Australia: Government winds back ABCC and Building Code 2016

Workplace Relations Minister Tony Burke has taken his first step to limit the Australian Building and Construction Commission (ABCC) by stripping its powers “to the bare legal minimum” and introducing an interim building code.

The ALP went into the 2022 Federal Election promising to abolish the ABCC and repeal the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) and in doing so, the Code for the Tendering and Performance of Building Work 2016 (Building Code 2016). However, as a statutory authority, its removal will have to be legislated through Parliament.

The ALP has committed to introducing legislation to abolish the ABCC by end of the year. Until then, the Government swiftly introduced measures on the first day of parliament to curb the ABCC’s powers. These measures will have a significant impact on the Commonwealth, funding recipients, building contractors and building industry participants.

The Minister has confirmed that it will now be the Fair Work Ombudsman’s (FWO) and health and safety regulators’ job to enforce the Fair Work Act 2009 (Cth) (FW Act) and safety matters in the building and construction industry. Litigation initiated by the ABCC is to be handed over to the FWO. Resourcing of the FWO will be dealt with in October’s budget, but the Minister has confirmed that the FWO will not receive as much funding as the ABCC when it takes over the ABCC’s caseload because it will not be commencing as many prosecutions.

ABC Commissioner Steve McBurney says that the ABCC will close if it is defunded, even if the Government fails to win Senate support for legislation to abolish it. McBurney confirmed that work is underway to wind up the ABCC’s current work for a “seamless” transition of functions to the FWO.

Introduction of an interim Building Code

As an interim measure, the Government has introduced the Code for the Tendering and Performance of Building Work Amendment Instrument 2022 (Amendment Instrument), which commenced on Tuesday 26 July 2022. The Amendment Instrument removes the majority of the requirements the Building Code 2016 imposes on building contractors and building industry participants, and leaves only those requirements the BCIIP Act requires (and certain transitional measures). The Amendment Instrument also removes the ABC Commissioner’s role under the Building Code 2016 in relation to granting exemptions and recommending exclusion sanctions.

The Explanatory Statement issued by Minister Burke describes the Amendment Instrument as a “swift and measured step towards the Government’s election commitment of repealing the Building Code 2016 and abolishing the ABCC, to the extent possible under the BCIIP Act that Act is repealed”.

Minister Burke said the revised Building Code removes “duplication of matters already covered by the Fair Work Act and other Commonwealth, state and territory laws”, and removes restrictions that have been selectively applied to construction workers, including prohibited enterprise agreement content requirements and positive requirements to protect freedom of association on site.

What’s left in?

The Amendment Instrument has stripped the majority of requirements under the Building Code 2016.

The Amendment Instrument has only retained mandatory matters specified in section 34 of the BCIIP Act, which include:

• prohibitions in relation to the engagement of non-citizens or non-residents undertaking building work, including advertising requirements (see section 11F Building Code 2016); and
• requirements for a preferred tenderer for building work to provide particular information to a funding entity, including information relating to whether building materials are domestically sourced, whether they comply with relevant Australian Standards, the whole-of-life costs of the project and impact on jobs and skills growth (see section 25A Building Code 2016).

The Amendment Instrument also adds a new Part 6, which preserves any exemptions given by the ABC Commissioner for essential services providers and essential services infrastructure prior to the Amendment Instrument’s commencement, and preserves the effects of any exclusion sanctions (of which there is currently only one in force).

What’s out?

The Amendment Instrument removes all other obligations under the Building Code 2016, such as:

• the requirement for code covered entities to comply with existing laws under section 9 of the Building Code 2016;
• restrictions on the contents of code covered entities’ enterprise agreements (including requirements to consult with unions in relation to the engagement of employees or subcontractors, or the provision of an area intended to be used exclusively by union officials or delegates). This means that code covered entities will no longer need to submit their enterprise agreements to the ABCC for compliance approval;
• prohibitions on certain conduct in order to protect freedom of association under section 13 of the Building Code 2016. The repeal of section 13 means that the following conduct is no longer prohibited:
  • the application of building association logos, mottos or indicia applied to clothing, property of equipment supplied by, or which provision is made for by, the employer;
  • the engagement of non-working shop steward or job delegates; and
  • officials, delegates or other representatives of building associations undertaking or administering induction processes.
• clauses relating to sham contracting, collusive practices, security of payments and right of entry;
• the requirement for code covered entities to manage drug and alcohol issues on site;
• the requirement to have a Workplace Relations Management Plan (WRMP) in place, and therefore the requirement to submit a WRMP to the ABCC; and
• the requirement to ensure expressions of interests or tenders for work are conducted in a manner consistent with sections 23-24 of the Building Code 2016 (including ensuring that respondents are not subject to an exclusion sanction, have a Building Code 2016 compliant enterprise agreement, or that they respond to certain information in the expression of interest or tender).

So what does this mean? 

Notwithstanding the above changes, the Amendment Instrument is a legislative instrument introduced by the Minister, which means that it is required to be tabled in the House of Representatives and the Senate this week. From there, it is open to Parliamentary veto and disallowance. If a motion to disallow the Amendment Instrument is given, the motion must be agreed to by the majority of the Parliament. In these circumstances, the ALP will require the support of minor parties who hold the balance of power in the Senate. Whilst Greens leader Adam Bandt has publicly advocated for the abolition of the ABCC, the ALP will need to secure the support of additional cross benchers to ensure it can press on with its election mandate.

Employers should carefully consider how the introduction of the Amendment Instrument affects your business operations in relation to tendering for new building work, complying with current funding or contractual arrangements, ensuring productivity on site and complying with relevant industrial and work health and safety laws.

Please do not hesitate to contact us if you have any queries or wish to discuss.

This article was prepared by Jonathan Stamatelos, Senior Associate, and Nicholas Ogilvie, Partner.

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