An explosive report prepared for the administrator by Geoffrey Watson SC documented the union’s decline into lawlessness and how it exploited Victoria’s Big Build infrastructure program.
Victorians will head to the polls for a state election late this year, with Labor seeking a fourth term.
One of the defining issues is expected to be the Allan government’s handling of alleged thuggery and corruption in the building industry, centred on the Construction, Forestry and Maritime Employees Union (CFMEU).
After years of reporting in The Age, the federal government in 2024 appointed administrator Mark Irving to take control of the union’s construction division and oversee a clean-out.
A report prepared for Irving by Geoffrey Watson SC detailed what it described as a slide into lawlessness and the alleged exploitation of Victoria’s “Big Build” infrastructure program.
In a section of the report Irving did not release, Watson — an anti-corruption law specialist — conservatively estimated the CFMEU had overcharged Victorian taxpayers by about $15 billion. He concluded much of that money “poured directly into the hands of criminals and organised crime gangs”.
The Allan government has since reacted angrily to Watson’s criticism.
Watson has now spoken publicly about his investigation, the state government’s response, and what he believes should happen next.
The push for a royal commission
Watson said he did not believe the level of alleged corruption was consistent across the country, arguing Victoria was in a category of its own.
He said if you measured crime and corruption on a scale of zero to 10, “New South Wales is about a two or a three, Queensland’s about a five, and Victoria’s about 1,000. It’s insane.”
That is why Watson is backing calls for a royal commission in Victoria.
“They do need something in the nature of a royal commission in Victoria. A body which is set up with the resources, with the powers to compel evidence, the powers of a royal commission. And then you can get to the bottom of it.”
However, he said the inquiry should not be run by Victoria’s Independent Broad-based Anti-corruption Commission (IBAC), arguing it is already stretched.
“IBAC’s already got enough on its plate. It’s looking at corruption across the state of Victoria, including local government and the like,”
“Now I’ve worked within these organisations and I know how thin their resources are spread, IBAC would then probably need to suspend all of its important work in all of the areas where it’s looking at public sector corruption.”
“So no – there should be a standalone inquiry, with the powers of a royal commission. And it should be properly designed and thought through to move rapidly, and to try and see what went wrong in Victoria, and why, and how you can prevent it occurring again.” he said.
“I wouldn’t bring back the ABCC”
Asked what further steps the federal government could take, Watson said reinstating the Australian Building and Construction Commission (ABCC) would not be the answer.
“The CFMEU was getting further out of control during the era of the ABCC. I think the Fair Work Ombudsman is doing a very good job.
“Also, I can assure you, recent statistics have shown that since the administration [of the CFMEU] things have been brought under control,”
“There have been very, very few disruptions on sites which have led to prosecutions. No, I wouldn’t bring back the ABCC. I think we’re better off without it.”
How Watson reached the $15 billion estimate
Watson said his $15 billion figure was based on what he described as conservative assumptions, starting with the scale of the state’s infrastructure pipeline.
“I used conservative numbers. $100 billion is being spent on the civil work making up the “Big Build” so I went to the old-time civil contractors, the people who used to let the contracts in the [Australian Workers Union (AWU)] days and then who had to deal with the CFMEU,”
“And one after another, they said the costs exploded immediately. Nearly all of them told me it was by 30%. Some of them said 20%. Some of them said 15%. I think one said 10%.”
“I applied that percentage increase in the cost to the “Big Build” projects after the CFMEU had pushed the AWU out. And I came up with 15%, a conservative number in the range that I’ve just given you.
“That means $15 billion, taking the conservative $100 billion estimate. I don’t see what’s wrong with the figure,”
“I might say this, since I’ve given the report, I’ve received numerous calls from people complaining that it was too conservative, people who would know,”
“I double-checked it by speaking privately to some people who I’ll just say were in the bureaucracy. So it wasn’t a silly number. I confirmed it time and time again.”
“Not one Victorian politician contacted me”
Watson also criticised the Victorian government’s approach to his work, saying no MP reached out to him before publicly attacking his findings.
“Do you know, not one Victorian politician contacted me. Everybody knew that I was conducting this investigation. Nobody spoke to me,”
“After the report was handed out, and before they came out and attacked it, did any of them ring me and say, ‘how did you arrive at these figures, or what is going on here? Tell us, talk to us’? No, no contact at all before they launched their attack on the report and me.”
He said he was struck by how personal some of the criticism became.
“I’ve been doing this anti-corruption work now for a couple of decades. It’s come at a considerable personal cost to me, both personally and financially.
“I’ve strong credentials in this area. But they’ve dismissed me and they’ve said ‘oh no, it’s just florid ramblings’, as though I’d made it all up. They really attacked my integrity,”
“And as I say, it’s pretty weird that somebody would say my figures were reckless. I’ll tell you what’s reckless: dismissing them without saying why, without looking at how I calculated it, or without coming up with an alternative figure.”
With the election approaching, Watson’s call for a standalone inquiry with royal commission powers is likely to intensify pressure on the state government over how it plans to confront alleged corruption in Victoria’s construction sector.
It also raises the question of how taxpayers will be reassured that infrastructure spending is being protected from organised crime and unlawful influence.
