Bridget McKenzie (Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Hansard source

I, and also on behalf of Senator Cash, move:

That the following matter be referred to the Rural and Regional Affairs and Transport References Committee for inquiry and report by 4 March 2025:

The nature, extent and impacts of misconduct in procurement processes involving publicly funded infrastructure and housing projects and programs in Australia, with particular reference to:

(a) the adequacy of the Commonwealth regulatory framework in preventing and addressing corruption, bullying, standover and other intimidatory tactics in the building and construction industry;

(b) any practices or arrangements that discriminate, or have the effect of discriminating, against certain persons, classes of employees or subcontractors;

(c) connections between the Construction, Forestry and Maritime Employees Union, declining productivity and the escalating costs of infrastructure in Australia, including housing;

(d) the impact of misconduct on construction businesses, suppliers and skills shortages;

(e) the causes and effect of cost and delivery pressures on the Australian Government's infrastructure investment program;

(f) Commonwealth oversight of state and territory procurement and contracting arrangements for infrastructure projects with a federal contribution;

(g) examples of best practice infrastructure procurement processes around the world;

(h) improving the involvement of Indigenous businesses, small and medium business suppliers, subcontractors and independent contractors on infrastructure projects;

(i) the need for anti-racketeering laws in Australia; and

(j) any related matters.

Tonight, I rise to speak on a motion standing in both Senator Cash's and my name proposing a Senate inquiry by the Rural and Regional Affairs and Transport References Committee into the nature, extent and impacts of misconduct in procurement processes involving publicly funded infrastructure and housing projects across the country. At the outset, I would like to thank senators and stakeholders in the public who have expressed their support for this motion and particularly the intent behind it. As we have had a public debate and passed legislation here this week, indeed to put the CFMEU into administration—that process is underway—there are still significant and serious questions about the expenditure of the Australian Commonwealth taxpayer funds into publicly funded infrastructure projects across the country. I believe—and many senators in this place and community members right throughout the country believe—that a Senate inquiry is the appropriate place for this to be examined. We know that a Senate inquiry has the power to subpoena witnesses—we've done that before—to provide protection to witnesses and evidence and also to hear evidence in camera should that be required. I think those three protections that are peculiar and particular to the Senate standing committee process mean that examining this issue—the public expenditure of money in my own state and in other states—through this process is incredibly important.

There are many in this chamber who agree that more needs to be done to ensure that, when the period of the CFMEU administration ends, there has been an opportunity to establish an enduring change in the culture of the entire construction sector so that corruption and outlawed bikie gangs, bullying, coercion, sexism and intimidation cannot once again take root. It is of course dealing with the issues of the here and now. It is also appreciating and understanding that this particular sector in our economy lends itself to this type of behaviour, as it has in the past, when Bob Hawke deregistered the BLF to get rid of Norm Gallagher. We now have John Setka kicked out and the CFMEU put into administration because of the construction division. What we want to make sure is that the son of Setka is not able to once again rise within the construction division to actually bring building sites and the construction industry more generally into disrepute, as has occurred.

No-one who has expressed support for this motion wants to see a situation where the CFMEU returns to type within months or years of administration ending. This is an important opportunity for the Senate to investigate and make recommendations for stronger policies that will help keep down the cost of building our houses, multiresidential developments, roads, bridges and railways. We know that Australian families are paying more than they should to build new housing and accommodation. We know that Australian taxpayers are being slugged more than they should be to build major civil infrastructure projects, the roads and railways that we need to get people to school and to work; to connect with family; and to move our fresh produce from farm to port and to the dinner table and beyond.

There is significant evidence of misconduct in the procurement and delivery of infrastructure and housing projects by the CFMEU, as well as by those participants in the construction industry who are willing to collude with those elements within the CFMEU that the administration is proposed to solve. This type of behaviour is actually the behaviour that's driving up costs for projects, and it's understood the cost of CFMEU controlled construction projects is 30 per cent higher than for non-CFMEU projects. These higher costs are having a real and material impact on all Australians. They are contributing to the nation's declining economic growth and diminishing standards of living and to the fact that we still sadly have a zero at the front of productivity. They are driving up inflationary pressures, raising the cost of living for families and businesses, slowing our economic recovery and subjecting homeowners to higher mortgage repayments for longer than they need to be.

Higher construction costs are forcing Australians, especially those who live in rural, regional and peri-urban areas, our thriving outer suburbs, to drive on unsafe, potholed and degrading roads for longer than they should have to do, as road maintenance and upgrade projects are delayed year after year because of the behaviour that I have outlined. These costs are locking workers in our capital cities into gridlocked streets during morning and evening peak hours as they travel to and from their place of employment and home. Time spent in congestion results in increased fuel consumption and emissions and in less time at home with loved ones.

When it comes to housing, the higher cost of building apartments and the associated delays are threatening the very social fabric of our country. You do not have to go very far outside this place to know that housing is a real and present issue for Australians, renters in particular. If young Australians can't envisage a future pathway to owning their own home, and when we see working people living in tents or cars in capital cities because they can't find a place to live, the culture of a nation will change. It is therefore imperative that those of us in this parliament with the privilege of representing our communities take every opportunity we can to investigate and examine policy solutions to reduce the cost-of-living pressures on families and drive down the cost of construction. That is what this proposed inquiry seeks to achieve.

There is significant evidence to support the contention that it is much more expensive to deliver infrastructure and housing developments on CFMEU controlled projects. This is not some myth of the coalition's making. This is a substantiated fact. The Master Builders and industry who've been champions of getting the CFMEU into administration attest that the CFMEU forces up the cost of construction by 30 per cent. In April 2022, an EY analysis was done into the cost of abolishing the ABCC, which estimated the removal of that regulator could cost over $35 billion, due to a decline in construction output, by 2030. In addition, that report estimated Labor's policy to abolish the ABCC could result in a $47.5 billion reduction in economic activity. This was a direct result of higher costs and lower productivity from CFMEU activity acting as a handbrake on other sectors.

Under the Queensland Labor government, the state's sweetheart deal with the CFMEU, the standard best-practice industry conditions, is driving increased costs and reduced productivity. Queensland builders and developers have suggested that productivity on some CFMEU-controlled projects averages just three days a week. Queensland Economic Advocacy Solutions released an economic analysis of that impact on apartment construction prices in 2024, which highlights the challenges faced by builders in the state who want to provide the housing that so many families desperately need. The report compares the CFMEU Queensland EBA conditions with non-EBA conditions in the state and exposed a shameful reduction in working days and productivity.

Before factoring in public holidays, rostered days off and union disruptions, a non-union project could provide 312 working days per year to deliver the project, compared with 260 standard working days on a CFMEU-controlled project. That is over 50 working days fewer, nearly two-months difference in getting a project completed. That is one-third fewer working days to build the housing that Queenslanders need. As a result, this study found CFMEU-controlled apartment buildings take 50 per cent longer to build. Just when we're trying to get houses built, we have economic analysis that shows, on CFMEU-controlled projects, they take double the time to build, and there are numerous examples within this paper outlining those issues. So it's no wonder working families can't afford to buy a house in Brisbane.

Last Thursday, Minister Watt denied, on RN Breakfast with Patricia Karvelas, that any of this evidence actually existed. When PK asked the question about whether the CFMEU was actually responsible for inflating the cost of building housing, Minister Watt said:

I've had a bit of a look at this, Patricia, and I cannot find any evidence whatsoever to support that.

There's no evidence. However, that actually lacks complete credibility when you look at these reports.

We're seeing the impact of the CFMEU on the delivery of major infrastructure projects under the $120 billion Infrastructure Investment Program. With every budget, there are additional delays on infrastructure projects with funding re-profiled for future years beyond the forward estimates, as critical road and rail projects that Australians have been desperately waiting to be built in our congested suburbs and capital cities fall by the wayside. At the very same time this government is bringing in additional new arrivals into these crowded suburbs, the very projects that were slated for delivery are being pushed out because of the CFMEU's control on the contractual arrangements with state governments, and that is exactly what this inquiry seeks to examine.

In the May 2024 budget by the Albanese government, more than $2.1 billion worth of infrastructure investment was delayed beyond the forward estimates. That's just more projects delayed. These aren't just a delay of 12 months, just a year; these are delays cascading four years into the future. The budget showed that Labor expected to spend $1.6 billion less on infrastructure last year than they estimated just five months previously in MYEFO. The budget, again, showed that Labor will spend $906 million less on roads in 2024-25 than budgeted the previous year and $524 million less on rail infrastructure than previous budget. This is the impact of delays in project deliveries.

The Albanese government had to pay out to state governments an additional $10.1 billion in the last budget. Not an additional kilometre was built for that $10 billion of rail or road—not an additional bridge, not even a staircase. This was to state governments for cost blowouts on state-procured projects. This is an issue that is very much impacting the Commonwealth taxpayer's ability to service the country with road, rail and bridge projects that everyday Australians need, want and deserve. That's why the Senate should support setting up this inquiry and setting up an examination into anti-racketeering laws. These are laws within the United States, where organised crime operatives, shall we say, are not able to be part of registered organisations. We shouldn't have the ability for mafioso to be on building sites, working hand in glove with the criminal elements within the construction industry and besmirching the lot.

We know that tier 1 contractors, the very big end of town, have a lot to answer for. You cannot have a corrupt system without two parties agreeing to participate in silence, under the cover of darkness, to corrupt the system. They're not getting ripped off. CFMEU workers are working essentially three days a week on these projects. Tier 1 contractors are raking in billions of dollars from state and federal governments. When we say 'state and federal governments', that's the Australian taxpayer; mums and dads who are barely making their mortgage and rent repayments are forking out billions in additional funds to criminal elements in the CFMEU and tier 1 contractors. This Senate inquiry seeks to examine that issue and make serious and sensible recommendations around the procurement practices in public infrastructure funding. I urge the Senate to support it, and I seek leave to move an amendment to the motion.

Leave granted.

I move the amendment:

Omit "4 March 2025", substitute "28 November 2024".

For those who may not have seen it, the amendment brings the reporting date to the end of this year, to our last sitting week, rather than stretching it out to March.