Malcolm Turnbull and the treasurer are at odds over the Australian Building and Construction Commission and its effect on wages

Scott Morrison's claim ABCC will boost wages shows it is fast becoming a magic pudding

The treasurer, Scott Morrison, has found a new argument to support the reintroduction of the Australian Building and Construction Commission: it will “support wage growth”.

Two problems: first, it contradicts what Malcolm Turnbull has said on the subject; and, second, he has not provided evidence for the claim.

On 1 June, Turnbull appeared on 2GB radio in the election campaign he launched over the blocked ABCC bill and was asked about a workplace deal granting a 15% pay rise over three years negotiated by the Victorian construction union.

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Alan Jones asked Turnbull who would stop “excesses” such as a carpenter on a union-negotiated agreement earning $163,000 a year.

Turnbull replied: “Well, we will stop that.

“But we can’t stop that unless we win this election, because unless we win this election we cannot get the ABCC legislation reinstated and we do that through the joint sitting.”

Attached to the ABCC bill is a code that regulates the contents of workplace deals made by firms bidding for government work.

Turnbull explained the building code, which bans (already unlawful) coercion to win above-award pay rises, would “ensure you don’t get these shocking agreements between the CFMEU and builders”. He said builders were “basically stood over” by the construction union.



On Monday, Morrison told 2GB that the ABCC would help “boost people’s wages”.

“Its absence is holding back people getting ahead in the construction industry, because of working days lost and the lawlessness in that sector, which is holding our economy back,” he said.



In question time, the treasurer said: “This is an important economic reform ... that will drive productivity, that will support wages growth, that will support increases in profits of small businesses so they can grow and expand.”

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Turnbull said the ABCC stopped excessive wages, Morrison said it will support wages growth.

Guardian Australia has contacted Morrison and the employment minister, Michaelia Cash, to ask for the evidence the ABCC would support wage growth.

Perhaps Morrison’s argument is that by increasing productivity there will be more profit to share with workers.

Christopher Pyne, representing Cash in question time, said “the last time the ABCC existed in Australia building and construction productivity increased by 16.8%”.

That was used in an Independent Economics (formerly Econtech) report commissioned at first in 2007 by the ABCC and then updated at the request of the Master Builders Association in 2013.

It comes from Australian Bureau of Statistics data on productivity rises in the construction sector over a decade, however even the ABCC-commissioned report doesn’t attribute the increase directly to the regulator. The report actually estimated the ABCC increased productivity by 9.4% not 16.8%.

Pyne said the report estimated that consumers were saved $7.5bn in “needless expenses” that would have been avoided if the ABCC were in place.

The report has been the subject of a lengthy rebuttal by Prof David Peetz, who has argued both the 9.4% productivity figure and $7.5bn in consumer savings have “no solid basis”.

Peetz criticised the report for cherrypicking which year it took as a base point with the result that (union-dominated, ABCC-regulated) commercial construction appeared a lot more expensive than (less union heavy, not ABCC regulated) domestic construction.

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“Therefore the claims of massive welfare gains and losses from building industry regulatory changes are nonsense,” he concluded.

Morrison said on 2GB that days lost to industrial action in the construction sector increased by 50% in the last quarter and now account for two-thirds of working days lost across the economy.

That’s true. But industrial action is the means that unions and workers exert pressure to win a bigger share of profit.

And that’s the problem with simultaneously arguing the Construction Forestry Mining Energy Union and other unions “stand over” businesses to win “excessive” pay rises but also claiming cracking down on the militant unions will boost wages.

The government’s case for the ABCC is fast becoming a magic pudding. It will simultaneously increase profits, decrease consumer prices, prevent excessive wage rises and support increases in wages.

Extraordinary claims demand proof and, if the government has reason to believe these are all simultaneously possible, voters deserve to see it.