Fair Work Building Inspectorate Advisory Board which may make recommendations to the Director of the Building Inspectorate in relation to policies and priorities of the Building Inspectorate. The Board is to be comprised of five part-time members, appointed by the Minister.
Coercive powers
The ‘coercive powers’ will be retained in a modified form. The Building Inspectorate will continue to have the power to compulsorily obtain information from a person they believe has information relevant to an investigation.
However, any exercise of these powers is conditional upon the prior approval and issue of an ‘examination notice’ by a presidential member of the Administrative Appeals Tribunal (AAT). The Bill requires the Minister to authorise particular AAT members to have the power to issue examination notices. The Building Inspectorate may only apply for an examination notice as a ‘last resort’ and must set out to the AAT member what alternative methods have been attempted to obtain the relevant information or documents sought.
The Commonwealth Ombudsman will also ‘monitor and review’ all exercises of the powers and regularly report to Parliament on the exercise of the powers.
The coercive powers are subject to a ‘sunset’ clause which provides that they may not be used after five years (1 February 2015). It is the policy of the government to conduct a further review of whether the coercive powers should be retained prior to this time, though the Bill does not provide for this.
‘Switching off’ the coercive powers
The Bill enables the coercive powers to be ‘switched off’ for certain building projects that the government describes as ‘peaceful parts of the industry where such extra compliance arrangements are not necessary’.
The Bill establishes the new office of the Independent Assessor – Special Building Industry Powers which will have the power to determine whether the coercive powers may be ‘switched off’. Such decisions may be made upon an application to the Independent Assessor by an ‘interested person in relation to a building project’.
An ‘interested person’ is defined as the Minister or another person defined by Regulations. As no Regulations have yet been released, it is not clear who is likely to be included in this definition. Applications to the Independent Assessor will be subject to the following provisions under the Bill:
- The Director of the Building Inspectorate will be able to make submissions in relation to any application made by an ‘interested person’.
- There is no right under the Bill for other ‘interested persons’ to be heard in relation to an application by another interested person.
- The Bill does not provide an opportunity for decisions of the Independent Assessor to be reviewed or appealed on the application of another ‘interested person’.
The matters which must taken into account by the Independent Assessor in a making a decision to ‘switch off’ the powers are:
- the objects of the Act
- other matters prescribed by Regulations, and
- the public interest.
It is not clear what sort of matters may be prescribed by the Regulations in this regard. The Explanatory Memorandum states that such matters may include a ‘demonstrated record of compliance with industrial laws’ in relation to a particular project.
Applications to ‘switch off’ the powers will be able to be made in relation to projects that are proposed, are currently underway or have been completed. Applications may also be made covering multiple projects. However, the Independent Assessor may only make determinations in relation to building projects which commenced after the commencement of the Bill.
Switching the coercive powers back on
The Bill does provide for the ability for the coercive powers to be ‘switched back on’ in certain circumstances.
The Building Inspectorate Director will have the power to require the Independent Assessor to reconsider any decision it makes. This would enable decisions to be reconsidered if the Director believes they are not appropriate, or if circumstances have changed which warrant a different decision. This could be done if, for example, the Building Inspectorate has additional information regarding suspected unlawful practices on a particular project that was not available to the Independent Assessor at the time of the original decision.
In practice, this will enable the coercive powers to be ‘switched on’ again later if the Director and the Independent Assessor believe this is necessary. However, the Director is the only party that has any standing to ‘apply’ to the Independent Assessor to make such a decision. If, for example, an affected employer sought to have a previous decision to ‘switch off’ the powers reversed, it would in practice be necessary for them to apply to the Director in order for the Director to order a review by the Independent Assessor. There is no formal mechanism in the Bill to allow for this.
Implications for employers
Although a separate building industry regulator and the coercive powers have been retained, it remains to be seen whether these will have the same level of practical effect as the ABCC has had in relation to dealing with suspected unlawful activity. The new ‘safeguards’ on the use of the coercive powers may result in a reluctance (or in some cases an inability) to use those powers in situations where they would currently be utilised by the ABCC.
The ‘switch off’ provision may also be of significance to building industry employers contemplating new projects, given the ability for the powers to be ‘switched off’ in advance. At this stage it is unclear how likely such applications are to be granted, given that the criteria on which the powers can be ‘switched off’ are to be contained in Regulations which are yet to be released.
Although there is the ability for the powers to be switched back on, this is only available at the direction of the Director of the Building Inspectorate.
The Bill is likely to be subject to considerable debate in the Senate and the full details of how it will work in practice will not be known until the relevant Regulations are released. More detailed analysis of the Bill will be included in future Freehills newsletters.
This article was written by John Cooper, Partner and Ben Davies, Solicitor, Melbourne.
More information
For information regarding possible implications for your business, contact a member of the Employee Relations team.