Union’s pay rules tied to road project’s cost blowout
A major state road project for a leading construction company has suffered losses of more than $30 million after new pay rules dictated by the militant CFMEU were introduced, an investigation has found.
CPB Contractors said the state’s Best Practice Industry Conditions (BPIC) introduced by the former Labor government had been hit hard by the investigation into the CFMEU’s past misconduct in Queensland.
CPB director Vince Sanfilippo said on Wednesday the company had added $23 million for higher wages and conditions and another $11 million for BPIC-related delays to the Bruce Highway upgrade near Gympie.
He said the BPIC rules, taken from the CFMEU “minimum standards” document, had helped increase the price of the work.
The inquiry is examining how the Queensland government deals with unions, contractors and workplace laws on major infrastructure projects.
In particular, it is looking at whether the now-scrapped BPIC was developed legally and whether any groups, including unions, had undue influence over government decisions.
The commission heard damaging evidence from public servants, union officials and industry figures.
Mr Sanfilippo said he was “disappointed” to see the CFMEU’s minimum standards also reflected in transport projects.
He said CPB had bid for the Bruce Highway upgrade near Gympie and he believed it was in the lodge with the lowest bid.
But in late 2020 the Department for Transport and Main Roads began asking unusual follow-up questions, such as how subcontractors would be managed, industrial relations risks at work and how furlough days would work.
“We were not used to seeing these types of questions coming from the Main Roads,” Mr. Sanfilippo said.
He said the new rules forced CPB to rethink its bid, adding $23 million to cover extra fees and condition costs associated with BPIC and seeking about $11 million more because BPIC-related delays pushed the project into an extra rainy season.
Although CPB adopted a “conservative” version of the BPIC that applied only to its own employees and not subcontractors, these changes increased the overall price of the work by approximately 13 percent.
Main Roads deputy chief executive Amanda Yates then contacted him and said the government had concerns about CPB’s industrial relations record, including on the Cross River Rail project.
He also said that BPIC will now apply for certain transportation tenders.
Mr. Sanfilippo said he warned him that forcing contractors to ensure everyone on site was paid certain rates would be illegal under the CPB.
“Ms Yates told me in subsequent conversations that my understanding of the law and statutory implications was correct,” he told the inquiry.
He emailed her a draft of a confidential policy the same day.
It was stated that KPMG analyzed civil construction operating contracts, standard department contract conditions and the CFMEU “minimum standards” document to develop the proposed conditions.
“It’s certainly interesting and disappointing to see this written in bold and the CFMEU drafting the minimum conditions,” he said.
The industry was not consulted when the draft was developed, but unions were invited to propose changes, marked in colour, the inquiry heard.
Commissioner Stuart Wood KC questioned why consultants and union operating agreements were being used to set “minimum” conditions rather than relying solely on existing awards.
It is expected to submit its final report to the Queensland government in July.
