Government Procurement as a Vehicle for Workplace Relations Reform: The Case of the National Code of Practice for the Construction Industry
| Author | Breen Creighton |
| Published date | 01 September 2012 |
| Date | 01 September 2012 |
| DOI | http://doi.org/10.22145/flr.40.3.3 |
| Subject Matter | Article |
GOVERNMENT PROCUREMENT AS A VEHICLE
FOR WORKPLACE RELATIONS REFORM: THE CASE
OF THE NATIONAL CODE OF PRACTICE FOR THE
CONSTRUCTION INDUSTRY
Breen Creighton
ABSTRACT
The use of public procurement as a vehicle for achieving public policy objectives can
conveniently be traced to the Fair Wages Resolution which was adopted by the British
House of Commons in 1891. This technique was subsequently adopted in many
jurisdictions, and finds clea r expression in the International Labour Organisation
('ILO')'s Labour Clauses (Public Contracts) Convention 1949 (No 94) ('Convention No 94').
1
This article describes the British model and its international pro geny, and then
examines a controversial and unusual Australian mutation in the form of the National
Code of Practice for the Construction Industry ('Code') and the various iterations of the
associated Implementation Guidelines ('Guidelines') which have been adopted since
1998. It suggests that the Code and Guidelines, especially under t he Howard
Government, constitute a perversion of the traditional use of public procurement as a
vehicle for the implementation of public policy in the industrial context. That is
because they were directed to the curtailment of the rights of workers and their
organisations ra ther than protecti ng employment standa rds and promot ing coll ective
bargaining. The article argues that the Code and Guidelines sit uneasily with accepted
notions of the rule of law in a number of respects , and with certain aspects of
Australia's obligati ons in international law. It also discusses the Fair Work Principles
('FW Principles') which have applied to all aspects of procurement by th e
Commonwealth since January 2010, and suggests that they embody an approach to
public procurement and the promotion of social objectives which is rather more in
keeping with international best practice than that reflected in the Construction
Industry Code and Guidelines.
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Professor of Law, Graduate School of Business and Law, RMIT University. The author
wishes to thank the Review's anonymous referees for their helpful comments on an earlier
version of this article. He, of course, retains full responsibility for the end-result.
1
Convention (No 94) Concerning Labour Clauses in Public Contracts, opened for signature 29
June 1961, 183 UNTS 208 (entered into force 20 September 1952) ('Convention No 94').
350 Federal Law Review Volume 40
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I INTRODUCTION
The Howard Government adopted a number of strate gies which were directed wholly
or partly to effecting behavioural and cultural change in the construction industry.
They included the enactment of the Building and Construction Ind ustry Improvement Act
2005 (Cth) ('BCII Act') and the Workplace Relations Amendment (Work Choices) Act 2005
(Cth) ('Work Choices').
2
They also included r eliance upon Commonwealth
procurement policy to drive 'reform' in the industry. This was d one through the
adoption and implementation of the Code and several iterations of the associated
Guidelines. The Rudd and Gillard Governments adopted less intrusive versions of the
Guidelines, but certainly did not abandon reliance upon procurement polic y as a
vehicle for workplace regulation. The adoption of a modified versio n of the Howard-
era Guidelines by the Victorian Government in 2012 also suggests t hat the more
interventionist appr oach to 'reform' t hrough proc urement is fa r from being of purely
historical interest.
The use of government pr ocurement as a vehicle for the attainment of public policy
objectives is not new: it was endorsed by the British House of Commons as long ago a s
1891, and in 1949 received formal recognition at the internat ional level through the
adoption by the International Labour Confere nce ('ILC') of Convention No 94, and
accompanying Recommendation No 84.
A leading British authority on government contracting had this to say about the
rationale for the use of government procurement as a regulatory technique:
Government contracts may…be employed…in support of policy by the incorporation in
such [ie procurement] contracts of conditions imposing obligations upon the contractor,
collateral to the main purpose of the contract as a means of procurement, to conduct his
affairs in specified ways in accordance with the policy to be implemented. In this respect
the government contract appears as a quasi-administrative or regulatory instrument
which can be used, within the restricted field of procurement, in support of legislation or
as an alternative means of implementing policy.
3
In the industria l context, procurement has conventionally been used to protect and
to promote the interests of workers — for example by seeking to ensure that employers
observe terms and conditions of employment that accord with appropriate industry
standards; by requiring formal recognition of workers' rights to form or join trade
unions; and promoting regulation of terms and conditions of employment t hrough
collective ba rgaining. The approach adopted by the Howard Government was rather
different. Instead of being used to protect and promote the interests of workers and
their organisations, procurement was used to try to regulate their behaviours in a
manner that was in many respects inimical to their interests.
This article examines the Code and Guideli nes in the context of the conventional
approach to the use of government procureme nt as an instrument of public policy. It
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2
Of course Work Choices had application beyond the construction in dustry, but it had a
particular impact in that industry — especially in relation to right of entry by union
officials, unprotected industrial action and coercive behaviour. For more detailed
discussion of both the BCII Act and Work Choices as they applied to the construction
industry, see Anthony Forsyth et al, Workplace Relations in the Building and Construction
Industry (Butterworths LexisNexis, 2007). See also Breen Creighton and Andrew Stewart,
Labour Law (5th ed, Federation Press, 2010) ch 24.
3
Colin Turpin, Government Contracts (Penguin, 1972) 254.
2012 National Code of Practice for the Construction Industry 351
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looks first at the Fair Wages Resolutions that were adopted by the British House of
Commons in 1891, 1909 and 1946, and at the translation of the last of these into the
international arena through Convention No 94. It then examines the adoption of the
Code and Guidelines, their development and implementation through the period of
the Howard Government, and the revi sion of the Guidelines by the Rudd and Gillard
Governments in 2009 and 2012. It suggests that the Code and Guidelines may have
helped effect a measure of behavioural change in the construction industry, but that in
doing so they compromised accepted notions of the rule of law, and are inconsistent
with Australia's international obligations in certain respects. They also sit uneasily
with the approach that has been adopted by the Rudd and Gillard Governments in
relation to procurement more generally.
II INTERNATIONAL CONTEXT
The Fair Wages Resolutions
The Fair Wages Resolution of 1891 stated that:
[I]n the opinion of this House it is the duty of the Government in all Government
contracts to make provision against the evils which have recently been disclosed before
the House of Lords' Sweating Committee,
4
and to insert such conditions as may prevent
the abuses arising from subletting [subcontracting], and make every effort to secure the
rate of wages generally accepted as current for a competent workman in his trade.
5
This was replaced by a further Resolution in 1909,
6
which was in turn superseded
by a third (and final) Resolution in 1946.
7
The 1909 iteration required that contractors
should 'under penalty of a fine or otherwise' observe wages and hours of labour that
were 'not less favourable than those co mmonly recognised by employers and trade
societies…in the trade or district where the work is carried out '. The 'fine' option was
never implemented, and was not replicated in the 1946 Resolution.
The 1946 Resolution exten ded to 'conditions of labour' as well as to wages and
hours, and made the endorsement of collective bargaining more explicit than its
predecessor. It also provided for referral of disputes about the a pplication of the
Resolution to 'an independent tribunal for decision';
8
required that contractors
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4
First Report from the Select Committee of the House of Lor ds on the Sweating System,
Parliamentary Papers 1888, No 361.
5
United Kingdom, Parliamentary Debates, House of Commons, 13 February 1891, vol 350, col
647. On the origins of the 1891 Resolution, see Christopher McCrudden, Buying Social
Justice: Equality, Government Procurement, and Legal Change (Oxford University Press, 2007)
42–9. For an assessment its efficacy, see B Bercusson, Fair Wages Resolutions (Mansell, 1978)
ch 5.
6
United Kingdom, Parliamentary Debates, House of Commons, 10 March 1909, vol 2, cols
415–58. For detailed analysis of the 1909 Resolution, see Bercusson, above n 5, chs 6–10.
7
United Kingdom, Parliamentary Debates House of Commons, 14 October 1946, vol 427, cols
619–718. For detailed analysis of the background to, and requirements of, the 1946
Resolution, see O Kahn-Freund, 'Legislation Through Adjudication: The Legal Aspect of
Fair Wages Clauses and Recognised Conditions' (Pt 1) (1948) 11 Modern Law Review 269; O
Kahn-Freund, 'Legislation Through Adjudication: The Legal Aspect of Fair Wages Clauses
and Recognised Conditions' (Pt 2) (1948) 11 Modern Law Review 429.
8
In practice, complaints were invariably referred to the Industrial Court, established under
the Industrial Courts Act 1919 (Cth). This tribunal was subsequently reconstituted as the
Industrial Arbitration Board and (after 1975) the Central Arbitration Committee.
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