New body to help clean up construction, but industry says it’s not nearly enough

Builders will be contractually required to report and stamp out criminal behaviour on state government construction sites, but Victoria says a significant share of the work to clean up the Big Build sits with the CFMEU and the Commonwealth.

Following a review into the troubled construction sector, a new alliance will also monitor unlawful activity on worksites using a streamlined “one doorway” approach to handling complaints, but the industry says more action is needed to force out criminality.

The Building Bad investigation found underworld figures had infiltrated the CFMEU.Credit: Rebecca Hallas

The final report by investigator Greg Wilson into the sector and the government’s response was released on Wednesday. It warned issues are so ingrained that “stronger interventions may still be needed” beyond the changes proposed.

The review was commissioned by Premier Jacinta Allan in response to the Building Bad investigation by this masthead, The Australian Financial Review and 60 Minutes into the CFMEU, which found underworld figures had infiltrated the union. In the wake of the Building Bad revelations, the troubled union was forced into administration.

Key recommendations of the review include that Victorian government construction contracts require principal builders to report suspected criminal conduct and, where possible, address the behaviour. This has been supported by the government.

A new referral body will be set up for builders and the government construction sector more broadly for the submission of such reports.

Another recommendation accepted in principle was the creation of a new alliance involving federal agencies to tackle crime on government construction sites.

“This alliance should share information, co-ordinate action and inform government of emerging issues on these sites,” the report says.

Industrial Relations Victoria will operate the complaints body and co-ordinate Victorian government law enforcement and regulators to participate in the alliance, in consultation with the federal government.

“Cultural and administrative changes will move more quickly than law reform, and Victoria needs to be well-positioned to capitalise on any change,” the report says.

“The review’s recommendations to create a complaints referral body and an alliance are designed to be flexible enough to be implemented in the short term, to allow Victorian agencies to work with Commonwealth agencies and the CFMEU administration while their work is ongoing.”

“However, the issues that led to this review are entrenched problems, and the review is aware that there is a risk that stronger interventions may still be needed,” the report says.

“The review has also considered a range of more significant legislative reforms, and, while they are not recommended now, government may want to consider them in the future.”

The state government accepted all eight recommendations in full or in principle but in its statement on Wednesday said that “most relevant interventions sit with the Commonwealth in industrial relations and the CFMEU administration”.

Premier Jacinta Allan said on Wednesday that the review had identified various state and federal agencies with powers to take action against criminal behaviour.

“It was found that it was perhaps unnecessary to add another body to that, but it’d be best to strengthen arrangements,” she said.

“We have a cop on the beat. It’s the Fair Work Ombudsman. It’s the arrangements that are put in place federally because that’s where the powers sit.

“This will be an agency that all individuals, regardless of the position they hold, will have the opportunity to make complaints to.

“We are also going to be requiring construction companies to report allegations, because it is those contractors and companies who have the responsibility for managing their work sites.”

Master Builders Victoria chief executive Michaela Lihou said the recommendations were a start, but there were was a lot more work that should be done, including more powers for law enforcement and state regulators.

“It is currently unclear how builders – according to these recommendations – would be able to effectively address suspected criminal activity,” Lihou said.

“Alongside the federal government, the Victorian government must play its ongoing part to help improve conduct and culture within our industry.

“Addressing the issues that impact parts of our industry requires ongoing effort, collaboration, adjustment, and monitoring. You can’t simply set and forget an approach to challenges like these.”

CFMEU administrator Mark Irving said the report highlighted the vulnerability of the construction industry to corruption.

“The report shines a light on the structural issues in the industry that need change. This report outlines the problems, but importantly from my point of view, it demands a whole-of industry response, from unions to employers, government agencies and law enforcement.”

Investigator Greg Wilson’s interim review in August was told there was “significant reluctance to make complaints from within the industry, both because of fear of reprisal and because people lack confidence that anything will be done”.

Allan said this would be a key area to be addressed with the new referral agency.

“We will strengthen [that] by providing that independent complaints pathway for people to be able to be confident there’s a place to make the complaint, that it will be acted on, and also there will be protections in place for the person making that referral,” she said.

Wilson identified labour hire as a “problematic area” because it provided pathways for workers who had been kicked off work sites to return through another company.

The state government said it accepted this issue and would strengthen the legislative powers of the Labour Hire Authority by expanding the test for a “fit and proper person” for labour hire directors to exclude those with past indictable offences, insolvencies, close associations with unfit people or memberships of criminal organisations. The register of providers will be updated to include details about why licences have been suspended or cancelled.

The changes will be assessed in two years to ensure they have been effective.

Allan said criminal behaviour had no place in Victoria’s construction industry.

“Unions are meant to keep people safe – we are making sure that people coming forward with information about conduct on worksites have the complaints processes and protections they deserve,” she said.

When asked if she took responsibility for the problem as premier and the previous minister in charge of the government’s Big Build, Allan said she took responsibility for “pulling this rotten culture out by the roots.

“When allegations were put to me in my previous role, I referred those allegations to those relevant agencies for their action and response,” she said.

Opposition major projects spokesman David Southwick said the terms of reference for the review were deliberately narrow.

“Only a royal commission, as previously proposed by the Victorian Liberals and Nationals, will get to the bottom of the alleged rorts and criminal conduct that has flourished across Big Build sites under the Allan Labor government and cost Victorians over $41 billion in major cost blowouts,” he said.

Greens integrity spokesperson Dr Tim Read said the government should go further and give the Independent Broad-based Anti-corruption Commission the power to investigate any misuse of money or power on government-funded projects.

“Parliament’s upper house supported a Greens bill last year which removed this restriction from IBAC and the government should now support it in the lower house,” he said.

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