Construction Industry Training Fund (Board) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 29 November 2018.)

The Hon. F. PANGALLO (17:39): The Construction Industry Training Fund (Board) Amendment Bill is quite a contentious one, particularly among my colleagues from the Labor Party and the Greens. They have called it for what it is in some regard, and so will I; there is no point in beating around the bush. To borrow from an overworked cliché, if it looks like a duck, swims like a duck, quacks like a duck, then it probably is a duck. To be blunt, this has that odour of union cleansing, which is a hallmark of liberal conservative ideology. We are seeing it in Canberra, with the comedic and occasional catastrophic travails of Michaelia Cash, and we are starting to see it here, albeit it is not so apparent.

We have already seen some union-aligned mates of the old Labor regime either walk into the sunset when they could see the writing on the wall or they were simply pushed into a corner. With the CITB, Gay Thompson, a well known and respected former state Labor MP and one-time unionist, handed in her badge as the board's presiding member not long after the 2018 election result. So it is a bit cute when Labor plays the jobs for the boys card with the CITB when they themselves were masterful at the same game for 16 years. It is called tit for tat.

Without going into the minutia of the proposed legislation, it is a significant overhaul of the composition of the board, which has largely done its work effectively for more than quarter of a century. The board is an industry owned, led and managed organisation, which is separate to the government, that administers a hefty $22 million-plus fund built from a construction industry tax or levy. The levy is payable on any project over $40,000 at a rate of 0.25 per cent of the project's cost. It covers the gamut of building and construction and not just the perceived bricks and mortar type. I have paid it in building a new home.

Property developers are among the biggest contributors. It is not inconceivable that the levy will also come from other key construction areas, like defence, the aerospace industry, IT, cybersecurity, mining and energy. The board provides leadership through funding for training and skills development, including apprenticeship and trainee support, construction worker upskilling and the establishment of other key learning and mentoring programs associated with the construction industry.

In its more than 25-year history, 21,000 apprentices have been trained, 64,128 support payments have been made to employers for apprenticeships, 492,317 construction worker training places have been funded and 9,867 students have been supported by the unique Doorways2Cconstruction program designed to drive school students into building and construction jobs.

Other innovation programs, like the Aboriginal Workforce Development Initiative; Women in Construction, a program designed to get more females into the industry; and adult apprenticeships are commendable. However, in the past four years, as the CITB was accumulating a sizeable war chest, there has been a worrying 52.9 per cent decline in the number of apprentices and trainees in training. CITB will tell you its funded courses have a very high satisfaction rate among workers and employers. However, much more is required.

South Australia is in the midst of a skills crisis that is going to worsen as major civil and defence projects come online. The government has set itself a challenging target of 20,000 apprenticeships over four years with its ambitious Skilling SA strategy. The CITB will have to play a pivotal role to help meet that deadline.

Since the bill was introduced, my colleague the Hon. Connie Bonaros and I have met with many stakeholders with vested interests. This includes the unions, the CFMEU and the Australian Workers Union, who believe it is their right to retain worker representation on the board even though they do not contribute a cent to the pool which funds their construction industry training centre. We also met with representatives from civil contractors, the electrical sector, mechanical engineers, plumbers and subcontractors. Their collective view is that the CITB needs to take a new and dynamic direction, with members chosen on merit, who had high levels of skills, expertise and judgement in the industry.

As I raised in question time yesterday, the Master Builders Association is also worried by the downward trend in construction, particularly among new first home buyers. The association has also pointed to the drop in quality of work over the past 10 to 20 years and wants the CITB to direct more funds to tackle this problem. Ian Markos from the MBA tells me that the number one complaint to consumer affairs is dodgy building work relating to waterproofing. In my previous life as a journalist I chased a multitude of dodgy builders and tradies over the years. Many did not have appropriate qualifications and skills to do the job—some had none—and they are still out there.

Anyone can get a builder's licence without ever having laid a single brick. The construction industry is evolving at such a hectic rate that compliance and rigorous building standards must be enforced. We all want homes and buildings to be safe, sound and free of defects. Sydney's Opal Tower is a glaring example of design and construction failures. Another I raised last year was a two-storey building at Munno Para which caught fire and which is now the subject of an investigation after the Playford council abysmally failed to enforce its own compliance orders. It was sheer luck that nobody was killed.

Only today it has been revealed that a group of Canberra apartment owners are facing a $19 million repair bill for shoddy building work after failed legal action. The Elara apartment complex, built in 2007 in the suburb of Bruce, has been plagued by a string of problems, including leaks and water damage. Incredibly, the $19 million cost of rectifying the defects is only slightly less than the cost of the initial project. Sadly, the Federal Court today threw out a claim by the owners who had lodged claims with the Master Builders Fidelity Fund—set up to compensate those who could not sue their builder for compensation—because the claims were lodged outside a five-year deadline.

Last February, a national report into compliance and enforcement in the building industry commissioned by state building ministers was released, yet went virtually unreported. I cannot even recall it being released here, probably because it was released during the election campaign. In a scathing assessment of building standards it made a raft of recommendations, including calls for registration schemes for all in the industry: builders, surveyors, architects, engineers, designers, private certifiers and inspectors, and implementing mechanisms for training and licensing.

The report was written by the Chancellor of Western Sydney University Peter Shergold and lawyer Bronwyn Weir. Professor Shergold and Miss Weir concluded that, 'The nature and extent of the problems put to us are significant and concerning.' I quote further from the report:

They are likely to undermine public trust in the health and safety of buildings if they are not addressed in a comprehensive manner.

To that end, among 24 recommendations the report called for each state or territory to implement registration schemes for all involved in the industry. This is what the Master Builders Association and other industry groups are calling for. They want to have money from the fund directed to improve productivity, innovation and technology, to lift building standards and reduce defects and dodgy work.

They are also seeking financial support for a worthwhile program called HiViz that opens pathways in the construction industry for women. With these pressing challenges in the building and construction industry it is vital to get the composition of the CITB right so that it can operate effectively and meet the needs of the industries it represents and supports.

The government bill aims to scrap the old model and replace it with the board, comprising a presiding member with voting rights and between four and eight industry representatives nominated by the minister after expressions of interest, plus two independent members. It demands a mix of people with knowledge and expertise in the building and construction industry, commercial and financial management, law and governance.

As it currently stands, there are 11 members appointed by the Governor, via the government, of course. There is an independent presiding member nominated by the minister after consulting with the industry. Currently, it is Peter Kennedy, whose experience and knowledge with major construction companies is beyond reproach. There are two members and deputies with expertise in the VET sector.

The Hon. C.M. Scriven: Except they don't.

The Hon. F. PANGALLO: Sorry?

The Hon. C.M. Scriven interjecting:

The Hon. F. PANGALLO: Five members and deputies nominated by employer associations are Natasha Hemmerling from the Master Plumbers, Stephen Knight from the HIA, Christine Stone from the MBA, Rebecca Pickering from the Property Council and Phil Sutherland from the Civil Contractors Federation. Three members representing employees are from the unions: Gary Henderson from the AWU, Martin O'Malley from the CFMEU and Jessica Rogers from the CEPU.

I do not have an issue with unionists and I trust one of their programs, MATES in Construction, which addresses mental health issues on building sites, is not only retained but expanded. However, I also note there is an amendment afoot that seeks to have an employee representative nominated to the board by the minister, and we welcome that. I understand the government has no issue with it either.

There are two members nominated by the minister, currently Denise Janek from TAFE and accountant Nicholas Handley. Labor has made much of Mr Handley's appointment because of his links to the Liberals and the Minister for Industry and Skills, David Pisoni. I cannot see where his skills and qualifications are out of place when aspects of CITB's financial reporting and compliance come under the Public Finance and Audit Act. The CITB has a big fund to administer and Mr Handley's expertise in financial management will be invaluable. I understand he has also had some engagement in his profession with the building industry, so I am quite comfortable with him being there. While Labor is not pleased with the selection process being done by the minister, after expressions of interest and consultation it can also make those calls should it win government again.

The other burning issue with this model is the method of voting to reach a consensus, a right of veto. There is a requirement for a majority vote in each of the subsections of the board for any decision to progress. This was a provision designed back in 1993 to avoid adverse decisions when there were still tensions between unions and the industry. I am informed this veto has only been used a handful of times. This system seems an archaic and complicated process to me, and surely reaching a majority decision is going to be a much simpler solution.

Let's move on to the bill itself. SA-Best will be supporting it in principle. We have some minor amendments of our own that we think solidify the intent. One requires the minister to consult the presiding member before nominating industry representatives and independent members for appointment. It gives an additional layer of integrity. Another is the board providing reports to the minister, so he or she can be across and fully informed of the board's functions. This ensures a level of transparency. Finally, to have a review of the act, so the minister can evaluate the legislative changes. I commended bill to the council.

Debate adjourned on motion of Hon. I.K. Hunter.

At 17:55 the council adjourned until Tuesday 26 February 2019 at 14:15.