CEO UPDATE 24/08/15 1

CEO UPDATE 24 August 2015

Contents

Click to go directly to articles of interest, then Click at ▲Top▲ to return to ‘Contents’

The Royal Commission into Trade Union Corruption and Governance and the Defeat of the ABCC Bills1 The Royal Commission Should Be Permitted to Do its Work .................................................................. 2 ABCC Bills Defeated ............................................................................................................................... 3 Proposed establishment of Registered Organisations Commission rejected by Senate ......................... 3 FWC Considers Inclusion of Family friendly/Family & Domestic Violence Clause in Modern Awards .... 3 Accident Make Up Pay – It’s Back .......................................................................................................... 3 First Formal Bullying Decision handed down by the Fair Work Commission .......................................... 4 Annual Leave Proceedings – Success and Finalisation .......................................................................... 4 ACCC Chair highlights Actions Against Unions ...................................................................................... 5 Productivity Commission’s Draft Report on Workplace Relations Does Not Go Far Enough .................. 5 House design copyright under the spotlight ............................................................................................ 6 Court Fines Construction Company $1.1 million following death of driver .............................................. 6 Safety Publications Relevant to the Industry ........................................................................................... 7 Changes made to the National Asbestos Exposure Register registration form ....................................... 7 Master Builder National Forecasts .......................................................................................................... 8 Non-Residential Back In Negative Territory ............................................................................................ 8 Improvement in building conditions stalls ................................................................................................ 9 Rates on Hold ......................................................................................................................................... 9 Low Wage Inflation.................................................................................................................................. 9 Consumer Sentiment Improves ............................................................................................................. 10 Cap on Investment Loans ..................................................................................................................... 10 ATO on Phone Scams .......................................................................................................................... 11 Small Business ATO App ...................................................................................................................... 11 COAG update – Premiers discuss national VET takeover at leaders retreat ........................................ 11 Construction and Property Services Industry Skills Council Update ..................................................... 12 National Residential Builders Council ................................................................................................... 12 Building Ministers Forum ....................................................................................................................... 12 Non-Conforming Products ..................................................................................................................... 13 Taxation – Stamp Duties ....................................................................................................................... 13 Housing Lot Sizes ................................................................................................................................. 13 Building Industry Confidence ................................................................................................................ 13 Timber Joists and Assemblies .............................................................................................................. 14 Structural Properties of Laminated Veneers ......................................................................................... 14 Door Sets and Windows ........................................................................................................................ 14 Bulk Thermal Insulation ......................................................................................................................... 14 Master Builders Australia National Conference ..................................................................................... 15

Message from the CEO

The Royal Commission into Trade Union Corruption and Governance and the Defeat of the ABCC Bills

The controversy surrounding the Royal Commissioner Dyson Heydon is not deterring Master Builders in its advocacy for reforms to clean up the industry. The allegations of bias levelled against Justice Heydon by the ACTU, the CFMEU and other unions under investigation by the Royal Commission do not detract from the integrity of witnesses or the evidence provided so far.

CEO UPDATE 24/08/15 2

Similarly, the rejection by the Senate of the ABCC Bills was disappointing, but Master Builders is encouraged by the support of some cross bench senators for the Bills and is working with the Government as it intensifies its effort to have the Bills passed by the end of the year.

Also on the industrial relations front, Master Builders is encouraged by the ACCC’s moves to strengthen its approach to secondary boycotts along the lines that Master Builders has long called for.

This Edition also highlights the release of the latest Master Builders Building and Construction Industry Forecasts which confirm that housing remains strong while commercial building would appear to be back on the slide.

Important developments in VET continue to occur, with the Prime Minister and the State Premiers, agreeing in late July to an in-principle position to allow the Commonwealth to take greater responsibility for VET with the States and Territories keeping responsibility for TAFE. These are important reforms and it is important that these align with the Government’s restructuring of the Industry Skills Councils.

Tax reform is expected to loom large in the next fortnight. Master Builders’ firm position is that increasing taxes does not constitute tax reform. Company and personal income taxes need to come down and yes, there needs to be a review of a range of State-based taxes which means looking at the GST, but it does not mean that the GST automatically has to rise.

The other side of the coin that Governments must look at is ways to reduce spending so as to relieve the tax burden on both business and individuals.

Finally, for those of you who have not registered for our National Conference on the Gold Coast, I once again encourage you to register as a delegate. Don’t miss this great opportunity to network with your peers and treat yourself to some well-earned time off.

Wilhelm Harnisch

Chief Executive Officer

▲Top▲

Workplace Relations

The Royal Commission Should Be Permitted to Do its Work

Master Builders has been closely following the controversy surrounding Dyson Heydon, the Royal Commissioner appointed to head the Royal Commission into Trade Union Governance and Corruption. The attacks on the Commissioner show how desperate those opposed to the uncovering of unlawful and unacceptable conduct have become in the face of the Commission’s revelations and the success in uncovering over 50 breaches of criminal and civil law. The attacks are based on no actual conduct – the invitation to speak at the fundraiser was declined. In a statement dated 13 August 2015 Master Builders commended the work of the Royal Commission and said that the attacks on the Commissioner were an unhelpful distraction from its valuable work.

In that context Master Builders on 21 August 2015 lodged a comprehensive submission with the Royal Commission on the necessary reform of the law relating to registered organisations and fundamental structural issues about regulating unions. The law reform task, inclusive of the introduction of a more disciplined ‘fit and proper person’ test has been set out in considerable detail and the urgency of the task illustrated by the unions’ ongoing unlawful and unacceptable behaviour.

▲Top▲

CEO UPDATE 24/08/15 3

ABCC Bills Defeated

On 17 August 2015 the ABCC Bills were voted down in the Senate. Rather than viewing the vote as a defeat for reform Master Builders is heartened by the fact that the vote in the Senate was 33 for and 33 against – a tie. This means the Bill was “negatived”. Despite Senator Lambie calling for the deregistration of the CFMEU, she voted against the Bills. The Palmer United Party Senator Wang abstained from voting. The Government has committed to reintroducing the Bills and Master Builders is in discussions with Government about timing and about advancing reform through a Building Code. Master Builders will intensify its’ efforts with the Cross Bench Senators to have the Bills passed this year.

▲Top▲

Proposed establishment of Registered Organisations Commission rejected by Senate

The Senate has recently rejected a bill that would have imposed greater disclosure and transparency obligations on officers of registered organisations such as union officials . The Fair Work (Registered Organisations) Amendment Bill 2014 [No. 2] (the Bill) was narrowly defeated 34 votes to 33 last week. In its recent submission to the Royal Commission into Trade Union Governance and Corruption, Master Builders advocated for the introduction of broad reform of registered organisations. Master Builders continues to support, in principle, the establishment of a truly independent Registered Organisations Commission with enhanced investigation and information gathering powers to adequately deal with potential breaches of duty by officers of registered organisations. Master Builders will continue to advocate for regulatory reform in this area.

▲Top▲

FWC Considers Inclusion of Family friendly/Family & Domestic Violence Clause in Modern Awards

As part of the 4 yearly review of modern awards, on 13 August 2015 the Fair Work Commission (FWC) heard submissions with regard to the potential variation of all 122 modern awards to include provisions relevant to family friendly work arrangements and a family and domestic violence clause. The ACTU has sought variations to all modern awards to incorporate provisions which support family friendly work arrangements for pregnant employees and/or employees returning to work after parental or adoption leave. The ACTU has also sought the inclusion of a clause that requires employers to provide paid domestic violence leave in certain circumstances. In response to the ACTU’s claim, Master Builders supported a submission lodged by the Australian Chamber of Commerce and Industry (ACCI) arguing that the draft clauses proposed by the ACTU did not satisfy the requirements under the Fair Work Act (FW Act) to be included in the modern award review. In direct response to ACCI’s submissions, the ACTU then revised its claim and significantly pared back what it proposed in its original submissions. Master Builders awaits the FWC’s decision as to whether the ACTU has sufficiently overcome the jurisdictional hurdles to allow the FWC to consider substantive submissions about the form such clauses might take.

▲Top▲

Accident Make Up Pay – It’s Back

On 18 August 2015, a Fair Work Commission Full Bench handed down a decision which will re-introduce accident make-up pay into the modern building awards from 15 October 2015. Whilst Master Builders was successful in having accident make-up pay clauses in the On Site and Joinery Awards knocked out on 31 December 2014, this latest round of litigation re-inserts that entitlement and will provide workers with accident make up pay for 26 weeks. Accident make up pay is the difference between the rate of pay earned if a worker had continued to perform the duties being performed immediately before the occurrence of a compensable injury and the sum of the amount of weekly compensation received by the worker under workers compensation. There will be further proceedings to settle the words of the new provision.

▲Top▲

CEO UPDATE 24/08/15 4

First Formal Bullying Decision handed down by the Fair Work Commission

The Fair Work Commission (FWC) has recently made an order for an employer to take specific action to stop the bullying of two employees. The decision is the first instance where the FWC has enlivened its anti-bullying jurisdiction, under the Fair Work Act 2009 (Cth) (FW Act) that commenced in January 2014. The decision followed an application by the two employees to the FWC for it to make orders to stop then being repeatedly bullied by their supervisor, a real estate property manager. The applicants argued that they were repeatedly belittled, sworn and yelled at, subjected to daily interference with their work, suffered physical intimidation and threats of violence, and were encouraged by their manager to victimise other staff members. Although the FWC heard that upon receiving complaints from the applicants, their employer attempted to remedy the situation by transferring them to another office location, the FWC was not satisfied that this would stop the offending conduct by the manager. Having determined that the employees had been subjected to repeated bullying, the FWC held that there was a real risk of the conduct continuing if the orders sought by the employees were not made. The FWC then ordered that for a period of 24 months, the manager not approach the employees within the workplace and that the employer implement an anti-bullying policy and training schedule to address the problem.

The case re-iterates the importance of employers having sound anti-bullying policy and procedures and ensuring that all staff receive training to prevent bullying in the workplace. Master Builders Human Resources Manual contains information on workplace bullying, as well as a sample anti-bullying policy tailored for members.

▲Top▲

Annual Leave Proceedings – Success and Finalisation

On Friday 7 August 2015 Master Builders appeared in the Fair Work Commission (FWC) to make submissions on a number of proposed new model terms to be included in all 122 modern awards in relation to annual leave. The review includes proposed amendments to the Building and Construction General On-Site Award 2010 and the Joinery and Building Trades Award 2010. The matters before the Full Bench related to the final form of the new clauses on excessive annual leave, the cashing out of annual leave and the granting of leave in advance all which had been won for employers. Master Builders proposed amendments to the FWC’s draft clauses in the awards that included:

1. Amending and clarifying the notice requirements in relation to the initiation of discussions with employees about the taking of excessive annual leave, to reflect the less formal approach practiced within the building and construction industry.

2. Advocating for a reduction in the amount of excessive leave that employers can direct employees to take, for example to one day, to allow employers to direct employees to take excessive leave during quiet times or adjacent to holiday periods.

3. Eliminating an employee’s right to direct an employer as to when excessive leave should be taken without there being any need for the employee to consider business cycles or any detrimental effects the direction may have on the business; and if the clause is to be retained, proposing that amendments be made to include transitional provisions to allow employers to plan around employees taking of leave where excessive accruals exist within the workforce.

4. Eliminating the proposed clause relating to record keeping with regard to the cashing out and granting of leave in advance on the basis that the Fair Work Act 2009 (Cth) already contains provisions that impose obligations upon employers regarding record keeping.

The FWC will consider all submissions made with regard to the proposed changes and will schedule a date for further directions later in September. Before year’s end we will have better annual leave provisions which enable employers to manage this issue with greater efficiency.

▲Top▲

CEO UPDATE 24/08/15 5

ACCC Chair highlights Actions Against Unions

On 14 August 2015, the ACCC Chairman Rod Sims made a speech

http://www.accc.gov.au/speech/meeting-expectations-industrial-relations-as-a-case-study about the ACCC’s enforcement of competition law as it applies to alleged union behaviour

in the general industrial relations arena, outlined current investigations and described difficulties with current laws. He said: “The Competition and Consumer Act (CCA) has always had clear exemptions for agreements relating to employment conditions and these, for example, mean that, even if employers met in a smoke-filled room to reach an agreement on the wages to be paid to their employees, this would not be within the ACCC’s jurisdiction”, Mr Sims said.

“The first exemption is the IR carve out, which means the ACCC does not have jurisdiction to deal with agreements that relate to employment conditions. The second exemption means that, broadly speaking, the CCA doesn’t apply to services of employees performed under a contract of service. The final exemption is for enterprise agreements that have been approved by the Fair Work Commission.”

“However, even with these exemptions, it does not mean the role of unions is to regulate markets by fixing prices, deciding who can and can’t operate in a market, or determining how bids for work will be allocated, just as it is not any company’s role to do this,” said Mr Sims.

Mr Sims said, “With this in mind, the ACCC has many related issues on its plate; indeed, the ACCC may currently have more union-related major investigations than ever before.”

In the speech, he notes that the recent draft report of the Productivity Commission on workplace relations recommends maintaining the IR carve-out from the CCA. He outlines 5 areas for related law reform, particularly simplifying the law about secondary boycotts. These reform proposals will be provided by the ACCC to the Productivity Commission in a submission on the workplace relations inquiry.

▲Top▲

Productivity Commission’s Draft Report on Workplace Relations Does Not Go Far Enough

As reported in the last CEO Update, on 4 August 2015, the Productivity Commission released its draft report on the Australian workplace relations framework. The draft report recommends a number of sensible changes to the current landscape, although it is likely that some of the recommendations will be controversial and the ACTU has already said that “ the Productivity Commission Inquiry was called by the Abbott Government in order to cut penalty rates, the minimum wage and rights at work”

a matter they confirmed on the release of the draft report. The Australian Government intends to

use the Productivity Commission’s report to develop its workplace relations policy to take to the next election so it will have political currency. The report has been labelled by many commentators as “sensible” or setting out what might be politically possible. This element of the report reinforces Master Builders’ initial reaction: that in not calling for a radical overhaul of the general workplace system the draft report is out of step with the findings of its own report on the building and construction industry’s workplace relations in the Public Infrastructure inquiry. The report’s pursuit of the “middle ground” shows the distance between what are mainstream workplace relations values that are generally adopted and the values that are applied in the building and construction industry. That point will be emphasised in our submission on the draft report. The National Industrial Relations Advisory Committee will meet in Melbourne on 7 September 2015 in order to workshop Master Builders’ response.

▲Top▲

Richard Calver, National Director Industrial Relations and Legal Counsel, rcalver@masterbuilders.com.au

CEO UPDATE 24/08/15 6

Legal and Contracts

House design copyright under the spotlight

Recently the Supreme Court of Queensland made an order for extensive alterations to be made to an upmarket North Queensland property when it was held that the home had infringed upon the copyright of another property that had already been built in the same estate.

In Coles v Dormer & Ors [2015] QSC 224, the court was asked to consider whether a house in an exclusive sub-division of Port Douglas, had breached the copyright of another in the same neighbourhood after its owners claimed the house was a copy of their own home. The original property, designed by an architect and in conjunction with its original owners, was constructed with a number of unique design features and was sold to the claimant. Having missed out on purchasing the property, the under bidders of the sale then commissioned the same builder to construct a similar home within a few streets of the original property. When the claimant became aware that the home was under construction, he approached the original architect and paid him to obtain copyright of the plans of his home. The Court found that the second property had “extensive and significant points of replication and similarity” to that of the claimant and as a result of the work being protected by copyright owned by him, the defendants had infringed that copyright. The substantial reproduction was not only limited to the floorplan but also to the façade of the home. Finding in favour of the claimant, the Supreme Court then ordered for the second property to undergo significant alterations, including removing and replacing part of the roof, a number of windows and external stone features.

It should be noted that for a design to be protected by copyright, it does not need to be registered. Copyright is automatically generated upon creation of the works. The general rule is that the author or creator (in this case the architect) of the work is its owner, however; that ownership can be assigned by agreement (on this occasion to the claimant).

The case illustrates the dangers of using the designs of others without permission to do so. It also demonstrates that if the Court finds a home’s design has been copied, not only is it possible for a potential claimant to seek compensation, but that the Court can also order the works to be substantially altered at the cost of the person in breach of the copyright.

▲Top▲

Richard Calver, National Director Industrial Relations and Legal Counsel, rcalver@masterbuilders.com.au

Work Health and Safety

Court Fines Construction Company $1.1 million following death of driver

Industrial Magistrate Lorraine Walker has recently fined a Canberra construction company $1.1 million for safety breaches that led to the death of a truck driver. The truck driver, a sub-contractor, was electrocuted and died when the tip truck he was driving connected to live overhead power lines on a construction site of Kenoss Contractors (Kenoss). In June, the ACT Industrial Court found that Kenoss was guilty of a number of safety breaches that contributed to the death; including the lack of signage to warn the driver that the power lines were live, the absence of a spotter and general safety supervision and planning. In handing down her decision, Magistrate Walker stated that the risks associated with the death of the driver were foreseeable and could have easily and affordably been addressed which could have prevented the death. In determining the scale of the fine, Magistrate Walker also took into consideration the poor corporate culture at Kenoss, which included the appointment of underqualified safety officers and its attempts to hinder investigations and tamper with evidence following the incident.

CEO UPDATE 24/08/15 7

A former project manager of Kenoss was also prosecuted in the original proceedings, but was found not-guilty on the basis that he did not hold sufficient power to meet the definition of ‘officer’ under the Model Work Health and Safety Act (the Act). Although Kenoss is now in liquidation and therefore the fine is unlikely to be paid, in handing down the penalty, Magistrate Walker stated the decision should serve as a strong warning to contractors who do not have adequate safety systems in place when work is undertaken near overhead power lines. The case also illustrates that managers of construction sites are also vulnerable to potential prosecution if they do not fulfil their obligations under the Act. The following link to an ABC News article, includes comments by ACT Worksafe Commissioner Mark McCabe about the significance of the decision - http://www.abc.net.au/news/2015-08-19/construction-company-fined-1-million-over-workplace-death/6708032

▲Top▲

Safety Publications Relevant to the Industry

Safe Work Australia has published the following relevant publications this week:

Work-related injuries and fatalities in construction, 2003 – 2013 report

http://www.safeworkaustralia.gov.au/sites/swa/about/publications/pages/fatalities-in-construction

Bullying annual statement

http://www.safeworkaustralia.gov.au/sites/swa/about/publications/pages/psychosocial-health-and-safety-and-bullying-in-australian-workplaces

▲Top▲

Changes made to the National Asbestos Exposure Register registration form

The Asbestos Safety and Eradication Agency (ASEA) has produced an updated manual registration form for the National Asbestos Exposure Register (Register). The form reflects amendments that have already been made to the online version, including the introduction of categories of exposure being residential, work, school/educational, environmental/domestic. ASEA has no regulatory role in relation to Asbestos as this is the responsibility of the States and Territories. Members should always ensure that if there has been a potential or actual exposure to an asbestos-containing material, that the local regulator be alerted.

Master Builders is continuing to advocate with ASEA that employers should be advised in writing when an entry is made on the Register and that they should be informed of their right to contest registrations.

Please note that if members choose to make an manual entry on the Register, that the updated form should now be used. Although ASEA prefers on-line entries at – https://asbestossafety.gov.au/national-asbestos-exposure-register, a printable and fillable PDF form is also available by request via enquiries@asbestosafety.gov.au or by telephone 1300 363 079.

▲Top▲

Richard Calver, National Director Industrial Relations and Legal Counsel, rcalver@masterbuilders.com.au

CEO UPDATE 24/08/15 8

Economics and Taxation

Master Builder National Forecasts

Master Builders National Forecasts have been tailored to focus on specific sectors of the Building and Construction industry. Forty two options are now available, ranging in price from $75 to $1100.

The Full Report ($1,100) includes national forecasts (annual to 2017/18, value of work done, dwelling commencements), 3 Sectors, 34 Sub-sectors, 8 States and Territories, as well as prospects for growth, industry state of play and economic backdrop. Sector Report ($400) for Residential Building, Non-Residential Building or Engineering Construction (1 sector; 3, 15 or 16 sub-sectors; national plus 8 States and Territories). Individual State or Territory Report (1 State or Territory, 3 sectors, 34 sub-sectors) for $275. State and Territory Sector Report (1 State or Territory, 1 sector) without commentary ($75) or with commentary, for NSW and Victoria ($125). .

To access please visit the Forecasts section at www.masterbuilders.com.au or click here.

Non-Residential Back In Negative Territory

Conditions in the commercial construction sector have fallen back into negative territory according to the latest Master Builders National Survey of Building and Construction. Despite earlier optimism, the latest survey shows that the anticipated recovery in commercial construction has failed to materialise.

In the June quarter the index measuring current conditions in the non-residential building sector fell to 46.1 which has reversed the improved level of confidence present in the December 2014 and March 2015 quarters. The index measuring expectations about future activity also dropped back for the second successive quarter as caution about the wider economy and fragile business confidence kept a lid on investment.

▲Top▲

CEO UPDATE 24/08/15 9

Improvement in building conditions stalls

Builders’ business conditions remained unchanged in the June quarter after the dip experienced in the preceding quarter. After posting solid gains last year conditions have eased, albeit remaining at a solid level above the neutral 50 mark.

However, as the chart shows, conditions need to strengthen further for builders to enjoy conditions similar to those experienced between 2003 and 2007.

Although respondents are on average describing their own business activity as ‘good’ or ‘very good’ and business profitability remains close to the ‘satisfactory’ range, builders will be looking for a further strengthening after the softening experienced in the March and June quarters.

Builder confidence flatlined in the June quarter but as the chart shows, remains at a fairly strong level. After recovering to levels not seen since before the G.F.C. the index measuring confidence has plateaued. The bottom line though, is builders still expect own business activity and profits to improve over the next six months.

▲Top▲

Rates on Hold

Despite the possibility that banks may feel compelled to take further unilateral action to lift rates on investor loans, Master Builders expects the Reserve Bank to keep the official cash rate steady over the remainder of this year and well into 2016.

In a recent statement on monetary policy, the Reserve Bank assessed that the unemployment rate had peaked and forecast that economic growth would be 3 per cent in 2016 with a central forecast of 3.75 per cent in 2017, well above trend.

There is always a considerable margin of error around such forecasts, but if it was to become apparent through the course of next year that the economy was on a strong growth trajectory, speculation would quickly increase about the likelihood of the next rate hike cycle beginning.

▲Top▲

Low Wage Inflation

The ABS Wage Cost Index (WCI) increased by 0.6 per cent in the June quarter keeping through the year growth at 2.3 per cent. Private sector wages growth was even weaker at 0.5 per cent in the quarter, with through the year growth at a new low of 2.2 per cent. There was little sign of any wage pressure by region or industry and no state or industry recorded annual growth above 3 per cent.

The WPI for the building and construction industry increased by 0.6 per cent in the June quarter, to be 1.7 per cent higher than June quarter 2014. Over the past three years, building and construction wage inflation has fallen; from 3.3 per cent in 2012/13, to 3.0 per cent in 2013/14, and to 2.1 per cent in 2014/15. The decade average was 3.8 per cent per annum.

The shift from higher paid mining-related jobs to lower-paid services and residential construction jobs, whilst not captured in the WCI, shows up in average earnings per employee where growth has been much weaker than WPI growth in recent years.

CEO UPDATE 24/08/15 10

The headline 0.6 per cent increase in the WCI for the quarter follows a 0.5 per cent result for the March quarter and is consistent with some improvement in labour market conditions. However, wages growth remains subdued and will work to keep inflation in check though limiting any upside in household spending.

Although wages growth is set to remain low over the next couple of years, some modest improvement in wages growth can be expected in areas where activity is more buoyant, such as New South Wales, Victoria and household and professional services.

▲Top▲

Consumer Sentiment Improves

The Westpac–Melbourne Institute consumer sentiment index rose by 7.8 per cent in August, from 92.2 in July to 99.5 in August. Westpac believes that ongoing positive news around house prices may have partly buoyed confidence, particularly for residential property owners. Confidence is not being boosted by the expectation of more interest rate relief, however, as only 5 per cent expect further rate cuts.

Sentiment towards housing recovered, with the response to “Whether now is a good time to purchase a dwelling” increasing by 8.2 per cent. This is up from last month’s sharp fall, but is still the second lowest reading since November 2010 (in the wake of a Reserve Bank hiking cycle). Concerns around affordability and prices underlie the sentiment. Westpac suggests that the responses are dominated by those outside the housing market. Confidence amongst property investors is likely to be much more buoyant. Growth in new lending to property investors is up by 22 per cent over the year to June compared with 7 per cent for owner occupiers and a 1 per cent fall for first home buyers. Respondents were less confident about the outlook for house prices.

▲Top▲

Cap on Investment Loans

The banks have been directed by the Australian Prudential Regulation Authority to cap the growth in their property investment loan portfolios to 10 per cent. In 2004 growth in this sector peaked at 30 per cent, 28 per cent in 2000 and 26 per cent in 1993. Growth has already exceeded the 10 per cent limit. In an effort to slow demand from investors, banks have raised rates on all investment loans by around a quarter of a percentage point as well as lowering loan-to-value ratios and imposing quantitative restrictions.

The tightening will have an impact on new residential building particularly in Sydney and Melbourne as competition for funding increases. Uncertainty around the availability of funding will unsettle investors and developers particularly “off the plan” purchases involving delayed settlement. Weaker residential property markets like Perth, Brisbane, Adelaide and Hobart will be adversely affected as investors and new developments are important in supporting those housing markets and economies in general.

Although at this stage it appears that caps on investor lending will have only limited impact on new building, banks may be forced to take further action to slow investor lending. Residential building is critical to the post-mining boom economy and authorities must be wary of unintended consequences as they attempt to manage risks attached to rapid house price inflation, particularly in Sydney and Melbourne

▲Top▲

CEO UPDATE 24/08/15 11

ATO on Phone Scams

Phone scams are the number one type of scam in Australia. Scammers can impersonate Australian Tax Office (ATO) employees to obtain personal information for financial gain. Generally, phone scams demand payment for an unexpected debt or offer an unexpected refund or grant. It is important businesses are aware that scammers try to collect personal information to steal identity, including: tax file numbers, names, addresses, dates of birth, myGov user name and password, bank account and credit card details, drivers licence, Medicare and passport details.

This information is then used or sold to other criminals to commit identity fraud. This can happen immediately or even months or years later. Phone scammers are likely to be pushy or aggressive. The ATO would never threaten jail or arrest and does not email, call or SMS asking for credit card or bank details to issue a refund. Scammers pretending to be from the ATO are generally more common during tax time so people need to be vigilant about protecting personal information.

▲Top▲

Small Business ATO App

Small business owners can use an ATO app to access a new business performance check tool. The tool gives a quick snapshot of the financial health of a business and compares it to similar businesses in the industry. It allows them to save their results and monitor their performance over time. The ATO app can also be used to:

calculate the amount of tax to withhold from salary and wage payments

check an ABN using ABN Lookup

look at key dates and set reminders and alerts for tax and super obligations

work out if employees are eligible for superannuation guarantee and calculate super guarantee contributions

calculate fuel tax credit entitlements for activity statements

work out how best to pay off a tax or super debt. Find out more ATO app

▲Top▲

Peter Jones, Chief Economist, peterjones@masterbuilders.com.au

Training

COAG update – Premiers discuss national VET takeover at leaders retreat

At the COAG leaders retreat in late July, the Prime Minister, Premiers and Chief Ministers agreed to consider a Commonwealth Government take-over of VET.

The released communique stated:

“Leaders committed to change that will see a more demand driven system, greater engagement with business about their skills needs to deal with emerging industries and new ways to help support students. Leaders agreed to consider a shift in responsibility for VET to the Commonwealth provided States and Territories could elect to remain TAFE providers within a national system.”

The Premiers of Victoria and Western Australia will lead the development of an options paper for a second leaders retreat to be held later this year.

▲Top▲

CEO UPDATE 24/08/15 12

Construction and Property Services Industry Skills Council Update

The Construction and Property Services Industry Skills Council (CPSISC) is redesigning various qualifications from the CPC08 Construction Training Package, which will be the first update for key qualifications in a number of years.

Reviews of the Certificate III in Carpentry (and related quals), Certificate III in Shopfitting, Certificate III in Signwriting, White Card and Concrete Pump Licence are in various stages of completion, with some fully completed.

CPSISC has been provided with funding until 31 December when new Skilled Service Organisations (SSO) and Industry Reference Committees will come into effect as part of the drivers to the National Training System.

The first round of the grants process to establish the SSOs will conclude on Monday 24 August.

The SSOs will be up and running from 1 January 2016. These service organisations will be independent bodies funded by the Australian Government to support industry reference groups to review and develop training products for the VET system.

Master Builders will represent industry on the Construction Industry Reference Group.

More information can be found at: https://www.education.gov.au/skills-service-organisations

▲Top▲

Robert Wilson, National Director Workforce Development Training, robert.wilson@masterbuilders.com.au

Housing

National Residential Builders Council

The National Residential Builders Council (NRBC) met in Sydney on Tuesday 4 August. Key items of business for the meeting were discussion of Master Builders’ ongoing engagement on the non-conforming products issue (including our expansive submission to a Federal Parliamentary inquiry into the matter), future directions for the Federal Government’s Taxation and Federation White Papers, and reviews of current industry conditions around the nation. The NRBC also met with the Hon Chris Bowen MP, Federal Shadow Treasurer for an exchange of views ranging across housing affordability, and taxation reform (in particular negative gearing, land taxes and stamp duties).

▲Top▲

Building Ministers Forum

Master Builders Australia met with the Building Ministers Forum (BMF) in Melbourne on Friday 31 July. Our delegation was led by Mr Gordon Leggett, Chairman of our National Residential Builders Council. The BMF is a grouping of Federal-State/Territory of building/planning ministers, operating under the auspices of the Council of Australian Governments (COAG). Discussions at the meeting were dominated by the non-conforming products issue, with the other matters considered being priorities and strategies for reducing variations to the National Construction Code, and for building regulation reform.

▲Top▲

CEO UPDATE 24/08/15 13

Non-Conforming Products

Master Builders lodged our formal submission with the Senate Economics References Committee for its inquiry into non-conforming products (NCPs) in the building supply chain. Key themes addressed in the submission include the nature and extent of, and a broad action agenda for tackling, the NCPs problem. Key elements of the proposed action involve strengthening the existing Codemark scheme, expanding oversight of product certification, enhanced confidential reporting, refocusing the ACCC and making the regulatory environment clearer, and reducing variations to the National Construction Code and similar uniform regulatory arrangements.

▲Top▲

Taxation – Stamp Duties

The Federal Treasury has added its influential voice to industry criticisms of the burden of stamp duties on residential property, describing them as “one of the most distortive taxes in the Australian economy.” The comments were made in their formal submission to the House of Representatives Standing Committee on Economics, for its inquiry into barrier to home ownership. In its submission, the Treasury also echoed building industry arguments regarding the adverse impact of stamp duties on house prices, pointing out reducing such taxes would improve land usage (which can be impeded by the ‘lock-in’ in effect of stamp duties).

▲Top▲

Housing Lot Sizes

Housing lot sizes continue to contract. New figures from Charter Keck Cramer (CKH), a consultancy, report the average lot size in the major capital cities was 474 square metres in 2014, down nearly 4 per cent on the previous year and more than 11 per cent on 2009. The largest falls in lot size in 2014 were experienced in Sydney (down nearly 12 per cent, to 450 square metres) and in South East Queensland (down 9 per cent, to 509 square metres). CKH attribute the continuing decline in lot sizes to ongoing land supply pressures, the high cost of residential land, and developer responses to housing affordability constraints being experienced by new home buyers.

▲Top▲

Building Industry Confidence

Confidence remains solid in the building and construction industry, according to a new survey by the ANZ Bank. However, this overall positive national outlook masked a diversity of experiences around the States and Territories. Optimism within the industry for the year ahead was strongest in NSW (driven by its booming property sector) and in Tasmania (reflecting strong growth in the tourism sector, spilling over into related construction activity). By contrast, industry confidence continued to erode in Western Australia, reflecting a weakening in office demand following a slowing in mining industry activity. The ANZ Bank described the outlook for office construction in the Perth CBD as “grim”.

▲Top▲

Brent Davis, National Director Industry Policy, brent.davis@masterbuilders.com.au

CEO UPDATE 24/08/15 14

Technical

Timber Joists and Assemblies

Standards Australia have released for industry comment a proposed draft international standard on timber joints and assemblies. Joist hangers are an integral part of timber constructions in that they provide a necessary means of connection between timber elements and also between timber elements and other materials such as metal, concrete and masonry. To provide a suitable connection, the joist hangers must be capable of transferring forces in a range of directions depending on the make-up of the joint. The purpose of this standard is to provide standard test procedures that may be used to determine the strength of a joint incorporating a joist hanger. Copies of these materials are available from Master Builders upon request to interested members.

▲Top▲

Structural Properties of Laminated Veneers

Standards Australia have released for industry comment a proposed draft international standard on the structural properties of laminated timbers. The proposed International Standard specifies requirements for establishing the characteristic properties of structural laminated veneer lumber, including fifth percentile strength values, stiffness characteristics and other performance characterises, relating to its end use as a structural product for dry use. It is applicable to members used in flatwise or edgewise bending orientations. The Standard will not cover the assessment or formaldehyde requirements, biological durability, fire performance or manufacturing, such as quality control and marking. Copies of these materials are available from Master Builders upon request to interested members.

▲Top▲

Door Sets and Windows

Standards Australia have released for industry comment a proposed draft international standard on water-tightness testing for door sets and windows. The proposed International Standard specifies a test method for determining the water-tightness under dynamic pressure of door-sets and windows, assembled for normal use and installed as in practice. The Standard will be applicable to areas subject to severe weather, for example those that are heavily weather-beaten, stricken by driving rain and wind, including typhoons, hurricanes, cyclones and other severe climate. It does not apply to the joints between the door or window frame and the building construction. Copies of these materials are available from Master Builders upon request to interested members.

▲Top▲

Bulk Thermal Insulation

Standards Australia has published the 2015 edition of AS 3999:2015, Bulk thermal insulation – installation. The 2015 edition supersedes AS 3999 – 1992, Thermal insulation of dwellings – Bulk insulation – Installation requirements. The objective of AS 3999: 2015 is to set out requirements on installing insulation for both new dwellings during construction and the retrofitting of existing buildings. The Standard is intended for construction of residential buildings. Some of the key updates in the revised 2015 edition are: updated requirements aimed at improving the performance of installed insulation and information on new products and technologies; and, introduction of comprehensive detailed drawings to complement the text and to help demonstrate what compliant installations could look like. Copies of these materials can be obtained from Standards Australia.

▲Top▲

Brent Davis, National Director Industry Policy, brent.davis@masterbuilders.com.au

CEO UPDATE 24/08/15 15

Events

Master Builders Australia National Conference

Building Australia

Jupiters Gold Coast, November 12–14

You're invited - to the 2015 National Conference, Exhibition and Awards. The National Conference provides the opportunity for Master Builders from all around Australia to come together to learn more about the industry and where it is heading, as well as enjoying an entertaining social and partners program. The Building Australia theme focuses on leadership and assisting members in continuing to grow their business.

High profile inspirational speakers such as Chris Richardson one of Australia’s leading economists will be presenting on the Economic Outlook and the future of the industry, the inspirational Alisa Camplin OAM Business Leader and Olympic Gold Medallist. Delegates will learn firsthand from members who are delivering the Commonwealth Games infrastructure about the complexities involved in delivering projects of this magnitude. Be inspired by Nigel Watts – Gearing up for the next growth phase. This is just a sample of the exciting line up of speakers. Further details and the conference brochure can be found on our website.

Accompanying Partners have the option of taking in the sessions or indulging themselves in a fun day out. Ladies will embark on a day to remember which will include visits to unique Gold Coast attractions.

National Awards are part of the conference program and will be presented on Saturday evening.

Early Bird registration now available – Save $200 on the Standard rate

What’s included? The delegates' package is outstanding value and a comprehensive one that mixes business with pleasure:

Thursday evening Assa Abloy Welcome Social Dinner

All conference speaker sessions on Friday and Saturday

Cbus Conference Dinner and Show on Friday night at SeaWorld

Site tour – Commonwealth Games facilities under construction

Access to Exhibition

Happy hour

Lunch and morning tea on Friday and Saturday

Conference satchel

The National Excellence in Building and Construction Awards Dinner

Forecast: The Gold Coast is expecting sunny days with a central swell of inspirational speakers and strong gusts of exciting social activities.