The Howard Government’s union-busting ABCC released a report (pdf) today claiming that smashing unions is good for the economy. Needless to say, The Australian ran hard with the story, giving it the front page, an opinion piece (“analysis”), and the editorial.
The report was prepared by Econtech, a firm that is heavily invested in the WorkChoices project — it was paid by the business lobby to sing the legislation’s praises. It is also committed to the ABCC, after preparing a report in 2003 predicting that government-sponsored union-busting would boost the construction industry. Econtech has now been hired by the ABCC, to verify its own predictions and justify its client’s existence.
If you don’t like the official evidence, invent some new evidence
It is worth noting that the 2003 Econtech report was reviewed by the Employment Studies Centre at the University of Newcastle (pdf). That review found fundamental problems with the Econtech methodology and assumptions.
At p 2 of the ESR evaluation, for instance, we’re told that “the Econtech report simply assumes, without any empirical inquiry, ‘that the productivity gap for engineering construction is one-half of that identified for commercial building…’”. And at p 27 of the recent Econtech report: “For the purposes of this analysis, it is assumed that the [labour] cost gap for engineering construction is one-half of that identified for commercial building…” There has been no effort made to explain why the one-half figure was adopted. It was simply made up.
More fundamentally, Econtech measures labour productivity by measuring the total cost of doing certain construction tasks. The ESC points out that the Australian Bureau of Statistics already measures productivity in the construction industry, and the official statistics show the opposite result to that found by Econtech. In other words, because the ABS figures didn’t match the Government spin, Econtech had to invent its own measurement technique.
Here’s a concrete example. This criticism is from p 2 of the ESC evaluation:
Econtech derives the 51 percent labour cost to undertake the 8 construction tasks from Rawlinson’s. According to the ABS Australian National Accounts 1993-94 Input-Output Tables (Cat. No. 5209.0), wages and salaries comprise only 23.1 percent of total inputs to construction (Direct allocation of competing imports). This is close to half the labour content used by Econtech…
The Executive Summary to the 2007 report again claims “labour represents about 51 per cent of total costs in non-residential building”. You might think that the full report would explain how they arrived at the 51% figure, especially after the ESC criticism, but you’d be wrong. The first time it is mentioned, at p 26, we’re told it’s just an assumption: “For example given … a share of labour costs in total costs of 51 per cent”. Over the page, a table is “[b]ased on the estimate that labour accounts for 51 per cent of total costs.” Why, when the ABS actually measures the contribution of labour to industry costs, does Econtech pluck a figure out of the air?
It is even stranger when you consider that Econtech is happy to rely on ABS data on industrial action. That is because it suits the political agenda behind the report, to show that a decline in industrial action has led to apparent economic benefits. But as we know, those economic benefits are based on Econtech’s unusual productivity guesstimates. What’s more, a discussion paper (pdf) prepared for the Cole Royal Commission — which led to the establishment of the ABCC — disputes the link between industrial action and productivity:
There is a poor direct correlation between the average number of days lost to industrial disputes and changes in the three productivity measures. For example, the period with relatively few days lost to industrial disputes in the early 1990s had relatively flat MFP [multi-factor productivity]. Importantly the level of MFP in this period was lower than estimated in the 1980s when industrial disputation was much higher. The weak relationship is also evident in more recent times.
Because the evidence didn’t fit, the Econtech study had to make up its own measure of productivity, which, as the ESC points out, is strongly at odds with the official statistics.
Ask the bosses what they want you to write
The conclusions of the Econtech report are based on case studies of projects undertaken by construction companies. As The Australian reported:
Essentially, it appears labour productivity and costs have turned around significantly for the nation’s big construction firms because of a big decline in union activity.
The link is apparent because Econtech’s researchers relied on the case study companies to tell them what had a big impact in their workplaces.
The report is based on information that “was provided by two leading construction companies”, and was written “[a]fter meeting with representatives of four construction companies”. Unions, on the other hand, were not asked for their input. So, in an election year, when the building industry is threatening to run a series of anti-union political advertisements to support the Howard Government, the supposedly damning anti-union report is based on the say-so of construction bosses.
The Econtech report also relies on a pamphlet written by Ken Phillips of the Institute of Public Affairs, a hard-right lobby group. You might also remember Phillips from the sham Independent Contractors of Australia organisation. The pamphlet was riddled with made-up figures. For example, on p7, Phillips states that “[i]t is not clear if the Eastlink industrial undertakings require non-working union delegates” — but that didn’t stop him claiming that they cost $58.5 million. On p 8, he also made up figures of $9.2 million for industrial action that didn’t happen, and $43.3 million for OHS stoppages that never occured. And later, he claimed that his figures are “likely to be conservative”! The Econtech report endorses these figures, made up by an aggressive anti-union campaigner, without question.
The ABCC must be scrapped
The ABCC is a draconian, star-chamber organisation with secret-police powers, and has no place in civil society. Even its cheerleaders at The Australian reckon its “draconian powers such as forcing witnesses to give evidence, holding hearings in secret and issuing directions on non-disclosure” are unnecessary. The ABCC should be abolished.
It runs an ideological, anti-union campaign that is putting workers’ safety at risk. Take the highly publicised case of Joe McDonald, whose attempt to hold a safety meeting was disrupted by ABCC officers. Later, CFMEU organisers at the same site were prevented from conducting a safety inspection in the exercise of their legal rights. But only a few days later, the same Q-Con site was the scene of a potentially catastrophic accident, as a cubic metre of concrete fell sixteen stories to the ground.
The union has been pressing workers’ safety concerns at Q-Con for months. The ABCC has sided with the employer the whole time — how much longer until someone is killed because the ABCC has been protecting unsafe workplaces? It’s no wonder John Howard’s not well liked by Perth construction workers.
Cross-posted at Solidarity.
Why are unions to be the sole arbiters of safety?
Why isn’t there am impartial government department of workplace health & safety or something like that to handle this task?
haven’t read your post properly! trevor – gotta get out the door, but remembered this mob, from a recent election….
http://www.abc.net.au/am/content/2004/s1213113.htm
An impartial government department, Steve? Any suggestions as to where we might find one? Outer Galootastan perhaps!
Cheers.
Daniel, if you ever hear of an impartial govt dept I also would like to know. However they are still streets ahead of unions for impartiality.
Who died & appointed union bosses the sole arbiters of safety?
If the government is not going to handle supervising the implementation of regulations, which other areas currently handled by the govt, can be done by a volunteer organisation?
I’m not sure I’m with you, steve. Where did this “sole arbiters” nonsense come from?
Here we have an example of a construction site where workers have regularly complained about safety issues. They complain through their representative body, the CFMEU. The CFMEU has tried to take it up with the company, which is more interested in profits than safety. It has tried to take it up with WorkSafe, which has in fact issued several improvement notices at the site, but which also takes too long to arrive on the scene. Eventually, tonnes of concrete fell sixteen floors, fortunately without killing anyone. So, the union was right about serious safety problems, while the company tried to cover it up, the Federal Government helped, and the State Government didn’t do enough.
The ABCC should be abolished because the unions will take over from here, thanks very much.
Riiiiiiiiiiiiight. All you need to do is promise that thuggery and self-interest comes entirely from employers and government, and that the various Royal Commissions made shit up, and this will sound like a fair proposal.
Assuming that’s what it was he was holding.
I’m involved in the construction industry. Believe me, large scale commercial construction is not influenced by whether there is a union at the worksite or not. The dynamics that drive major works at places like large shopping complexes are more about the big boys squeezing the shop owners and making them pay for a new facelift every 2 or 3 years.
The union issue is about costs between the construction companies and the workers wages and safety costs. Money that goes to the workers leaves the pockets of the construction bosses. But the shop owners and the owners of the complexes won’t see that money either way. So, of course union bashing will not boost construction.
I have to deal with bosses and unions. They both drive me crazy at times.
Have EconTech replied?
It would be very interesting.
Trevor.
You get stuck in to Econtech because they have previously been commissioned by the ABCC. Then you link to a related 2003 critique prepared by the Employment Studies Centre at the University of Newcastle. Now who commissioned that study? Blow me down – the CFMEU! Try at least to be consistent when commiting crimes against logic. Attacking Econtech’s more recent reasoning is fine. The discrepancies with the ABS labour cost date are obviously fair game. But you’re doing the rest of your post a huge disservice by opening up with a cracking example of the motives fallacy.
Oh, and implying that the ABCC is ideologically anti-union is a bit harsh. After all, there are many reasons to be anti-union that rely on hard evidence and lived experience.
Cheers
BBB
Of course unions are partial. Impartiality is irrelevant. The problem is that, even if government inspectors were veritable bulldogs fighting for safety etc. there wouldn’t be enough of them. Unions have an inspector permanently stationed at every site – the delegate.
As for “union thuggery”…. Something like 1 out of 16,000 Australian building workers are killed in accidents every year. The figure for the mostly unionised US is 4 out of every 1,000. It would take a lot of “thuggery” to cancel out those figures. How many people have died due to building union “thuggery”?
That was supposed to read: “mostly un-unionised US”. ooops
Actually, Econtech was never previously hired by the ABCC. They’re regularly hired by the Howard Government, including, as Jo points out above, during election campaigns, and this year they’ve been hired by ACCI. So what I was commenting on was a pattern — and a pattern in which their methodology has been consistently criticised for resting on dodgy assumptions.
Perhaps I should have made it clearer that the ESC report was commissioned by the CFMEU, but I did link to it at the CFMEU website, so that’s a bit of a hint.
In any case, as you’ve noted, the real focus of my post is the dodgy content of the Econtech report. The criticisms of its methodology have been on the table since 2003, but it hasn’t done anything to fix it or explain why Toner is wrong. And it still doesn’t explain why the ABS figures are wrong, either.
Trevor,
Not being an expert on ABS data, I’m not sure why we should be using the 1993-94 national accounts for labour’s current contribution to non-residential construction input costs. Is it possible that labour’s share has risen over the last 13 years and that Econtech’s ‘assumption’ is based on actual data supplied by construction companies?
Cheers
BBB
Hmmm, Econtech caught with their numbers down eh?
Doesn’t surprise me. Nor does the Government Gazette’s slavish response.
As for OH&S in workplaces, Steve at the Pub has obviously been spending a bit too much time at the pub and too little at work if he reckons that organised labour should have no input on industrial safety matters.
I used to be involved in OHS prosecution work for a certain Government and Unions, together with industry employer groups, were regarded as key stakeholders in industrial safety issues and regularly consulted in regards to broad policy matters.
I must say, in the entire 7 or so years I was doing such work, I never once saw or heard any Employer group suggest that enforcement (prosecution) of defaulting employers was a good idea.
They were all for consultation, tea and biscuits and a nice chat, whenever some poor bastard was crushed by a crane, run-down by a forklift, electrocuted, smashed by a falling scaffold (or whatever) at work.
They were also dead keen on “voluntary codes of practise” and self-assessment in regards to compliance.
The Unions, on the other hand, were all for enforcement and prosecution action whenever an accident occurred. They also favoured mandatory codes of practise and independent risk assessment and certification procedures.
If the employers had had their way, it would have been harsh words, followed by a response of: “Sorry Guv’nor, we’ll try not to kill anyone on the job again.”
Seems to me that the Unions were the sensible ones.
Anyway Steve, it’s your shout and I’ll have a schooner of New, thanks.
What is a “Schooner”? And what is “New”?
Evan, I did not suggest that organised labour should have no input into safety matters, or any other matters. I did ask why organised labour should have the majority say.
Quick fix for safety in construction industry – codify the crime of “industrial manslaughter” and hold every responsible individual (i.e. someone who could have prevented an accidental workplace death)in the company, from Board Chairman down, liable for mandatory jail sentence equivalent to other manslaughter offences – I’d be entertained to see them seek refuge in a provocation defence!
Evan, I did not suggest that organised labour should have no input into safety matters, or any other matters. I did ask why organised labour should have the majority say.
Because it is their members that are most likely to feel the results of an accident .
Duh another beer anyone ?.
BBB, if they’ve based their 51% figure on actual data, then they should say so. They don’t. They simply make it up. And they made it up in 2003, before the so-called “case studies” were a part of their work.
You’re right, of course, that the 93-94 accounts are not the best data to use. If you want to have a crack at the most recent figures, you can find them here. I’m no statistician, but my workings have it under 30%.
We were forewarned of this, I remember reading an article in the AGE – I could probably dig it up if I tried – describing the govt’s terms of reference when tendering for the report. It was quite clear what result the government wanted, and was paying to get.
I remember that study being commissioned. Working at an economics consultancy, we wouldn’t have touched it for quids. The TOR was something like ‘outline the benefits of further deregulation, and the costs of reregulation’. Lovely cost/benefit analysis there: measure the benefits of what we like, and the costs of what we don’t, and ignore the rest.
I remember thinking that whoever won the tender would not be banking on their credibility in future. Doesn’t sound like this mob had much to begin with.
The TOR was something like ‘outline the benefits of further deregulation, and the costs of reregulation’.
Yes that was it Kymbos, and the writer of the article said exactly the same thing about the detrimental effect on the credibility of whoever accepted the tender.
In a further centralisation of power, isn’t the Federal government attempting to move all workers off State based accident injury payouts and onto it’s very restrictive ComCare system?
Yet another way of screwing the worker.
‘Organised labour’ is another term for people who take the rational view that being disorganized is a recipe for being ripped off, injured and killed. People pay weekly subscriptions to pay representatives they elect to look out for them, to represent them to management, and to the industry generally, and to ensure that while they are working for a living, someone is looking out for the things that accountants, tax lawyers, consultants, economists employed by think tanks, public servants, journalists, business analysts and the like, do for the people who employ them. It is called ‘civil society’.
It has been assumed, at least since WW2 that such arrangements are a necessary (although of course, not sufficient), condition of liberal democratic society.
It is an intersting sign of the confident, booming and exciting times, that employers in a number of dangerous industries are becoming increasingly confident and open about ‘pricing’ safety risk, and simply passing on the cost of the risk to the final consumer. The laws increasingly discourage approaching the inherent risks of certain occupations through other more democratic and conservative means, and even if it didn’t, the growing confidence in general impunity for the powerful means it doesn’t much matter.
Attending the funerals of people killed at work, is just the same as attending the funerals of anyone who has died before their time, but there is an extra something to the occasion, each time relatives and friends know some accountant and politician and some nerd in some think tank decidied their husband/son/sister/brother life was worth an additional 0.00001% reduction in costs.
Just because someone claims to be representing the better interests of workers doesn’t mean they actually are, amused.
Just because I’m disorganised doesn’t mean that you’re the one to organise me.
Nobody has claimed that the factors in the Royal Commission that gave rise to the ABCC have been addressed, and just as well. The first sentence in my earlier posts stands.
There was a secret volume of the Cole commission that supposedly laid out the grounds for criminal charges in 26 cases. How many criminal charges were laid as a result of the Cole commission, Andrew? And how many led to convictions?
The record on civil matters is pretty bad, too.
The Cole Commission and the ABCC are ideologically-driven union-busting exercises. The most serious issue facing the industry is safety, but they don’t care if a few people die as long as there are some anti-union headlines from time to time.
Andrew E you are the small but perfect example of the type.
There is no “type”, amused.
I don’t know, Trevor; and if I told you in the current political climate I’d probably get arrested.
Wat I don’t understand is: if it’s OK to criticise goverments and business, why is it never OK to criticise unions? At all? For anything, no matter what? Isn’t it rich to simply dismiss the Cole Commission out of hand for its ideology, while excusing all union activity because (you believe) their motives are pure? I don’t see how you can defend Kevin bloody Reynolds or 90% of all the paid parasites who get around in their dinky little ComeFuckMeUnion polo shirts. In trade unionism, as with other areas of human activity, there is a gap between lofty intentions and actual practice: the sooner trade unionists realise this, the better they will be able to arrest the decay of this curate’s egg.
That said, I would love to see an inquiry as an aggregation of coronial inquests into those who die on building sites, put a few rules in place etc. I’m surprised the ABCC hasn’t done this. I’m surprised the cashed-up union hasn’t done this. I’m stunned if I’m the first person who’s thought of it.
Good points, Andrew E.
Going further, there are few classes of organisation that have so blatantly preyed on the most vulnerable in our community as the trade unions. Their motives are generally very base indeed. To be fair, safety issues are an exception. There is a degree of unintended irony in some of Trevor’s comments about the ABCC; the trade unions are the most ideologically driven bodies in Australia. Even more so than what passes for the Liberal Party these days.
BBB
Another report of dubious value excites Hockey