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FactCheck: are two-thirds of all industrial disputes in Australia in the construction sector?

Prime Minister Malcolm Turnbull. AAP Image/Dean Lewins

FactCheck: are two-thirds of all industrial disputes in Australia in the construction sector?

Since it’s been abolished by the Labor Party, days lost to industrial disputes have increased by 34%. Two-thirds of all industrial disputes in Australia, which are at their highest level since 2010, are in the construction sector. – Prime Minister Malcolm Turnbull, speaking about the Australian Building and Construction Commission in a speech to the Macarthur Chamber of Commerce, March 29, 2016.

Prime Minister Malcolm Turnbull has said he will call a July 2 double-dissolution election if the Senate does not pass legislation aimed at restoring the Australian Building and Construction Commission (ABCC).

The PM has said that:

  • since abolition of the ABCC, days lost to industrial disputes have increased by 34%;
  • two-thirds of all industrial disputes in Australia are in the construction sector and;
  • industrial disputes in Australia are at their highest level since 2010.

Are those assertions correct? Let’s check the data.

Are days lost to industrial disputes up 34% since the ABCC was abolished?

The ABCC was introduced in 2005, under the Howard government. Labor abolished the ABCC in March 2012 and replaced it with the Office of the Fair Work Building Industry Inspectorate.

When asked for a source to support his assertion about the 34% increase, the PM’s spokesman sent a table drawing on figures from the Australian Bureau of Statistics (ABS) data set on industrial disputes:

The spokesman said that:

ABS data suggests the introduction of the ABCC in late 2005 helped to reduce the rate of industrial disputes in the construction industry.

  • Pre-ABCC, the number of working days lost per 1000 employees in construction was five times as much as for all industries (56.1 versus 10.4 days).

  • During the ABCC’s operation, this dropped to around two times as much (9.6 days versus 4.2 days).

  • Since the ABCC’s abolition, the number of working days lost per 1000 employees in construction has averaged around 4.5 times the rate for all industries.

Indeed, we can clearly see from the graph below that, in construction, working days lost due to industrial disputes fell after 2005 and stayed low to 2009. Then, there was an increase in 2010 and big spikes in 2011 and 2012.

The big spikes in construction sector working days lost due to industrial disputes in between 2010 and 2012 coincided with several large construction sector disputes and strikes.

As reported elsewhere, a 2014 Productivity Commission report concluded that

The evidence that the ABCC stimulated material improvements in aggregate productivity or achieved cost reductions is weak… The ABCC is likely to have had its primary impact on unlawful conduct and on local productivity and costs at particular sites.

By taking the average number of working days lost in the construction industry (per 1000 employees) during the ABCC era and comparing it with the average number of working days lost in the construction industry (per 1000 employees) in the post ABCC era, it is possible to conclude it has risen 34% (or 3.3 days).

The PM’s statement is supported by ABS data.

Are two-thirds of all industrial disputes in Australia in the construction sector?

This assertion only true for the December 2015 quarter – which happened to be unusually high.

In other quarters, construction accounted for a much smaller proportion of working days lost, as the chart below shows:

Working days lost in construction due to industrial disputes has been consistently higher than the average across all industries since 2012.

It’s worth noting though, that the same data set, at certain time points, puts working days lost due to industrial disputes in the coal mining sector at much higher than construction.

The coal mining industry disputes were happening at the peak of the mining boom. Days lost due to industrial disputes spiking in 2010 and 2012 when a shortage of workers on major projects put unions in a strong bargaining position.

To sum up: the PM’s assertion that two-thirds of all industrial disputes in Australia are in the construction sector is correct for December 2015 only.

Overall, however, his comment is misleading because he is using the unusually high December 2015 quarter as a benchmark. The long run average for construction for 2010 to 2015 is just under 30% of all days lost (still the highest share of any industry). The average between 2005 and 2009, with the ABCC, was around 10% of all days lost.

Are industrial disputes in Australia at their highest level since 2010?

As shown in the chart below, ABS data shows the total number of industrial disputes in the 12 months ending December 2010 at 227. For the 12 months ending December 2015, the figure is 228.

What that time frame doesn’t show you is that, overall, the number of industrial disputes has declined greatly in the last few decades. The longer term trend is depicted in the chart below:

So the PM’s assertion that industrial disputes in Australia at their highest level since 2010 is correct, but relies on a selective choice of time periods.

The rate of industrial disputes has been trending down in recent decades, basically following the fall in trade union membership.

Verdict

It’s true that days lost to industrial disputes in the construction sector (reported to the ABS) have increased since 2010. They are now running at a higher level than when the ABCC was operating – at about 34% higher for the time periods indicated.

The PM’s statement that two-thirds of all industrial disputes in Australia are in the construction sector is correct for December 2015 only. Overall, his comment is misleading because the PM is using the unusually high December 2015 quarter as a benchmark. The long run average for 2010 to 2015 is just under 30% of all days lost (still the highest share of any industry). The average between 2005 and 2009, with the ABCC, was around 10% of all days lost.

The PM’s assertion that industrial disputes in Australia are at their highest level since 2010 is correct, but relies on a selective choice of time periods. There were more disputes in March 2010 and December 2009 than December 2015. However, for the time period he referred to, the claim is correct. – Gerard de Valence


Review

This is a fair FactCheck. I am comfortable with conclusions reached by the fact-checker.

All lost and unproductive workforce inputs affect the cost and value for money performance of the Australian construction industry. However, it is important to remember that this evidence alone does not explain rising cost or productivity of construction in Australia. We need measures that shine light on both management and the labour force. – David Chandler


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