Allegations of rorts and coercion on Victorian road and rail projects

Whistleblowers have revealed how the militant construction union has seized control of the taxpayer-funded major ­infrastructure program and driven up traffic management costs by $380m.

Entry-level labourers and workers who hold stop-and-go signs on Victoria’s Big Build projects are now earning more than $206,000 a year.

Industry whistleblowers say that a CFMEU “takeover” of the taxpayer-funded major ­infrastructure program has driven up traffic management costs alone by $380m.

Fresh allegations of rorts and coercion have been made on road and rail projects, sparking urgent calls for a new construction industry watchdog.

The Herald Sun can further reveal how an extraordinary premium is being added across large-scale builds where the militant construction union has seized control, with project suppliers whose bids are double the price of competitors winning jobs due to CFMEU links.

Workers who hold stop-and-go signs on Victoria’s Big Build projects are now earning more than $206,000 a year. Picture: Luis Enrique Ascui

Whistleblowers say this has repeatedly happened after builders have already inked main contracts, increasing the risk of budget blowouts that are now endemic in Victoria.

The trend has worsened since the axing of the Australia Building and Construction Commission by the Albanese government.

The Herald Sun has seen tender documents and spoken to industry insiders about the iron grip the union has around civil construction works funded by taxpayers, which even extends to union delegates banning non-members from toilets and lunch rooms on some sites.

Whistleblowers have revealed how standover tactics and intimidation are also adding to bills, with the union strongarming builders into using its preferred suppliers after tender processes have played out.

There are urgent calls for a new construction industry watchdog. Picture: Andrew Henshaw

Once established on site, delegates often send in extra workers with a direction for project managers to “find something for my boys to do”.

“They basically control the rosters,” one insider said.

A breakdown of pay earned by entry-level labourers and traffic controllers – who hold the stop-and-go signs – aligned with the militant union shows they now pocket more than $206,000 a year for a six-day, 56-hour week worked on Big Build projects.

This includes site and travel allowances, overtime, and meal penalties across 48 weeks of the year.

It is at least 75 per cent higher than workers get on a general building and construction award used at road resurfacing sites, or power and gas jobs.

The union has strongarmed builders into using its preferred suppliers after tender processes have played out. Picture: Andrew Henshaw

On some union-controlled sites, multiple workers are posted to entry points to check permits and other accreditation, with another crew on site to relieve them during breaks.

One whistleblower said they had witnessed penalty codes being misused on timesheets and shift start or end times being extended to boost overtime.

CFMEU state secretary John Setka dismissed allegations of roster manipulation and rorts, saying: “That doesn’t happen, no (company) is going to pay that much”.

“We have been through two royal commissions. What did they find, what were we doing wrong?” he said. “When have they ever pinged us on ghost pays and all that?”

But Mr Setka confirmed workers on a 56-hour week would earn more than $200,000, saying those on night shift – paid at a double time – would earn even more.

“They work hard, they don’t just sit there sucking stubbies, and then a building springs up,” he said.

CFMEU state secretary John Setka dismissed allegations of roster manipulation and rorts. Picture: Nicole Garmston

“If you go to other workplaces and work those sort of hours, you’re not going to get as much as us but I tell you what, you won’t be far off.”

Asked what proportion of taxpayer-funded Big Build sites now had the union calling the shots, Mr Setka said: “I would like to say we control nearly all of them.”

The state minister responsible for Victoria’s Big Build on Friday dodged questions about alleged rorts and intimidation on taxpayer-funded sites, saying people with evidence of criminality should go to “appropriate authorities”.

Transport Infrastructure Minister Danny Pearson was pressed on revelations in the Herald Sun that tenders were being inflated for industrial peace, non-union members were banned from toilets, and that the CFMEU was controlling how sites were managed, during a parliamentary hearing on the State Budget.

Nationals MP Danny O’Brien asked whether an investigation would be opened, given the implications for Victorian taxpayers.

“Industrial relations, as a legislative instrument, were ceded to the Commonwealth by the Kennett Government in 1996,” Mr Pearson replied.

Mr O’Brien said there was no need for IR legislation to investigate claims of rorts and cost blowouts, to which Mr Pearson deflected away from the government.

“If there is evidence of criminal activity or illegal activity... my strong message would be that it should be reported to appropriate authorities,” he said.

Industry insiders have crunched the numbers on $25.6bn worth of contracts across Victorian projects, including those inked for the $26bn North East Link, $34.5bn Suburban Rail Loop, and level crossing removals, using publicly available Oxford Economics industry figures and a comparison of CFMEU workplace deals with the Building and Construction General On-Site Award.

Assuming an average 2 per cent spend on traffic management, there is a $384m increase on wages and allowances based on CFMEU rates, even without excesses that have been outlined.

John Setka says the union is calling the shots on ‘nearly all’ of the Big Build sites. Picture: Chris Hopkins

CFMEU price is ‘double’

Companies bidding to supply labour on major projects at double the price of competitors are securing deals because they are aligned with the militant construction union the CFMEU.

The Herald Sun has viewed confidential tender documents showing four bids to be a ­supplier to a builder on a major road project in Victoria.

Whistleblowers have revealed sensitive data to show the extent of the union’s power on site, on the condition of anonymity due to fears for their safety and employment.

Three of the bids were worth between $900,000 and $1m.

The fourth bid, worth more than $2m, was backed by the militant union and was eventually selected by the builder.

A note on the document said that the company that bid more than double its rivals “has a CFMEU agreement”.

One whistleblower said “no one would spend twice the amount given free choice” and decision-making was influenced by the capacity for the union to slow down jobs, including through cranes and traffic control.

They said general safety issues might be flagged on trucks, for example, which could halt the entire project for two days and blowout timelines and costs for the builder.

“The client will say, ‘I know the traffic management is going to cost me double but it’s going to bring me industrial peace,” they said.

Whistleblowers said since the Australian Building and Construction Commission was wound up by the Albanese ­government there was no body with enough powers to stop ­industrial coercion, and that complaints to state and federal representatives had no ­impact.

They said big builders were now capitulating to demands midway through jobs.

“Non-CFMEU aligned businesses are often able to get on to a project in the initial stages through a proper commercial process, but once the CFMEU establish their delegates onsite they start ordering the contractor to move to their subbies at a higher cost,” they said.

CFMEU state secretary John Setka said he doubted that costs of union-aligned bids were double others, but said that lower bids were probably “rogue operators” that didn’t pay workers properly.

“There’s a lot of rorters around,” he said.

“You can’t say our rates are double what some other union’s rate is, or whatever; our rates are probably double compared to the rogue s--tbags that are exploiting women and young kids and don’t pay super and are breaking every law under the sun.

“I don’t think it’s that much, to be honest, you have got to compare apples with apples.”

Mr Setka, who is retiring from the role of state secretary at the end of this year, said a lot of accusations aimed at the union were “bulls--t”.