‘No place for this’: New CFMEU boss slams Metro Tunnel ‘ghost shift’ scandal

The new boss of Victoria’s embattled construction union has lashed out at those allegedly responsible for corrupting the Allan government’s giant Metro Tunnel project, saying the reliance on “gig economy” building workers has fuelled rorting of taxpayer funds.

In an extraordinary intervention, CFMEU state secretary Zach Smith revealed the union had moved swiftly this week to help weed out corrupt project insiders while demanding Labor reform the way workers are hired across the state’s Big Build infrastructure sites.

Premier Jacinta Allan at the Metro Tunnel site on Thursday inspecting the project.Credit: AAP

“The union has taken action, and we strongly condemn this behaviour,” Smith said in response to revelations in this masthead that the Metro Tunnel project had been corrupted by a small number of CFMEU delegates working with the state’s biggest labour hire firm.

They are accused of orchestrating a “ghost shift” scheme, involving labour hire workers filing fake invoices for shifts that were never worked.

The practice can lead to major cost blowouts and, on the Metro Tunnel, were discovered by consortium partner John Holland, the key construction company working on the $15 billion project.

“This is what the widespread use of labour hire can result in, and I call on the government and the consortium to have workers directly employed,” said Smith.

“There is no place for this behaviour in the industry. Our members are hardworking people who are building Australia’s infrastructure and should not be tainted by this.”

Smith was appointed to lead the union by CFMEU administrator Mark Irving, KC, last year and has spent months attempting to combat corruption within union ranks and the wider building sector.

On Friday morning, this masthead revealed that the John Holland Group was scrambling to address the scandal. Both the union and the company supported the sacking of two delegates this week and the launch of probes to uncover the extent of the alleged fraud against the taxpayer.

The labour hire firm implicated is MC Labour, a major player in Victoria’s construction sector. With union backing, it has operated a near-monopoly of labour hire supply on the Metro Tunnel site, sparking concern from industry insiders that the ghost shift scandal could have already cost taxpayers millions of dollars.

A spokesman for the Victorian government late on Thursday confirmed the matter was under investigation and could be referred to police.

“We are aware CYP D&C [Cross Yarra Partnership Design and Construction] Joint Venture is currently undertaking an urgent investigation and if there is found to be criminal activity, it will be referred to Victoria Police,” he said.

“These allegations are extremely serious and deeply concerning.”

Allegations of “ghost shifts” on the Metro Tunnel were also revealed in 2023, this time related to rail workers.

An investigation by the national safety regulator found that timesheets were falsified, but they were beyond its remit because they did not relate to live safety risks.

Metro Trains and contractor John Holland also investigated the issue, but their findings have never been released publicly. The company at the centre of the scandal, Morson International, was banned from Big Build projects while these probes were under way.

Government Services Minister Natalie Hutchins said the government had only been made aware of the concerns regarding MC Labour on Thursday night and was investigating.

“I do want to emphasise the contracts that are in place in regards this contract work means that taxpayers will not be paying the bill,” she said.

“The liability, if it is found to be true, will fall on the business that has a contract with government.”

Opposition Leader Brad Battin called for clarity on whether MC Labour would be removed from Metro Tunnel sites as promised with previous cases.

“Victorians deserve to have a government that respects the taxpayer and spends their money wisely. This government clearly does neither,” he said.

“Unlike Premier Allan’s decade of waste, the Liberals and Nationals have a clear solution: bikies off building sites, a Construction Enforcement Victoria watchdog, and a royal commission into CFMEU corruption.”

A spokesperson for the Victorian Infrastructure Development Authority, which oversees the state’s Big Build projects, also confirmed an investigation was under way.

“Any companies or individuals doing the wrong thing will face serious consequences, with the potential for allegations to be referred to Victoria Police,” the spokesperson said.

“If there are any additional costs as a result of these allegations they will be borne by the consortium.”

Three senior sources familiar with the matter, who spoke on the condition of anonymity, also confirmed the sackings of the CFMEU delegates and MC Labour’s alleged involvement. One of those sources said the alleged rort had potentially cost the taxpayer “many millions”, while another said it was a sum much lower.

While stories in media outlets have detailed “ghost shift” allegations on various Labor Big Build sites, it is the first time those alleged to be responsible have been sacked.

The sacking of the delegates is part of a continuing scandal surrounding the CFMEU, and comes as the administrator to the powerful union continues to wrestle control of its networks and drive corruption from the sector.

The CFMEU was placed into administration last year following the Building Bad investigation by this masthead, The Australian Financial Review and 60 Minutes, which found underworld figures had infiltrated the union. Following the revelations, the state government launched a review that recommended principal builders working on state projects report suspected criminal conduct and, where possible, address the behaviour.

MC Labour has previously been implicated in scandal, with this masthead recently revealing its ties to underworld figures, including notorious ex-bikie Toby Mitchell.

Since the union was plunged into administration, Irving and Smith have moved to crack down on the use of labour hire firms, arguing they have led to a new gig economy that disadvantages union members.

CFMEU’s Zach Smith at Melbourne rally in September 2024.Credit: Justin McManus

But the labour hire industry has also been a honey pot for organised crime, with several of the state’s labour hire firms aligned with major gangland or outlaw bikie gang figures.

It is suspected the practice of ghost shifts at the project has gone on for several years and could have added to the budget blowout on the major infrastructure project.

MC Labour has had a long and, at times, controversial relationship with the CFMEU. In 2014, The Age revealed how MC Labour gave kickbacks to a CFMEU organiser, who resigned after the revelations. MC chief executive Marc Lunedei has since insisted the business was operating above board under his guidance.

His son, former MC senior manager Matt Lunedei, is a known close associate of Mitchell, whom he met while serving time in prison for aggravated burglary and theft. In 2021, Mitchell helped Matt Lunedei to recruit workers for MC.

The company was contacted by this masthead on Thursday before publishing the allegations.

In a statement sent on Friday afternoon, Marc Lunedei said his group welcomed the investigation, and it would assist with any inquiries.

“Today, MC Labour has been made aware through media outlets that an investigation has been initiated into allegations made relating to shifts performed by labour hire workers associated with a project partner.

“MC Labour has systems and controls in place to ensure that all labour shifts have been authorised according to the pre-existing and agreed authorisation processes. Our established governance framework is designed to uphold integrity and compliance with all regulatory and contractual obligations.”

The Metro Tunnel project has been beset with cost overruns and concerns that subcontractor groups with ties to union delegates have been filing fake invoices to Big Build companies for workers’ shifts that had not been fulfilled.

On Thursday, Premier Jacinta Allan was at the Metro Tunnel’s new Town Hall station to spruik the project.

Concerns about ghost shifts on Big Build projects emerged in 2023, when it was acknowledged as a problem by the state government.

At the time, then-premier Daniel Andrews said there would be “proper accounting” of the invoices sent by subcontractors to the private company partners in the project, including John Holland.

“We expect everybody involved in every project is doing the right thing, and if they are not, they will be dealt with and the consequences will be very, very significant,” he said at the time.

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