Summary

Prior to the 2022 Federal election, the Labor party had committed to abolishing the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) the Code for Tendering and Performance of building work 2016 (Building Code) and the Australian Building and Construction Commissioner (ABCC). However, the Building Code cannot be repealed until the BCIIP Act is repealed.

As an interim measure, The Minister for Employment and Workplace Relations, Tony Burke introduced the Code for the Tendering and Performance of Building Work Amendment Instrument 2022 (Amendment Instrument) which took effect 26 July 2022.

This Amendment Instrument amends the Building Code by removing the majority of the Building Code’s requirements, leaving only transitional provisions and those mandatory matters prescribed by s34 of the BCIIP Act. Significantly, the Amendment Instrument has removed the prohibition on funding entities contracting for Commonwealth funded building work with contractors who are non-compliant with the building code.

For now, the Building Code continues to impose limited obligations on those entities covered by the Building Code (code covered entities) and “funding entities” (being all non-corporate Commonwealth entities (NCCEs) and those corporate Commonwealth entities (CCEs) directed to comply with the Building Code by the Minister of Finance).

What does this mean?

The Amendment Instrument.

The remaining obligations imposed by the Building Code are:

• That contracts cannot be awarded to a building contractor that is subject to an exclusion sanction
• prohibitions on the engagement of non-citizens or non-residents undertaking building work, including advertising requirements and
• requirements for a preferred tenderer for building work to provide particular information to a funding entity, including:
  • information relating to whether building materials are domestically sourced
  • whether the building material complies with relevant Australian Standards
  • the whole-of-life costs of the project and
  • impact on jobs and skills growth.

Table 1 below sets out the remaining obligations imposed by the Building Code and the entity responsible for carrying out these obligations.

We set out below what this means in practice.

ABCC

The ABCC will no longer:

• issue Determinations of Compliance
• assess WRMPs
• accept new WRMPs
• refer breaches of the Building Code to the Minister
• make sanction recommendations to the Minister in respect of breaches of the Building Code and
• make complaints or referrals to the Secretary of the Department of Finance in relation to a funding entity’s non-compliance with the Building Code.

Code covered entities such as building contractors, are no longer required to:

• comply with Workplace Relationship Management Plans (WRMPs)
• enforce compliance with the Building Code from its subcontractors
• comply with any provisions relating to Security of Payment provisions (noting those obligations are still imposed at a State and Territory level)
• maintain any policies with respect to freedom of association
• restrict the right of entry of building association officers as provided under the Fair Work Act 2009 (Cth) (FWA) and relevant work health and safety laws
• have a policy about or carry out drug or alcohol testing as prescribed by the Building Code
• report any request or demand by a building association relating to secondary boycotts
• report actual or threatened industrial action to the ABCC or
• report any code breaches to the ABCC.

In addition, code covered entities may no longer refuse to engage subcontractors because the relevant subcontractor is not compliant with the Building Code. If Contractors seek to do so, they may be in contravention of the adverse action provisions under the FWA.

Funding entities

Funding entities (i.e. NCCEs and some CCEs) are no longer required to:

• inform the ABCC after issuing a request for expressions of interest or requests for tender (howsoever described) for building work
• ensure tender processes and calls for expressions of interest (howsoever described) in respect of Commonwealth funded building work are conducted in a manner consistent with the Building Code
• require tenderers for Commonwealth funded building work to comply with the Building Code
• apply to the ABCC to have WRMPs approved
• notify the ABCC when a tender process is completed and a code covered entity has been awarded a contract to undertake Commonwealth funded building work
• notify the ABCC of allegations of breaches of the Building Code
• respond to requests for information made by the ABCC concerning matters related to the Building Code, and
• undertake initial actions to encourage modification or cessation of non-compliant behaviour, in response to alleged breaches of the Building Code.

Table 1. Remaining Building Code Obligations

Obligation heading	Obligation description	Responsible entity
Labour Market Testing	Undertake Labour Market Testing as prescribed in s. 11F.	Code covered entities
Preferred Tender – Prescribed Information	Ensure preferred tenderers for Commonwealth funded building work provide the information prescribed in s. 25A(1)	Funding entities
Australian Standards Compliance	Only enter into contracts in respect of Commonwealth funded building work with a code covered entity that exclusively uses products in building work that comply with Australian standards	Funding entities

Key Takeaways

The array of obligations imposed by the Building Code on funding entities and code covered entities has been significantly reduced.

Funding entities undertaking procurement activities for building works must still ensure that preferred tenderers provide certain information required under the Building Code. However, template contracts and procurement documentation can be amended to remove many of the obligations that were previously mandated.