Labor government ignored legal advice warning CFMEU deal risked federal funds

Confidential papers expose how Labor pressed ahead with its controversial CFMEU agreement despite lawyers warning it could trigger massive cost blowouts and funding cuts.

BPIC was implemented under Annastacia Palaszczuk’s government.

• Editor’s view: Cost Qld dearly

Annastacia Palaszczuk’s Labor government had confidential internal legal advice warning its sweetheart deal with the militant CFMEU was legally fraught, would increase construction costs and risk billions in federal funding – but went ahead with it ­anyway.

Confidential government documents obtained by The Courier-Mail reveal the former government began seeking Crown law advice in November 2019 on whether it could adopt a document that would eventually become known as Best Practice Industry Conditions.

But in early 2020, this 200-page document was called “minimum standards”, and had been drafted by the CFMEU to be used on all of its projects.

THIS MUST FORM PART OF THE CFMEU INQUIRY. READ TODAY’S EDITORIAL AND JOIN THE DISCUSSION

The policy was officially introduced in 2023.

Between February and March 2020, lawyers said the proposed minimum standards were “in the form of an enterprise agreement exclusively with the CFMEU” and could not be mandated on government contractors without breaching federal laws including the Fair Work Act.

The legal advice to the state government also warned the policy “may not be suitable” on projects where the Australian Workers’ Union had majority coverage.

Crown lawyers advised that, with careful wording, the government could work around this obstacle, by simply making BPICs a guideline test for contractors looking to secure tenders for government projects worth more than $100m.

“It is legally possible for the department to evaluate tenders based on whether or not they can demonstrate minimum conditions of employment, measured against the minimum standards document,” they said.

Then transport minister Mark Bailey with then acting premier Steven Miles at the Woolloongabba Cross River Rail site in 2023

Civil Contractors Federation Queensland secretary Damian Long said Labor was able to implement this by making contractors sign up to a “pre-qualification” agreement that stated they would implement BPIC.

“They made us pre-qualify for the work contractually and then they audited us to make sure we were complying with the BPIC minimum standards,” he said.

A publicly available Transport Department document from December 2020, when Mark Bailey was minister, shows BPICs in transport projects were ultimately put in as a “guidance document” and were not mandatory.

The leaked documents also show Labor was warned forcing BPIC on contractors could put Queensland in breach of the National Partnership Agreement that governs federal funding for major projects – giving the commonwealth the option to withdraw funding from BPIC projects worth more than $100m.

Lawyers also raised concerns BPIC would destabilise active major projects, including Queen’s Wharf and Cross River Rail, where workers were already covered by AWU-led agreements with wage rates up to 42 per cent above the CFMEU’s minimum standards.

Labor was repeatedly warned of certain industrial conflict as the AWU held majority coverage across civil construction and that the CFMEU had no coverage on many of the worksites targeted for BPIC rollout.

Separate leaked cabinet documents revealed TMR heads warned Mr Bailey BPIC could add up to $192m in extra labour costs across four years on the existing $5bn project pipeline. The department warned heat-stress shutdown rules – workers stopping at 35C or 28C if the humidity hit 75 per cent – could blow out project times across the southeast.

Labor declined to comment due to the ongoing inquiry into the CFMEU.

BPICs have been scrapped by the LNP state government.

Originally published as Labor government ignored legal advice warning CFMEU deal risked federal funds