New federal workplace relations reforms are raising concerns that a construction framework, characterized by significant cost blowouts in Victoria, could be adopted nationally, potentially adding billions to taxpayer-funded infrastructure projects. The legislation, passed by Federal Parliament, introduces a shift in procurement that allows the Commonwealth to favor companies with union-backed enterprise agreements when awarding contracts.
The opposition argues this could replicate the model used in Victoria under Premier Jacinta Allan, which has been blamed for escalating costs and workplace pressures. Reporting indicates that agreements between the CFMEU and the Victorian government coincided with industrial demands that drove infrastructure costs up by as much as 22 percent. Applying these cost pressures to the federal government's $13.5 billion infrastructure allocation for 2026-27 could result in nearly $3 billion in additional spending annually, or approximately $26 billion over the government's 10-year infrastructure pipeline.
"After Victoria's $15 billion CFMEU scandal, Australians have the right to ask: How many billions of taxpayer dollars is Labor prepared to expose to the same risks?" said Shadow Assistant Minister for Employment Zoe McKenzie. "Parliament should be closing the door on the culture that enabled corruption and inflated costs - not opening a new one through Commonwealth procurement."
Leaked documents from major Victorian projects, such as the Metro Tunnel, have reportedly shown contractors warning that CFMEU-backed staffing requirements were inflating labor costs. In some instances, workforces were allegedly pushed to around 22 percent above industry benchmarks with the addition of roles like crane observers, traffic controllers, and cleaners, contributing to nearly $200 million in extra costs on the Metro Tunnel project alone.
Further concerns stem from allegations surrounding construction industry figure Mick Gatto, who is reportedly at the center of an ongoing corruption and extortion investigation involving the CFMEU. Allegations include contractors paying millions to avoid CFMEU-led industrial action that could halt construction sites. The Watson Review, commissioned by the Queensland government, highlighted serious issues within Victoria's construction sector, alleging that bikie-linked individuals, organized crime, and corrupt union officials had infiltrated the state's Big Build sites. The review claimed this enabled widespread misconduct and the misuse of up to $15 billion in public funds.
Premier Jacinta Allan has attributed broader cost overruns to inflation, not corruption, and has rejected calls for a royal commission. However, the Coalition warns that adopting similar settings federally risks repeating these costly outcomes nationwide. Liberal Deputy Leader Jane Hume stated that the reforms are likely to entrench union influence in taxpayer-funded projects. "Government procurement should be based on one thing... value for money - not on whether a business has signed an industrial agreement that is preferred by the government," Hume said.
The Watson review cautioned that some enterprise bargaining agreements (EBAs) could create conditions ripe for corruption, particularly when access to work is controlled by a small number of decision-makers, increasing the risk of bribery over EBA approvals. Liberal Senator Maria Kovacic expressed fears that the proposed laws could "open the door to further misconduct at taxpayers' expense."
Business groups have also voiced strong opposition. The Business Council of Australia (BCA) described the changes as "a corruption risk written into law," arguing they could distort procurement decisions and undermine confidence in the use of taxpayer funds. BCA chief executive Bran Black warned that higher project costs would filter through to the wider economy, impacting all Australians.
Prime Minister Anthony Albanese has stated the government has "zero tolerance whatsoever for corruption." He pointed to past government actions, such as placing the CFMEU into administration and removing former union leader John Setka from the Labor Party. When pressed on specific measures to combat corruption, the Prime Minister did not outline additional steps.
A government spokesperson reiterated the Prime Minister's stance, emphasizing zero tolerance for criminal or corrupt behavior and affirming that value for money and timely delivery will remain central to government spending decisions. The spokesperson rejected claims that the legislation would force procurement decisions to favor union-aligned firms, stating that the changes do not alter fundamental spending principles. They added that the government is consulting on strong standalone standards for the construction industry and will continue to collaborate with various stakeholders to address misconduct.
The government also highlighted measures introduced in 2024, where funding agreements with states and territories were amended to require reporting of any allegations of unacceptable behavior to relevant authorities and the department, aiming to identify and remove bad actors. The spokesperson asserted that this framework is actively being used to drive out misconduct.