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Research released by building unions to nullify the corruption scandal enveloping the Allan government was commissioned by a training centre whose headquarters were developed in a deal brokered by gangland figure Mick Gatto and his allies.
The expert research by economist Saul Eslake and academic David Hayward was paid for this year by the Plumbing Industry Climate Action Centre (PICAC) and is at the centre of an ongoing campaign by building unions to dispute the estimated multibillion-dollar cost of CFMEU misconduct.
Premier Jacinta Allan and several of her ministers have also attacked claims that Big Build wrongdoing by union bosses and gangland figures such as Gatto could have cost taxpayers as much as $15 billion by cutting comments given by Eslake and Hayward to reporters.
But as it emerged that some of the pair’s views are at odds with the attempts by some unions and Labor to downplay the scandal and associated calls for an independent inquiry, The Age can detail how the PICAC was built on land brokered as part of a deal involving underworld figure Gatto and the plumbers’ union.
The PICAC is a national industry training organisation and registered charity supported by federal and state governments. It opened in Brunswick in 2009 after an intense lobbying campaign for funding from long-serving plumbers’ union boss and current PICAC director Earl Setches.
The PICAC’s headquarters was bought and developed in a deal brokered by underworld figure Gatto and involving a Gatto-linked developer, the Banco Group, and the plumbers’ union over a decade ago.
In a 2014 interview with The Age, Gatto confirmed that he had helped broker the deal that involved the developer selling a parcel of its land in Brunswick to the plumbers’ union to develop into PICAC’s headquarters.
“The plumbers [union] are friends and I do work for Banco,” he said at the time when he was quizzed about the deal. “Certainly, I made a phone call and I put them together [to do the land deal].”
Banco has paid Gatto a monthly fee for two decades to smooth its dealings with building unions and was paying the gangland figure a regular retainer as recently as 2024, according to sources with deep knowledge of Gatto’s business empire not willing to speak publicly due to a fear of repercussions.
Even though the training centre is nominally backed by both union and industry stakeholders, the dominant role of Setches is well known, as is the fact he is a close friend of Gatto’s.
Earlier this year, it was revealed that Setches had recently dined on a yacht with Gatto, while The Age first exposed Gatto’s role in the green plumbing centre in 2014, as well as reporting the misgivings of unionists about his involvement at the time.
The PICAC-funded research by Eslake and public policy expert Hayward is at the centre of the campaign by the union movement to cast doubt over claims first aired by corruption expert Geoffrey Watson, SC, that Big Build wrongdoing by union bosses and gangland figures such as Gatto could have cost taxpayers as much as $15 billion.
Eslake and Hayward have also been repeatedly cited by the Allan government, including as recently as last week, albeit with government insiders privately insisting Labor ministers were relying on comments the pair have provided newspapers, not their work for PICAC.
But on Tuesday, Hayward called for an independent inquiry into the scandal, directly contradicting the premier’s insistence that such a probe would be unnecessary.
Hayward told this masthead that while his analysis questioned the accuracy of the scale of Watson’s $15 billion cost estimate, Hayward still supported an independent inquiry into the alleged corruption that Watson’s landmark 2025 investigation, Rotting from the Top, had exposed.
“I think an independent inquiry would be very good, and I don’t understand why it hasn’t happened already,” Hayward said. “It would be eminently sensible. It would be very helpful.”
The esteemed public policy academic also said that while he disputed Watson’s $15 billion wrongdoing estimate, the corruption revelations in Watson’s report were “enough to warrant an independent inquiry”. Hayward said an inquiry could “get to the bottom” of the corruption scandal.
On Tuesday, this masthead revealed that the second expert hired by PICAC, economist Saul Eslake, to ostensibly discredit Watson’s work had revealed he was never asked to probe the price of union misconduct or had even read Watson’s report.
Allan referenced Eslake’s work on Monday to argue that blowouts and price increases on Big Build projects were the result of inflation, not union misconduct.
He told The Age on Tuesday that he was not aware of the centre’s links to Gatto and that if he had known that he “would’ve had to think about whether I would have taken the job”.
Land title records show that in June 2008, Setches took possession of land at Albert Street, Brunswick, from the owners of the Banco Group for $1.5 million, with stamp duty paid in October 2008.
The Labor government allocated $2.1 million in the 2008 budget to finance the $9 million PICAC project run by the Plumbing Trades Employees Union and Master Plumbers Association to build Australia’s first green “climate action” plumbing centre.
Even before Gatto confirmed he had brokered the deal, it was well known in the building sector and on the public record that the Banco group retained the gangland veteran as its union fixer.
At the 2002 Cole royal commission into the building industry, Gatto was also quizzed about why he was on Banco’s payroll and said that “Banco pay me” at least $2000 a month and that he had worked for the developer “for a fair while”.
Since it was established, the Plumbing Industry Climate Action Centre has enjoyed government support. Last year the federal government pledged $20 million towards a new training centre in Melbourne’s west in partnership with the state government, which is contributing $10 million, and PICAC.
PICAC, Gatto and Banco were contacted for comment. The state government declined to comment.
At the ceremonial opening of the PICAC building in 2009, then-Labor federal minister Bill Shorten said: “As anyone would know if you’ve been pressured or lobbied or cajoled or persuaded, Earl Setches is normally at the end of the phone explaining to you the benefits of this centre. So I’m sure many of you will breathe a quiet sigh of relief that today it has arrived so that we can get back to the rest of our lives.”
According to previous reporting in The Australian Financial Review, the Plumbing Industry Climate Action Centre and a related training fund received $4.4 million in Labor government grants from 2008 to 2013, and an additional $5 million in taxpayer funding in 2016 for PICAC facilities in Geelong and Narre Warren.
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Nick McKenzie is an Age investigative journalist who has three times been named the Graham Perkin Australian Journalist of the Year. A winner of 20 Walkley Awards, including the Gold Walkley, he investigates politics, business, foreign affairs and criminal justice.Connect via email.
Patrick Hatch is transport reporter at The Age and a former business reporter.Connect via X or email.From our partners
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