Politics with Michelle Grattan: Geoffrey Watson calls for a royal commission on the CFMEU scandal

Victorians faces a state election late this year, with the Labor government pitching for a fourth term. A key issue will be the government’s failure to deal with thuggery and corruption in the building industry, centred on the Construction, Forestry and Maritime Employees Union (CFMEU).

After its hand was forced by years of reporting in The Age, in 2024 the federal government appointed an administrator, Mark Irving, to clean out the union’s construction sector.

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.

In a section of his report that Irving withheld, Watson – a specialist in anti-corruption law – conservatively estimated the CFMEU overcharged Victorian taxpayers A$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 furiously to Watson’s criticism.

Watson joins us to talk about his investigation, the state government’s response – and what should happen next.

The need for a royal commission

Watson says the CFMEU hadn’t been equally corrupt across Australia, saying 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’s why Watson is backing calls for a royal commission in Victoria into the scandal.

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.

But Watson says that inquiry shouldn’t be done by the state’s Independent Broad-based Anti-corruption Commission (IBAC).

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.

Asked about what more the federal government could do, Watson says bringing back the Australian Building and Construction Commission (ABCC) wouldn’t help.

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.

Counting the cost of corruption

Watson explains how he came to his estimate that CFMEU corruption had cost Victorian taxpayers $15 billion.

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.

On coming under fire for his work

On the response from the Victorian government, Watson said not a single government MP had been in touch about his investigation.

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.

Watson said he had been surprised how personal some of the government’s criticism of him had been.

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.