Lend Lease's huge task to beat the cartels

As the royal commission this week turns its attention to the building unions, it’s important to now reveal previously undisclosed details of what happened when some of the participants in the commercial building cartel-style agreements tried to destroy Daniel Grollo’s Grocon Company.

Now that Lend Lease has broken away from these cartel-style agreements that control Australia’s commercial building, Lend Lease’s board and chief executive Steve McCann must prepare for incredible personal attacks. Lend Lease’s key supporter, Boral chief executive Mike Kane, must also be ready. But the likely attacks on McCann and Kane and their board members will be nothing compared to what its financially insecure sub-contractors face. It’s one thing for federal and state politicians to pass laws, it’s another to win the wars on the streets. Grocon showed that in 1930s Chicago-style battles, laws are not enough (Lend Lease's about-turn leaves the unions seething, July 3).

Those who try to break away from the cartel-style agreements -- which are designed to increase the price of construction by between 15 and 30 per cent -- will face the same pressures as Grocon. Everyone blames the building unions but when you are dealing with an agreement between employers and employees to give one party (unions) power to restrict competition and to jack up prices and profit margins, the issues are far more complex.

The Grocon battle between the cartel-style forces and those seeking to break away from the cartel-style agreements concentrated on the Myer site being redeveloped in the centre of Melbourne, but in fact the pro-cartel forces attacked other sites and managed to virtually put out of business a small anti-cartel builder in a regional city.

Here are some of the details:

  • The building site protests were nothing to do with conventional employee/employer relations. More than one thousand pro-cartel people took control of some of the streets of Australia’s second largest city and not one person protesting was an active Grocon worker. They were mostly employees from sites operated via the cartel-style agreements and so most were on full pay.

    They were effectively representing employer and employee participants in the cartel-style agreements. Grocon workers wanted to break clear of the cartel as much as Daniel Grollo and they had no issues with Grocon pay or safety. Never before in Australia’s history has a so-called industrial dispute -- that almost shut down a big city -- not involved any of the workers for the company being attacked. It was purely a dispute between pro-cartel and anti-cartel forces.

  • Initially the police refused to intervene because, mistakenly, they saw it as a dispute between unions and an employer -- therefore not their core business. The same thing happened in 1998 on the waterfront in the Corrigan dispute although in that case waterfront employees were on the picket lines.

  • But on the Grocon site the state government was able to explain to the police that laws had been passed to break the cartel-style agreements so the police had to uphold the law.

  • Victoria also has an enlightened police commissioner, Ken Lay, but would a Labor government allow the police to prevent the pro-cartel forces from taking control of big parts of the city? Police and upholding the law in these situations will be a big issue.

  • The police did not have the skills or people power to stop the pro-cartel forces. When they finally tried to re-take control of parts of the city they were initially forced back. Many police were physically attacked by pro-cartel forces. In the end the Victorian police regained control of the streets and now have a unit that is trained to uphold the law in circumstances like this.

  • Initially the police did not understand that the plan of the pro-cartel forces was to break the Grocon sub-contractors. If they had no work for a few weeks the sub-contractors would go out of business and the building could not be completed without using contractors approved by the union. That’s why having a group as strong as Boral on the anti-cartel side was so important.

  • The personal attacks on individuals were almost unbelievable for twenty-first century Australia. Grocon people, but more importantly sub-contractors, were phoned at home with calls that accurately described what a wife was wearing the day before or similar such attacks.

    Understandably many wives were really scared and wanted out and urged husbands to join the cartel forces. But the charisma of Daniel Grollo and extensive training for Grocon people and sub-contractors on how to handle such calls kept the group together. Lend Lease and Boral need to undertake the same training as they prepare to battle the pro cartel-style forces.

  • Huge advertising billboards were put on the airport freeway attacking the finances of the Grocon group and attempts were made to stop the Cbus superannuation fund from backing building owners who used Grocon as a builder and therefore enjoyed lower construction costs. Lend Lease is bigger than Grocon but it should prepare for similar attacks.

If the pro-cartel forces win then Australians will get substantially less hospitals and schools for their money.

Unfortunately, the royal commission was set up to attack unions. It needs to understand the game is much bigger.