Government to appoint independent administrator for CFMEU

The federal government is preparing to appoint an independent administrator to overhaul the CFMEU and clamp down on criminal elements within its ranks, amid growing concern at the damage from gang-related figures at mammoth building projects.

The move will impose tight control on key parts of the union after days of revelations about its ties to organised crime, as employers call for a judicial inquiry into allegations of kickback offers and other deals that have driven up the cost of construction.

Prime Minister Anthony Albanese and Employment Minister Tony Burke have been considering their options for intervening in the CFMEU crisis. Credit: Alex Ellinghausen

Prime Minister Anthony Albanese has expressed contempt for John Setka, who has quit as secretary of the Victorian branch of the CFMEU, and vowed to take “whatever action is appropriate” to fix the problems within the union.

Senior cabinet ministers have played down the option of deregistering the union because this could repeat the mistakes made with a precursor to the CFMEU, the Builders Labourers Federation (BLF), after it continued its misconduct despite being deregistered.

ACTU secretary Sally McManus said she supported an administrator being brought in.

ACTU secretary Sally McManus.Credit: Eamon Gallagher

“I think that this is a good move for the CFMEU to get an independent administrator appointed by the courts,” McManus told ABC’s 730 program.

“It allows them to have the space and to do what is necessary to be part of a push which we will all be part of to get rid of organised crime out of our union movement.”

McManus denied ignoring allegations against the CFMEU because she was fearful of the union’s power and influence. Asked if she was aware of specific allegations regarding organised crime members infiltrating the union, she said, “absolutely not”.

“There were Facebook posts of people that people alleged were bikers or used to be bikers. I’d always raise those issues immediately with the relevant leaders of the CFMEU at the time,” she said, adding the CFMEU national secretary had set about removing people with apparent connections to “various groups”.

McManus said she didn’t think there was any need to review the legality of all EBAs struck by the union after it was revealed by this masthead that they were being used as a commodity to control some building sites.

The move to appoint an outsider to run the union gained momentum on Tuesday after the CFMEU national secretary, Zach Smith, voiced his support for Setka and argued that action by the national office would be enough to deal with the problems.

Employment Minister Tony Burke is preparing to unveil the federal response on Wednesday morning after signalling that the attempts by the CFMEU to control the damage did not go far enough.

The move comes after the federal government said an email warning about CFMEU threats, which it was sent two years ago – and which was reported by this masthead on Tuesday – had not gone to the prime minister’s office.

“The correspondence was first sent to an inactive email address,” the government said. It was then sent to the “contact the PM” website and left with the Department of Prime Minister and Cabinet.

While the Coalition demanded answers about what the government was told in 2022, the government confirmed the prime minister’s office did not receive the correspondence referred to in this masthead’s report on Tuesday.

A key factor in the federal decision to appoint an outside expert to run the CFMEU is the experience of a union scandal in 2012, when Bill Shorten as workplace relations minister named an independent administrator to run the Health Services Union due to fears about the misuse of membership funds by top officials.

Ministers believe the decision to appoint an administrator avoids the problem of trying to deregister the union in the way prime minister Bob Hawke moved against the BLF in 1986 due to concerns about corrupt behaviour by its leader, Norm Gallagher.

The advice to the government is that deregistering the CFMEU would not work because the union could continue to act against employers, negotiate enterprise bargaining agreements and represent workers without cleaning out any tainted officials.

In a legacy of the WorkChoices regime put in place by the Coalition more than a decade ago, unregistered organisations are allowed to negotiate for members as “red unions” without full status at the Fair Work Commission.

By keeping the CFMEU a registered organisation with an outside administrator, the government aims to keep the union subject to sanctions against unlawful conduct under workplace relations law.

On Monday, Albanese warned that the plans by the CFMEU national office to “clean up their own shop” might not go far enough, and “they’re on notice that we’ll take whatever action is appropriate”.

“I mean, I have contempt for someone like John Setka. He has no legitimate role in the union movement,” he said.

Then-CFMEU boss John Setka in June.Credit: Eamon Gallagher

The federal move is expected to extend beyond the Victorian branch to stamp out problems in NSW and Queensland as well.

McManus is due to hold a meeting with senior colleagues on Wednesday, when the executive is expected to be asked to endorse the appointment of an external administrator.

Labor’s national response to the scandal has escalated after party leaders in Victoria, South Australia and Tasmania wrote to the national executive asking for the construction division to be disaffiliated from the party.

As well as banning donations from the construction division, the party will also stop receiving affiliation fees.

Many of the nation’s union bosses are refusing to speak out against the CFMEU after McManus said on Monday the leaders of the movement stood united against criminality within it.

A spokesperson for the Transport Workers Union issued a statement supporting McManus’ comments but not mentioning the CFMEU, while unions including the SDA, Australian Workers’ Union, Australian Manufacturing Workers’ Union, and the Rail, Tram and Bus Union declined to weigh in.

As the CFMEU national secretary, Smith has stared down the ACTU’s demand to stand aside officials who are the subject of criminal allegations before a crisis meeting of the peak body’s executive.

Smith also refused to condemn Setka, who resigned on Friday, blaming media scrutiny, ahead of the publication of revelations of underworld infiltration in the union, and footage of him placing a suitcase out the front of another official’s home with the word “dog” on it.

Asked by RN Breakfast host Patricia Karvelas whether he accepted Setka had shamed the union, Smith replied: “No, I don’t. I don’t accept he has shamed my union.”

McManus has declined to say what the ACTU will do if the CFMEU does not meet its demands.

Master Builders Australia chief executive Denita Wawn backed the idea of an administrator being appointed. “We want the government to use all their powers to remove the toxic culture, including through the use of an external administrator,” she said. “Deregistration is not the answer – tighter governance is.”

Australian Constructors Association chief Jon Davies also backed the move, saying: “We support the appointment of administrators if that is the course of action the government proposes.”

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