‘30 per cent’: Inside the meeting where Allan’s top adviser named CFMEU premium

Premier Jacinta Allan’s chief infrastructure adviser confidentially estimated the cost of rorts and rip offs could be as high as 30 per cent on parts of Victoria’s Big Build, while another top official privately conceded the state government had done nothing to nail down the true cost of corruption on its projects.

The damning comments attributed to the high-ranking Victorian public servants are contained in a trove of documents released by the Fair Work Commission to this masthead following a freedom of information request.

They undermine efforts from Allan and certain building unions to focus on inflation and discount corruption and wrongdoing as driving cost blowouts and delays on the $100 billion Big Build infrastructure program.

The files contain commission general manager Murray Furlong’s contemporaneous notes of a meeting in October last year, where he writes that a senior Labor government public servant was asked by a public service colleague to try “approximating the cost” of wrongdoing on the Big Build.

The wrongdoing was described in the notes as conduct in the “ambit of crime … such as ghost shifts & [gangland] enforcers supplied via made-up jobs” as well as “unproductive work practices and patterns required by the CFMEU” and a range of other factors.

Furlong’s notes of this meeting state the senior public servant estimated there was a “30% CFMEU premium on [Big Build] sites”.

While the note doesn’t identify the official who made the comment, a source with knowledge of the meeting, unable to discuss it publicly, said it was Kevin Devlin, who for years has overseen the Big Build as the head of the Victorian Infrastructure Delivery Authority.

In the notes, Furlong also recalls a senior industry representative describing the removal of a national code governing construction industrial relations was “like switching off the electric fence”.

This masthead has previously reported that Devlin had separately been party to a national peak body’s confidential briefing that warned of lawlessness in the construction industry and also cited a 30 per cent premium.

Furlong publicly referred to the 30 per cent figure at a Senate estimates hearing in February attributing it to discussions with Victorian officials.

Devlin issued a statement on Friday night saying that any suggestion that increased project costs were solely due to wrongdoing was incorrect.

“The claim that a blunt percentage increase can be applied to the overall cost of a project or infrastructure program is misleading,” he said, adding he had not had an opportunity to review Furlong’s meeting notes for accuracy.

In separate briefing notes Furlong later made ahead of a subsequent Senate estimates appearance, he recalled a message to the CFMEU’s then-administrator saying the cost issue “won’t (and shouldn’t) go away without accountability. I said that Victorians have a right to know”.

The cost of the CFMEU’s conduct has become a political flashpoint after corruption-busting lawyer Geoffrey Watson, SC, estimated the cost at about $15 billion in a report tabled in the Queensland commission of inquiry into the union.

The opposition has since used it to attack the government’s major projects record, while the government, and some unions, have sought to discredit it.

This masthead also revealed last weekend that the consortium building the Melbourne Metro claimed CFMEU-led industrial relations issues had added $200 million to labour costs.

On Friday, Attorney-General Sonya Kilkenny said claims about the costs associated with the CFMEU’s lawless behaviour needed to be treated with caution pointing to auditor-general reports detailing inflation in the sector and changes in projects as potentially lifting prices.

Asked why her officials would canvas a figure of 30 per cent if it was incorrect, Kilkenny said it was important to “rely on facts and substantiated evidence”.

But the commission files released under freedom of information show the government has not attempted to gather that evidence itself.

The documents detail a meeting in April of this year, where Furlong records asking another senior public servant if “the Victorian government [is] doing anything to determine the costs” of wrongdoing on the Big Build.

“Towards the conclusion of the meeting, I asked if he was aware of any work being undertaken across the Victorian Public Service to quantify the costs – whether it was $1m, $15b or $30b,” he wrote.

“[The public servant] responded that he wasn’t aware of any work being undertaken about this specific matter.”

The Age has separately confirmed the public servant was Matt O’Connor, the deputy secretary of Industrial Relations Victoria.

The revelations come after repeated examples in The Age detailing wrongdoing on the Big Build, calls by the Victoria Police for law changes to enable them to combat Big Build corruption they are otherwise powerless to stop and support for a royal commission from former integrity watchdogs.

Allan, who has repeatedly refused to provide an estimate of the cost of wrongdoing at press conferences, this week apologised for the presence of criminals on the signature $100 billion Big Build program, for which she was the responsible minister before becoming premier.

Kilkenny on Friday struggled to explain the apology. Asked if the government was taking responsibility for not stopping the CFMEU’s conduct, Kilkenny said the government was apologising because of allegations of “unacceptable” corruption.

Kilkenny repeatedly refused to specify what conduct, or whether the government was admitting that it had allowed such conduct.

Kilkenny also declined to say when she would act on the calls from Victoria Police for greater powers to tackle corruption in the construction sector, some of which they have sought for years.

“It is entirely appropriate for Victoria Police to raise those proposals, to put forward those proposals, and for government to consider it, and that is exactly what we do,” she said.

In response to the deepening crisis, the government this week wrote to the state’s biggest contractors asking that they immediately provide details of all industrial fixers on their payroll and flagging the establishment of a mandatory register of approved industrial negotiators.

One of the highest-profile fixers is gangland figure Mick Gatto who this masthead and 60 Minutes revealed last week was still on the payroll of Big Build subcontractors.

Gatto has now been photographed at a Bali resort in a social media post alongside a high-profile CFMEU member Ray Jensen. Jensen’s wife and brother-in-law are both influential CFMEU delegates.

The caption posted by Jensen reads: “Anther (sic) episode of 60mins coming up #bigbuild.” The J-Vad song Mafia Style (Gangster Trap) is playing under the post.

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