Victoria must brace for an election wrecking ball

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Business Spectator: Victoria must brace for an election wrecking ball. Ken Phillips, Politics National Affairs, 5 September 2014

In many respects, Victorian voters will have to choose between a Coalition government and a CFMEU-controlled Labor government at the looming state election.

The CFMEU has dominated the headlines in recent weeks, with evidence from the Royal Commission into union corruption unearthing serious allegations that it has engaged in potentially criminal behaviour. Its links with prominent crime figures have also come under scrutiny.

But the CFMEU has played a key role in Victoria’s budget-destroying infrastructure construction costs.

A standout example is Victoria’s desalination plant. Completed in 2012, it has been valued by the government at $5.7 billion, reflecting the cost of its construction. But it is only three times the size of the $387 million Perth desalination plant that opened in 2006. Comparatively, the Victorian plant should have cost at most $2bn; it was a money-rorting plaything for the CFMEU.

This is the environment in which the Victorian election, due on November 29, is to be held.

Determined to fix this cost blowout, the-then Baillieu Coalition government introduced a construction code of conduct. This simple administrative device looks at enterprise agreement clauses that push up the cost of construction. The code says that any construction business that wants government work mustn’t have those clauses in their agreements.

When the code was introduced, the (then) CFMEU-friendly giant construction firm Lend Lease defied the code. The CFMEU sought to defend Lend Lease, challenged the code in the Federal Court and initially won. The Victorian government, however, won on appeal and the CFMEU lost in the High Court. The code is rock-solid legal. Now Lend Lease has declared that it will support the code, much to the fury of the CFMEU.

Last month, the Victorian government opened the new $447m Box Hill Hospital. It was the first major infrastructure job that was completed since the code was announced, and it came in under budget, four months early and without any industrial disputes. Ironically, it was completed by Lend Lease.

As a result of the project’s success, the government could afford to add 100 extra beds to the hospital and a larger emergency department.

The Coalition has plans to spend $4.5bn in health infrastructure, $4.1bn on regional rail, $6bn on the East-West Link, $1.8bn on freeway upgrades, $10bn on a new port at Hastings, $400 million on Melbourne road-rail separation. The list goes on with schools, Metro rail and more.

The Victorian Coalition government budget is $1.3bn in surplus. It is the only Australian government to have a surplus, and is uniquely placed to deliver on its multi-billion dollar infrastructure plans. But the major obstacle in the way is the CFMEU.

The Victorian Coalition government has demonstrated that it is in the business of doing something practical about controlling infrastructure construction costs. The centerpiece of that strategy is the construction code, and it is looking like it will continue to be successful. The CFMEU rabidly opposes the code in the courts, in violent street picketing and through collusive relationships with major construction firms.

Likewise the Victorian Labor government in waiting is also opposed to the construction code and has committed to its repeal. Victorian Labor is heavily funded by the CFMEU. Labor is therefore open to the accusation that should it win government, the voters will have put the CFMEU in control of Victoria.

Opinion polling shows that Labor is set to win the election. But political observers don’t believe the Victorian electorate has yet focused on the election and the implications of its outcomes.

Melbourne’s population is currently 4.25 million and possibly will grow to 7 million by 2030. If the huge infrastructure spend does not deliver significant value for money, the state risks chaotic gridlock and budget destruction.

Ken Phillips is executive director of Independent Contractors Australia and author of Independence and the Death of Employment.

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