Queensland’s $5.4bn warning shot on Brisbane Cross River Rail project

The Queensland government has taken the extraordinary step of dismissing the board overseeing the state’s largest ­infrastructure project.

Brisbane’s Roma Street trains station and part of the Cross River Rail construction site. Picture: David Clark/AAP

The Queensland government has taken the extraordinary step of dismissing the independent board overseeing the state’s largest ­infrastructure project as a warning to the contractor to deliver on time and on budget.

The move follows a campaign by left-faction unions, including the CFMEU, complaining about contractor CPB and demanding the government sack the board ­responsible for managing the $5.4bn Cross River Rail project in Brisbane.

Cross River Rail Minister Kate Jones warned CPB she was now “breathing down their neck” to ensure it delivered the 10.2km rail line for the $5.4bn contract price.

She said she wanted to send a warning to CPB that the Queensland government would not tolerate what was happening in Victoria, where she said the company was trying to “weasel its way out of its contract with the Victorian government on the multi-billion-dollar West Gate Tunnel”.

Minister for Cross River Rail Kate Jones. Picture: News Corp

“I made my motivations clear — we don’t want the cost blowouts and delays in Queensland that we’ve seen in other states,” Ms Jones told The Australian.

“If the contract were to be breached, huge financial penalties would apply.”

CPB has at least $18bn in contracts with governments across Australia, including $8.1bn in NSW, $3.97bn in Victoria, and more than $6bn in Queensland, including $497m to build the first stage of the Mackay Ring Road and a $241m upgrade to a central Queensland prison.

In NSW, CPB Contractors is building the $1.95bn WestConnex Rozelle Interchange, the $1.376bn Sydney Metro Stage 2 and the $463m Sydney Metro Pitt Street Station. In Victoria, its contracts include the $2.5bn West Gate Tunnel, the $400m Metro Tunnel RIA, the $312m Metro Tunnel and the $761m Monash Freeway.

Toll road company Trans­urban told the ASX in January that CPB Contractors and John Holland intended to terminate their Victorian West Gate Tunnel contract over contaminated soil.

CPB is the biggest division for Cimic Group, Australia’s largest construction company, which was formerly known as Leighton Holdings before being rebadged in 2015 by its Spanish owners, Grupo ACS. The company has endured a tough few months, replacing its chief executive after sinking to a $1bn annual loss following writedown on its Middle East ­operations.

Ms Jones said while Cross River Rail was on time and on budget, it was “early days” and she wanted to ensure it stayed that way. She will not renew the contracts of independent board members of the Cross River Rail Delivery Authority in April, saving about $4m, and she will tell authority chief Graeme Newton to report directly to her. “(I want) a direct line of sight on how we build the Cross River Rail project,” she said. “It’s my job to hold (CPB) to that ($5.4bn) contract … you need to be hands-on to keep the contractor accountable. They need to know we are breathing down their neck.”

The CFMEU and ETU have been trying unsuccessfully to negotiate an industrial agreement for aboveground construction with CPB, accusing the right faction Australian Workers Union of inking a “substandard” deal with the contractor.

Electrical Trades Union state secretary Peter Ong said Ms Jones’s move would not help the unions in their dispute with CPB, but it was “certainly warranted” to sack the board and meant she had been listening to the CFMEU and ETU’s concerns.

He said they had been warning the government that CPB was employing cheap contractors who were not complying with the government procurement policy’s standards for health and safety, wages or industrial relations.

A senior government source said large contractors often undercut on price when securing a contract, and then made a profit through “contract variations” that required extra spending by the government down the track.

The source said Ms Jones’s announcement was a “pre-emptive” warning to CPB not to try that with the Cross River Rail.

CPB declined to comment.