Construction industry figures say CFMEU premium costing Adelaide sites millions of dollars

The militant union is slapping a costly premium on Adelaide construction, hitting SA’s biggest projects hard, senior industry figures say.

The militant CFMEU union is applying a 10-15 per cent premium to Adelaide construction projects, adding millions of dollars to cost, senior industry figures say.

Senior development industry figures have told The Advertiser standover tactics have been applied since the rogue Victorian branch takeover in 2022, and continue despite secretary John Setka quitting over a scandal including alleged bikie gang connections to the union during his watch.

The industry figures claim the CFMEU is inflating project costs by threatening to shut down sites unless costly demands are met, including the use of expensive union-approved subcontractors and insisting union representatives be employed on every site in Adelaide.

“Are the CFMEU driving up costs? Unquestionably, yes. There’s definitely a premium,” said one construction figure.

They warned the CFMEU imposts threatened to swell costs of future Adelaide projects, variously listing the $3.2bn Women’s and Children’s Hospital, the Adelaide Crows’ $100m Thebarton Oval headquarters and $15.4bn Torrens to Darlington South Rd tunnels project.

Infrastructure Minister Tom Koutsantonis, whose department is scouring all CFMEU contracts in South Australia, said he had not yet been alerted to any “evidence of any wrongdoing or unethical practices”.

CFMEU leader John Setka pictured in Adelaide. Picture: Roy VanDerVegt

Infrastructure and Transport Minister Tom Koutsantonis. Picture: Brett Hartwig

But the industry leaders revealed CFMEU demands also included paying about $200,000 per-head annual wage for three, rather than two, lollipop sign gangs to control street traffic during a project.

Other imposts involved using Melbourne-based subcontractors on an Adelaide project and their accommodation, food and beverage costs being met by the developer.

The industry figures estimated project costs had soared by between 10 and 15 per cent, but some said this premium could be as high as 30 per cent.

They said major national development firms and governments preferred to meet union demands, rather than risk shutdowns on major interstate sites or electorally damaging schedule delays.

One said major projects might have already included the CFMEU premium in their cost estimates, arguing this might explain previous blowouts such as the Torrens to Darlington cost inflating by more than $5bn.

The CFMEU emphatically rejected the allegations, saying in a one-sentence statement: “This is scaremongering nonsense from money-hungry developers who want to cut corners on safety and quality for the sake of profit.”

A CFMEU SA mass meeting at North Adelaide’s 88 O’Connell development. None of the workers pictured are accused of any wrongdoing. Picture: Facebook

Premier Peter Malinauskas in mid-July asked police to investigate bikie links to the CFMEU in SA after Mr Setka quit amid allegations gangs had infiltrated the organisation interstate. There is no suggestion that Mr Setka himself had any involvement with the gangs.

This followed reports that bikies had infiltrated major construction projects in Victoria and NSW and had been employed as union delegates, with one bikie-linked CFMEU official earning $250,000 a year.

Master Builders Association SA chief executive officer Will Frogley branded as “deeply concerning” the issues raised by industry figures, urging them to report the alleged illegal behaviour to the Fair Work Commission's investigation into the CFMEU.

“The alleged behaviour not only breaches a host of Fair Work and competition laws, it has the potential to blow out project costs and saddle SA taxpayers with increased debt,” he said.

“These tactics also turn young people off our industry at a time when we are desperately trying to overcome a skills shortage.”

In a statement, Mr Koutsantonis said: “So far, I have received no evidence of any wrongdoing or unethical practices by the CFMEU on any South Australian project.

“However, I will not stand for the type of behaviour we have seen in other states exposed by the media.

“Specifically, the Department for Infrastructure and Transport contracts obligate contractors and subcontractors not to engage in unethical practices, including collusive arrangements.

“DIT are currently reviewing all contracts that include enterprise bargaining agreements signed by the CFMEU and will report back to me with any findings of concern.”

The rogue union is using the flagship 88 O’Connell development – 160 apartments on North Adelaide’s long-dormant Le Cornu site – as a showpiece for mass meetings and speeches.

The CFMEU showcased on social media a May 16 mass promotional meeting attended by numerous workers at 88 O’Connell, a Commercial & General (C & G) development

Artist impression of new Crows facility at Thebarton Oval … it is understood the Adelaide Football Club is in the market for tenders and has not yet encournted a CFMEU price premium.

Outgoing national secretary Christy Cain addressed workers “about the importance of joining the union and being a union member”, according to the CFMEU SA social media post.

C & G group chief executive officer Trevor Cooke said 88 O’Connell had an industry-standard enterprise bargaining agreement that was endorsed by the CFMEU “well before any Victorian involvement in the SA division”.

The site has a workforce often exceeding 300 people, the vast majority of whom are union members.

“We believe that strong and effective unions play an important part in ensuring quality, large-scale construction jobs are delivered safely, efficiently and to the high standards expected by our community,” Mr Cooke said.

“Commercial & General enjoys a good working relationship with the CFMEU across our various South Australian sites.”

It is understood the Adelaide Football Club is in the market for tenders for its Thebarton Oval project, final designs of which were revealed by The Advertiser on July 19, and have not yet encountered a CFMEU price premium.

It is considered likely, however, that the Crows are on alert for any union impost as they seek to prevent cost escalation in the long-running project.