Occupational health and safety (OHS) eyebrows were raised in Australia recently as a State Government suspended the application of three construction-related codes of practice, principally, on the basis that compliance will cost too much. The decision by South Australia’s Minister for Industrial Relations, John Rau, following a report by the Small Business Commissioner, Mike Sinkunas, illustrates several issues:
- the SA government is overly influenced by the Housing Industry Association (HIA),
- small business is being misinformed on how workplace safety works,
- the application of “reasonably practicable” has been ignored, and
- the unions and safety profession do not know how to respond.
As part of the arrangement to pass the model Work Health and Safety laws, the SA Government agreed to allow the Small Business Commissioner review OHS codes of practice to
“….assess whether the code of practice would affect small business if implemented…”
The ferocious lobbying for some form of control over OHS was based on misinformation concerning the costs of compliance and, as such, “affect” has been determined as economic effects. As “affect” is a neutral term it should be possible to assess the OHS Codes on terms other than economic. A moral and economic argument could be mounted around the reduction of fatalities and injuries in the construction sector but up to now, the South Australian safety profession is silent as is the local trade union association.
Housing Industry Association
The Housing Industry Association of South Australia has long been misrepresenting the potential impacts of the Work Health and Safety harmonisation process on its members and the South Australian Community. In its media release about the Codes’ suspension the HIA states:
“The decision is a victory for commonsense bearing in mind that the Codes were designed without consideration of their impact upon the residential industry. It is important that unnecessary impediments to this part of the industry are withdrawn given that we are coming off 3 years of significant reduction in activity in South Australia with respect to new home starts….
HIA and its Members remain committed to having the safest sites that we can achieve in the work place and HIA looks forward to further dialogue with SafeWork SA and the Small Business Commissioner as to how that may be achieved in a sensible, practicable and cost effective manner.”
The conservative side of politics loves to see any reduction in regulation as common sense but common sense is a nonsense and the phrase is only ever used when something occurs that supports one’s own position, outlook or ideology.
The HIA says that “the Codes were designed without consideration of their impact upon the residential industry” but the HIA had made a submission (summary, undated) on the model WHS laws and Codes which addressed costs. The submission said
“The uncertainty and interpretation concerns in this code could lead to union interference on sites and unnecessary costs for housing construction.”
But the code referenced in the quote above was concerning construction amenities and was not one of the Codes the government has suspended.
The quote is also significant in the linking of industrial relations with costs. The housing industry has always been fearful of union activity on its construction sites, a Conservative fear that is manifesting in the renewed interest in industrial relations at a national political level.
The HIA has regularly spoken to government about the costs associated with OHS compliance. In a submission to Safe Work Australia on the draft workplace bullying code of practice, the HIA stated that it
“HIA believes that the costs of implementing the draft Code are significantly underestimated.
The methodology used by the RIS in determining costs is questionable. The use of average weekly earnings does not reflect the full cost to a business, but only the possible wage cost. Other costs that are not considered included opportunity costs and purchase costs such as for products or training. This leads to an underestimation of the actual costs to business. Further, the time allocations estimated in the RIS are understated, and assume existing expertise and a static workforce, such as that found in a business with a corporate structure and human resources capacity. This assumption is not appropriate for small business, including those of housing construction.” (page 10, emphases added)
The HIA seems to always complain about the additional business costs that could result from new safety regulations and obligations but it fundamentally misunderstands workplace safety and is passing this on to its members. Every business incurs costs when meeting legislative compliance on OHS just as they do for taxation and business reporting but many businesses, particularly small businesses, underestimate the costs of safety compliance in their business plans because they do not understand the costs of compliance.
Governments in Australia provide business advice that includes some statements on costs but without providing workable cost estimates. For instance, WorkSafe ACT issues a small business guide that recommends undertaking a risk assessment to identify potential hazards and states:
“You should consider conducting a risk assessment:
- before you buy any new equipment or chemicals (get as much information from suppliers and manufacturers as possible to ensure you won’t ‘buy in’ new risks to your workplace)
- before you re‑order the equipment or chemicals you already use in your workplace when you are about to introduce a new work task or procedure
- when you get new information about your work tasks, procedures, equipment or chemicals.
This is more effective in terms of safety and costs.” (page 9, emphasis added)
Most State and Federal governments issue similar business start-up advice. The governments try to get OHS compliance costs into initial business plans but, for some reason, the reality of these costs are ignored or given a lower priority and when costs become evident, such as after an incident or when new laws/Codes are proposed, the costs are then seen as an unfair imposition. The costs of complying with the new WHS laws and codes should have been minimal because the safety obligations are not very different from what already existed. The costs are more likely to be unpopular or seen as unfair to those businesses that were “managing” their safety through luck and not through a sound understanding of workplace safety.
Business groups lobbied hard over many years for increased flexibility on compliance with OHS obligations. The governments allowed this flexibility through the application of “reasonable practicable”. In its interpretive guidelines, Safe Work Australia says that
“‘Reasonably practicable’ is used to qualify duties to ensure health and safety and certain other duties in the WHS Act and Regulation”
The capacity to qualify duties has been ignored by the South Australian Government and the Small Business Commissioner. SWA states that
“…Although the cost of eliminating or minimising risk is relevant in determining what is reasonably practicable, there is a clear presumption in favour of safety ahead of cost.
The cost of eliminating or minimising risk must only be taken into account after identifying the
extent of the risk (the likelihood and degree of harm) and the available ways of eliminating or
minimising the risk.” (emphasis added)
The Small Business Commissioner’s assessment of the Codes of Practice talks, almost exclusively, about economic costs – the last consideration in the determination of reasonable practicability. It’s worth looking at the relevant findings.
- “There are significant additional costs to comply for small businesses;
- These costs are both administrative and through the purchase and/or hire of various equipment – for example, lunch rooms, fencing, scaffolding and so onto meet the obligations;”
Small construction companies rarely have lunch rooms and it is common for the only onsite facilities to be a portable toilet. Many workers provide their own meals in lunch boxes, chill bins, eskies or water bottles and eat in the open or their vehicles or under the house’s roof.
Fencing is an OHS measure but principally a way of securing the site in order to prevent any damage to the structure or theft until the house gets to lock-up stage. This has been an existing business cost for many years.
Scaffolding is needed when working at heights unless the risk of falling has been controlled in other ways. Regulators have been pushing the cost and risk benefits of safety in design for a long time and the concept remains valid but remains largely ignored. If safety was incorporated in the design of a structure, there would be no additional safety costs and they would be included in the initial drawings.
The next finding reflects the false costing that the HIA has been pedalling for some time.
“Depending upon the location and size of the builder and also the type of construction, for example in a residential house construction, (whether it is single or double storey) the cost can range from 4 to 5k at the low end up to around 25 to 35k or higher.”
The Small Business Commissioner should have undertaken a more forensic analysis of the information provided by the HIA, a “key group” member according to the Commissioner’s findings. But then Commissioners operate on the information provided to them so perhaps some of the responsibility could be shared by those who remained silent on the Commissioner’s deliberation. Perhaps there is also a structural flaw in a tripartite consultative model that restricts alternate voices.
“Administrative type costs are aspects such as the setting up of an administrative system to monitor and record the necessary paperwork, ongoing time for supervisors or owners to update and maintain the records, (for example Safe Work Method Statements), training costs, use of consultants and so on;”
This finding is mostly nonsense as all companies operate administrative systems and part of those systems relate to safety management. The issue of Safe Work Method Statements is one discussed elsewhere in the SafetyAtWorkBlog and is more relevant to large businesses that the residential housing sector.
“These costs cannot be absorbed in the highly competitive market place that currently exists in this sector and additional costs will be passed on to the customer/client which then further affects demand and affordability issues;”
This argument is spurious and an attempt to frame costs in relation to housing affordability. As discussed above this may only work if costs are new and additional. Buyers expect a house to be built without a worker being injured in its construction. Would a home buyer be happy living in a house where a worker died during construction? Could a worker fatality be reason for a home buyer to break a contract? Should home buyers place a clause in the contract stating that no workers will be injured in the construction of their house, as large construction contracts do?
The Commissioner also complains about the legibility of the Codes:
” The three Codes themselves [Preventing Falls in Housing Construction, Safe Design of Structures, Construction Work] are similar to others I have reviewed previously; lengthy (in these cases from 29 to 53 pages long) not easy to work through, and confusing in places;”
These concerns have not been raised in any other States who have accepted the model WHS Laws, Regulations and Codes, to our knowledge. OHS regulators place a great deal of attention on the readability of their documentation but acknowledge there is an important role for safety professionals and industry associations in explaining the relevance and contents of these Codes to their clients and members.
Also, the Commissioner’s findings fail to identify any of the confusion in the Codes so there is no opportunity to address the confusion, if it exists at all.
“There are practical considerations which mean for many builders and subcontractors it is almost impossible for them to comply with the WHS regulations and codes of practice. This is due to many of these businesses being so small that they do not have the capacity to dedicate resources in this area. Some builders have identified that is uneconomic to undertake smaller jobs due to the ‘level of paperwork’ that is required to complete a job.”
This sounds like nonsense. Small businesses have limited resources, sometimes because they misunderstood or underestimated the resources required to undertake a job safely. The reality of limited resources is usually a major reason for joining industry associations and it is hard to believe builders reject work on the basis of excessive OHS paperwork. The matter of perceived red tape has been addressed elsewhere in the SafetyAtWorkBlog.
“There is an overwhelming view that the ‘one size fits all approach’ in the Codes are not practical for residential building sites – that these Codes have many aspects that are related to civil/commercial building sites only.”
See “reasonably practicable” above.
“There is some concern regarding varying interpretations that a Safe Work SA inspector may provide regarding compliance.”
This is always the case in any jurisdiction and surely accepting the Codes of Practice would have helped minimise the “varying interpretations”. Expect more varying interpretations with the Codes.
“There has been significant effort by the industry over time to ensure a high level of safety in the workplace with ongoing training and education.”
This is no doubt the case but the Commissioner should have realised that training and education remain as the second lowest hazard control measures in the hierarchy of risk controls. By instigating or encouraging higher order controls, the long term safety costs to businesses and the community would be minimised.
The Commissioner ends his findings by calling on “key groups’ to renegotiated a more suitable Code of practice that improves
” safety practices and outcomes in a practical cost effective manner.”
Deputy Premier and Minister for Industrial Relations, John Rau has agreed to this review process but it is difficult to see how this will work while continuing to follow the WHS harmonisation process, where model Codes of Practice are applied consistently across Australia.
The model Code of Practice for Safe Design of Structures, and most other model Codes, states:
“Compliance with the WHS Act and Regulations may be achieved by following another method, such as a technical or an industry standard, if it provides an equivalent or higher standard of work health and safety than the code.”
There is no obligation for Minister Rau to revise these Codes. It may be possible to throw this process back to the housing industry to develop an industry standard, as long as it matches or exceeds the model Code of Practice. If the HIA and Master Builders South Australia have concerns with the Codes, set them the task of doing better. They may find that the model Codes of Practice were the better option in relation to legal standing, business costs and ease of implementation.
Some colleagues in South Australia have said that this whole kerfuffle is directly related to the precarious election position of the current government given that an election is due within six months. This may be the political imperative but there seemed to be far less capitulation to lobby groups under the previous Industrial Relations Minister, Russell Wortley.
What seems to be needed in South Australia is a strong OHS voice that argues on the basis of evidence and that scrutinises OHS statements and allegations to verify facts and identifies uncertainty. The unions seem to have made no comment on Rau’s decision to suspend the Codes and the safety profession associations are as silent as ever.
The arguments about business costs and Codes of Practice have currently been restricted to the building industry but wait until the new guidance on workplace bullying is released soon. The Housing Industry Association went to town on business costs in its workplace bullying submission to Safe Work Australia in July 2013, as below. Rau’s acceptance of the costs argument by HIA and others through the Small Business Commissioner has legitimised the argument and has undercut the validity of establishing and managing a safe workplace for all South Australian businesses, big and small.
“Costs of a code of practice
HIA believes that the costs of implementing the draft Code are significantly underestimated.
The methodology used by the RIS in determining costs is questionable. The use of average weekly earnings does not reflect the full cost to a business, but only the possible wage cost. Other costs that are not considered included opportunity costs and purchase costs such as for products or training. This leads to an underestimation of the actual costs to business. Further, the time allocations estimated in the RIS are understated, and assume existing expertise and a static workforce, such as that found in a business with a corporate structure and human resources capacity. This assumption is not appropriate for small business, including those of housing construction.”