Union wage rises to add up to 15pc to nation-building projects

State-funded infrastructure projects could be 5 to 15 per cent more expensive because of union-backed wage rises.

CFMEU state secretary John Setka likened the prospect of ’productivity’ clauses in the EBA being actually triggered as akin to winning the lottery. Picture: Jake Nowakowski

State-funded infrastructure ­projects could be 5 to 15 per cent more expensive, costing taxpayers in Victoria and Queensland hundreds of millions of dollars, because of spiralling union-backed wage rises.

The Victorian government will pay workers on the metro trains project an allowance of $70 a week in return for industrial peace, the Herald Sun reports today. Builders in Victoria have commissioned ­research that warns some projects may be shelved as a result of the extra costs.

The findings of the Deloitte ­research come as the Construction Forestry Mining and Energy Union and about 20 big builders struck a deal for a 15 per cent wage rise over three years that employers fear will soon become the ­industry norm for large projects.

Deloitte warned taxes will have to rise, or spending in other areas slashed, to pay for the extra costs as the rest of the population bears the burden of outsized remuneration in the construction sector with building workers’ earnings now outstripping all but doctors.

Union deals are leading to ­carpenters earning $163,000 and labourers $152,000 — twice the award wage — in Victoria and ­between $145,000 and $161,000 in Queensland, adding hundreds of millions to construction costs.

Queensland construction workers are expected to see an ­annual 5 per cent wage growth, but the Liberal National Party claims it could build ­infrastructure for 5-15 per cent less.

“Agreements for higher wage levels involve real trade-offs for taxpayer funds,’’ the research warns, saying wage growth could also force the shelving of some public and private projects. “And, if the projects do proceed, then taxes would need to be higher (or other public spending reduced) meaning the broader public was partly funding the higher wages in the construction sector.’’

Brookfield Multiplex, L.U. ­Simons, Hickory, Built Constructions, and Probuild are among those who have signed the CFMEU enterprise bargaining agreement.

Brookfield Multiplex is building the $125 million Bunjil Place development in Melbourne’s southeast and the Department of Justice’s $180m Hopkins Correction Centre at Ararat in western Victoria, which was funded by a public-private partnership. Built Constructions is developing the Melbourne Park Administration and Media building for Major Projects Victoria

Labor leader Bill Shorten sidestepped questions on the issue, instead raising bankers’ salaries in his response.

“What we see in the remuneration system ... in banking is ­another reason to have a royal commission into the banking sector and financial services industry,’’ he said. “We see excessive remuneration ... at the same time as we see literally tens of ­thousands of consumers being ripped off.”

Builders in Queensland have also expressed concerns about the effect of spiralling wages in the unionised building sector.

“Queensland has more strikes in the construction industry than the rest of the country — the situation is getting out of control,” Master Builders director of construction policy Corlia Roos said.

“It is hurting our state’s economy and reducing our attractiveness for vital investment in infrastructure, tourism and other business opportunities.”

Queensland Industrial Relations Minister Grace Grace will not take steps to limit the risk of cost blowouts, with a spokesman saying wages negotiations in the private sector were a matter for the industrial umpire.

The Australian has obtained agreements arranged by the CFMEU in NSW demanding a raft of extra payments and perks. A greenfields agreement with Lend Lease covering 2012 to 2014, forced the employer — and subcontractors — to give staff “industrial relations training leave”. It also provided for “non-­cancellable ‘WorkCover Top-Up” and income protection insurance as “an additional lump sum” over payments offered under the NSW statutory scheme.

The workplace deals also ­demanded Lend Lease make contributions to non-statutory retirement and a union “drug and alcohol” charity, with paid time off to attend union meetings.

Agreements struck between Lend Lease and the CFMEU over the $6 billion Barangaroo project in Sydney included a demand that $77 per employee was paid into a union-linked redundancy trust.

A source familiar with the NSW deals said the pattern agreements were “evidence how extra cost get built into agreements, and the power of the unions to ­demand these sorts of benefits”. “This is how you get absurd wages and conditions on construction projects,’’ the source said.

The EBA deal struck this week between the CFMEU and employers including Brookfield Multiplex, Probuild, and L.U. Simons will see Victorian construction workers boost their wages even further with a 5 per cent wage rise in each of the next three years and 3 per cent the year after.

CFMEU state secretary John Setka, speaking at a meeting to endorse the deal, likened the prospect of “productivity” clauses in the EBA being actually triggered as akin to winning the lottery. The union is now expected to try to foist the EBA as a pattern agreement on the rest of the unionised construction sector in Victoria.

The Master Builders Association of Victoria, which commissioned the research, said “there are no winners associated with this proposed agreement, with the construction sector and Victorian taxpayers, having to foot the enormous bill”. The research finds that the level of growth in construction wages above the rest of the economy would add $621m to the state’s infrastructure spending over four years. In private sector construction the cost is even higher amounting to $2.2bn over four years across the projected $75bn worth of forecast construction activity.