Two policies that will hurt electrical contractors

The introduction of the carbon tax and the planned removal of the Australian Building and Construction Commission (ABCC) are two government policies that will affect the electrical and communications industry.

While the carbon tax will not directly impact on electrical contractors, because businesses in the electrical and communications industry are not in the top 500 polluters, independent research from global economic and strategic consultants Castalia released by the Australian Chamber of Commerce and Industry (ACCI) found energy-intensive small and medium enterprises are likely to suffer a cut in profitability of between 10 and 20% under the proposed carbon tax. The research demolishes the idea that only 500 big companies pay the tax. It finds “a material impact on the profitability of SMEs with consequent flow-on effects for investment and employment”, due to higher energy prices and a loss of competitiveness.

Higher costs and lower competitiveness mean reduced profitability. For energy-intensive SMEs, a profitability reduction of 10 or 20% is a blow to viability for no environmental or economic gain. NECA has also called on the Australian Government to review its decision to abolish the ABCC or face the potential of lawlessness returning to job sites. The Prime Minister told caucus, in mid-October, about plans to introduce legislation to replace the ABCC. NECA joined other industry groups in opposing the destruction of the building industry regulator. The ABCC was established following the findings and recommendations of the Cole Royal Commission into the Building and Construction Industry.

The Royal Commission found that the building and construction industry was characterised by a widespread disregard for the law, cataloguing over 100 types of unlawful and inappropriate conduct. The commission also found that existing regulatory bodies had insufficient powers and resources to enforce the law.

The ABCC’s primary responsibility is to ensure that workplace laws are upheld in the building and construction industry. When the Australian Government announced plans to remove the ABCC and its powers, NECA issued a media release calling on the government to rethink its decision to abolish the ABCC.

NECA continued its advocacy by meeting briefly with the opposition leader, Tony Abbott, and his senior advisors in Parliament House the day after the announcement and relayed the concerns of the electrical industry. NECA was also in close consultation during this period with Senator Eric Abetz, the Shadow Minister for Workplace Relations. NECA strongly believes the ABCC has been effective in making the building industry more accountable and its removal is a worrying sign for electrical contractors and all businesses involved in the building and construction industry.

The ABCC has cleaned up the building industry and made it more compliant since it was established following the Cole Royal Commission. The findings and recommendations from that inquiry remain relevant today. Lawlessness is still exhibited in the industry today but the ABCC has been effective in removing the worst instances. Removing the ABCC or emasculating its powers will see increased inappropriate behaviour and this will lead to the costs of projects blowing out.

The building industry has certainly improved and is more accountable since the ABCC was established. This improvement has enabled the electrical and communications industry to work alongside other industries on a level playing field when working on construction or building projects.

Recent industrial action across a range of sectors points to failures in the Fair Work Act. Negotiated by some unions, it has become a ‘strike first’ approach before bargaining with the employer. The Act needs a review to assess its strengths and weaknesses to weed out measures that are harming Australia’s productivity. NECA will continue to monitor these significant issues, especially the planned removal of the ABCC. The association will write to, and attempt to meet with, all relevant political parties, including the Greens and key independents, to lobby against the destruction of the building industry regulator because its survival is in the best interests of our industry.

James Tinslay is the CEO of NECA, the industry body for electrical and communication contractors in Australia. Based in Sydney, Tinslay has been CEO for five years and before that was CEO of NECA’s NSW chapter for 17 years. He has been working in the electrical industry for 30 years. NECA represents the views of over 5000 contractor members that employ in excess of 60,000 workers in the industry.