CFMEU building industry protests Melbourne

Recent events in Melbourne, where members of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU, aka CFMEU) instigated a series of protests, are likely to shape the future of the construction industry in the state of Victoria (VIC).

It is easy to take the path of working these protests into the general fabric of the COVID-19 pandemic. One could view it as worker frustration boiling over under the threat of restrictions, fanned by people peddling various forms of ridiculous misinformation, mixed in with trace amounts of pure anarchy.

Another thing not to overlook, is that this is peak footy season for Melbourne. The annual release provided by the "Grand Final" has, for a second year, been rendered at the very least more remote. It seems highly unlikely there would have been such big mobs if many of those "angry young men" had tickets to the MCG for an upcoming Saturday game.

All those arguments, exceptions and excuses have a little validity. However, even allowing for these added boosts to a general sense of frustration, this kind of pandemic narrative cannot fully account for what has happened.

Equally, attempts by the CFMEU and others to portray this as the result of "professional protesters" are also likely misguided. According to reporting in The Age newspaper:

Senior CFMEU figures say far-right activists and anti-vaxxers exploited the situation, but it was wrong to say, as Mr Setka did on Tuesday, that there was a "small minority of construction workers" at Monday's melee who had quickly walked away because of the violence of "professional protesters".

Senior figures estimated that about 80 to 90 per cent of the protesters were construction workers. Others said they knew many of the people at Monday's rally as union delegates and members. Not all were opposed to vaccinations or were right-wing. Some were annoyed at the union caving in on safety and workers' rights.

The Age: Why construction workers took to the street

It may be true that some of the most violent protestors were not union members, but it was union members who provided the opportunity and the platform to these groups.

One way of viewing what has happened is to see that the two "sides" of the conflict came from very different viewpoints, and held different values as well. From the side of not only the Victorian government, but - HNN would suggest - the broader Victorian community as well, the deal was that the construction industry had been granted a considerable and generous concession. The industry view is that it is more of a right than an honour.

In the process of trying to control a pandemic, the government has had to start by finding the likely locus of virus transmission, then calculate how to balance controlling that transmission in the context of broad community concerns, including the mental health and financial concerns of families and individuals, and the prosperity of the overall state economy.

What the construction industry has not seemed to understand is that the reason Victorians have a curfew, are limited to a few hours outdoors each day, to 5km of travel from home, and no at-home visitors, is to compensate for risky business activities such as construction. In that sense, the whole state, and particularly the greater Melbourne region, has already contributed a great deal to allowing construction activity to go ahead.

The Victorian construction industry's perspective - or at the least that of a significant majority of CFMEU members - is almost the reverse of this. They seem to believe that, in the midst of a pandemic, they have some inherent right to go about construction as "business as usual" - and that any restriction placed on them is somewhat "optional", and, if enforced, actually unfair and unjust.

What has happened, from the Victorian government and community perspective, was the construction workers failed to honour the details of the agreement offered. They were given the privilege of working, even though this placed the community at greater risk. They were supposed to do this in the safest way they possibly could. Instead, they blatantly ignored COVID-19 safe practices at work, and when asked - as so many other workplaces have been asked - to get vaccinated, rebelled.

Deeper causes

What seems to not always be fully understood outside of Victoria, is how deeply the Victorian community has been affected by these days of demonstrations. That might be because there are no counter-demonstrations - because, you know, it's a pandemic, and the way you counter-demonstrate is to stay home.

The result of these demonstrations could be something like the construction industry being viewed over the next three years as dubious, if not held in contempt.

As a result, from a purely rational standpoint, this union behaviour doesn't make much sense. Watching hoards of construction workers swarm the Westgate Bridge, attack police, and riot in the city streets is far beyond anything reasonable. It cannot possibly achieve anything except disruption.

There have been several attempted "thoughtful" analyses of how all this has happened. Most concentrate on the controversial leader of the CFMEU, John Setka, and the tensions inside the union between its left-wing past, and a present heavily inflected by the views of Mr Setka's more right-leaning lieutenants.

The reality of this major rift between many of the members of the union and its leadership is likely due to much deeper and - ultimately - more serious forces at work. Members of the union do not completely understand the task the leadership faces, and, in turn, the leadership is somewhat reluctant to communicate the details of that task.

Mr Setka's willingness to embrace mandatory vaccination is the result of understanding the considerable force behind that move by the state government. It's also an acknowledgement that nothing harms a union more than overstepping its influence and capabilities.

In simple terms, the CFMEU, while still an important union, has seen its importance decline significantly over the past five to ten years. That decline in influence for the CFMEU has come from a number of sources. To begin with, some would say that simply spelling out the acronym - construction, forestry, mining and energy - indicates how much the union will be affected by coming moves to limit climate change.

More to the immediate point, it can be seen that the union has been steadily losing influence. That's down to the way in which construction is moving to a different place in the economy. This is relatively easy to discern in the economics graphs supplied by the Reserve Bank of Australia (RBA).

The three charts presented here do not show an industry that is in decline, but they do show that other industries represent stronger growth. The top chart, labelled as (1), shows an ongoing trend in construction, which is relatively low capital investment. It has been reliably around 5% of total business investment. Meanwhile, industry categories such as other business services (which broad embraces the technology sector) are currently at over 20%.

Likewise, in terms of industry share of output, the chart labelled as (2), construction peaked around 2014, and then slowly declined over the next six years to be around 8%. Again, other business services are much higher, at over 16%.

When it comes to employment growth, while the construction industry was on its way to a new peak in 2019, the COVID-19 pandemic saw this decelerate rapidly, and the industry has been slow to regain that growth. Meanwhile, both business services and household services have provided very high growth percentages, both pre- and post-pandemic.

Beyond these statistics, there is also the growing sense in the global construction industry that fundamental changes need to be made. McKinsey & Company, in their June 2020 report "The next normal in construction: How disruption is reshaping the world's largest ecosystem" see a future in which construction activity is radically reshaped, as the diagram below illustrates.

Integrating building information modelling (BIM) with as much pre-assembly as possible could change the nature of construction by the end of the decade. It's similar to the changes expected in the energy sector as well, as fossil-fuel power is replaced by solar and wind.

When it comes to the next several years, future growth is largely linked to the-pandemic recovery in larger construction projects where union membership dominates. According to a forecast document from real estate specialists Knight Frank:

Beyond 2021, it is anticipated that any previously mooted developments could be reconsidered or have their development commencement dates pushed back due to uncertainty surrounding demand caused by COVID-19.

Forecast by Knight-Frank

It seems quite unlikely, given vacancy levels, and the growing dominance of work from home (WFH) practices, that there will be strong demand for new office towers through the current decade. In fact, some of the larger projects may be converting office towers to at least partly feature apartments for city-dwellers.

The importance of all this is not just the shape that the construction industry will take in the future. It's also about how key it is to the prosperity of Victoria as a state. At one time, shutting down office tower construction sites in the Melbourne CBD could be felt as having a significant impact on the state's economy. Limiting office capacity would, at that time, limit growth, and encourage businesses to locate elsewhere in Australia.

Increasingly, that relationship does not hold anymore. Office space in the CBD remains important, but it is now likely that more significant growth will be decentralised, and require less ambitious use of space. This means the power of the CFMEU to negotiate has significantly diminished.

This is the situation that Mr Setka and his leadership team face. The power of construction unions may be at its lowest point since the mid-1990s, when legislation granted the legal right for unions to strike. It is understandable that this is not something the union leadership can clearly communicate to members - partly because they might adopt more extreme measures, and do irreparable harm to the sector.

At the moment, as things stand, the CFMEU has ended up doing considerable damage not only to their own union, but to trade unions in general in Australia. That is not being helped by more recent moves to blame the Victorian Government for making simple, rational, evidence-based requirements on various industry sectors.

One way out of this, which would produce a good outcome, and help to salvage what is left of the public reputation of the CFMEU, is for the industry, the union and the government to hash out a plan to actually make construction project sites, including facilities such as tea rooms, much more COVID-19 safe. That should range beyond the provision of well-ventilated service facilities, and also include some form of active, ongoing enforcement of CovidSafe practices.

The big mistake

What has been missed, especially by the trade union movement in general, as well as many industry associations, is that Australia in September/October 2021 is not the same as Australia in March/April 2021.

If the Delta variant of COVID-19 had not come along, we would likely all be treating anti-vaxxers and so-called "libertarians" as annoying and slightly harmful eccentrics. Delta, and the need to abandon COVID-19 suppression, has changed all that. They will become, inevitably, sources of future transmission. There are only two ways to stop that: isolation or vaccination. That's really the choice that is being provided.

People are going to die of COVID-19 in October, November and December this year. Hospitals will be overwhelmed, health workers find their lives turned into a long, difficult slog through day after day. Families will be devastated by the loss of loved ones.

In terms of VIC and NSW managing to maintain community stability, and not descend into the pure inhumanity of forcing nurses (and it will be nurses) to decide who lives and who dies because there will not be enough beds, ventilators and staff to help everyone, it's going to be a close call.

Stopping the spread of SARS-CoV-2 through vaccination and safe work practices is the least each of us can do. And one thing we can guarantee that will not help is disruptive protests, which can only damage the few freedoms we still retain in the midst of a deadly pandemic.