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In August 2024, when Danny Pearson was transport infrastructure minister in the Allan government, it emerged that the Metro Tunnel’s builders, Cross Yarra Partnership, needed more funding for the project.
Asked in parliament to shed light on the nature of these disputes, Pearson refused. At a press conference around that time, one of our reporters asked him if a new contract had been signed with the builders, promising them more taxpayer money, as a letter leaked to us suggested. “There are some things I can say. There’s some things I can’t say,” he told us.
Then-opposition leader John Pesutto said the leaked letter highlighted “the total lack of financial transparency surrounding major projects” in Victoria.
We have travelled a long and ugly road since then-treasurer Tim Pallas’ statement in June 2019 that the price of the Metro Tunnel was “fixed” and the consortium of builders would have to bear any additional costs. In 2024, Premier Jacinta Allan told parliament that blowouts were part and parcel of major infrastructure projects.
But not all blowouts are created equal. Unexpected problems with geology beneath the Yarra are one thing; corruption that sees bikie gang members and criminals pocketing millions of dollars in kickbacks are another. To distinguish between the two, Victorians need to see how their money is being spent and the decisions behind that.
Allan has long claimed our Building Bad series in July 2024 was the first indication her government had of such corruption. “From that point on, we are told, there was zero tolerance; before that, it is implied but never stated, there was zero awareness,” we wrote in February of this year. As recently as May, the premier maintained there was “no evidence” of bikies cashing in on construction of the North East Link.
This is not “zero tolerance” from Jacinta Allan. This is the stance of the three wise monkeys in the face of masses of evidence.
Today, our investigative team reveals that in May 2024, months before our July publication of the Building Bad series, Allan and her government received a report from Cross Yarra Partnership outlining the “limitation imposed due to the industrial relations landscape” created by CFMEU restrictions on the tendering of contracts and its effect on mounting costs.
It points to blowouts caused by abnormal “attendant labour requirements” – additional employees on building sites – and demands from CFMEU health and safety representatives. The Age has already shown that the union farmed out health and safety roles on building sites to such figures as notorious bikie standover man Joel Leavitt, alleged hitman Muhammed Sayan and convicted killer Johnny “Two Guns” Walker.
The consortium’s report makes it clear that the Allan government was told this sort of union malpractice was adding to costs, and it even gives a figure: $196.4 million for that phase of the construction. But even worse, it damningly exposes that the consortium claims it caved in to these demands with the government’s knowledge and approval, which it called “adopting a ‘best for project’ attitude”.
Given Labor’s record on major projects, this surely cannot be what is best for the Victorian public.
When then-premier Daniel Andrews announced in 2022 “the biggest hospital project in Australia’s history” at Arden Metro Tunnel station, his government – including then-transport infrastructure minister Jacinta Allan – already knew electromagnetic interference from trains could be an issue for hospital equipment.
It would be three more years before the government abruptly decided to scrap its plans for the Arden precinct, raising further questions about transparency and planning.
Two years ago, the government conceded that industrial relations was one of “a range of factors” that had delayed completion of the Metro Tunnel’s State Library and Town Hall stations. But Allan and her ministers have repeatedly rubbished the claim of anti-corruption expert Geoffrey Watson, SC – appointed to investigate the CFMEU by the federal government – that 15 per cent of the cost of the Big Build, an estimated $15 billion, had been added to the cost by corruption, much of it going into the hands of organised crime.
Watson has described The Age’s revelations today – part of wider ongoing reporting with 60 Minutes – as “smoking guns”.
But the challenge is not only for Spring Street. New federal laws that would allow businesses with union-backed enterprise agreements to be favoured for taxpayer-funded work are set to pass the Senate next week after Labor reached a deal with the Greens. Watson warned that where “the power to give an [enterprise bargaining agreement] was concentrated in the hands of a few people … it was very, very easily corrupted.”
The Albanese government has already said that these laws will not cover construction contracts, a case of shutting the barn door after the horse has bolted. But acknowledging that failure means it should think again about these new powers, rather than having to clean up a similar mess in the future.
Neither this Victorian government nor any that succeeds it can be taken seriously until it comes clean on what was known and when.
This may well require a fully independent inquiry, as recommended by Fair Work Commission general manager Murray Furlong and many others, since it has repeatedly been made clear there is no hope of transparent conduct from a stonewalling Allan government.
Because it is now abundantly clear that the government has long known about excesses fuelled with taxpayer money and intends to do, as it has done all along, shamefully little about it.
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