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A prominent economist whose work has been used to attack a $15 billion cost estimate for the CFMEU’s appalling behaviour on the Big Build says he was never asked to probe the price of union misconduct as claimed by the campaign promoting his research.
Independent economist Saul Eslake told The Age he had no idea his work, which Premier Jacinta Allan has also referenced to downplay the CFMEU’s budgetary impact, would be used by Victoria’s plumbers’ union to dispute the cost of union corruption.
His work is one of two pieces of research presented on the Check the Maths website critiquing the $15 billion figure. Records show the Communications, Electrical and Plumbing Union owns the site.
The campaign appeared late last month and has used advertisements in the Herald Sun, social media and podcasts to dispute an estimate from lawyer Geoffrey Watson, SC, that the cost of CFMEU misconduct on Victoria’s Big Build was equal to about 15 per cent of the $100 billion program.
Watson’s estimate was included in a report tabled in a Queensland commission of inquiry, and the $15 billion figure has become a political headache for Allan, who has rejected it as untested and unfounded.
Allan still attacks the figure, even as this masthead revealed the government’s infrastructure tsar was on a high-level board that estimated CFMEU lawlessness and criminality had driven blowouts of up to 30 per cent on taxpayer-funded projects. That assessment was also supported by Fair Work Commission general manager Murray Furlong.
Notes taken by Furlong at an October meeting, and obtained by The Age under freedom-of-information laws, show he recorded a senior Victorian public servant estimating there was a “30% CFMEU premium on [Big Build] sites”. Furlong’s account was challenged by the public servant at the weekend.
Construction unions have sought to discredit Watson’s $15 billion figure, with groups such as the Electrical Trades Union and Trades Hall sharing the plumbers’ Check the Maths website, which says: “We asked a public policy professor and an economist to check the Maths on the bogus ‘$15 billion big build’.”
But Eslake, the economist referenced in this sentence, said this was not how his work was commissioned.
He said he had originally looked into cost inflation in Victoria as an expert witness for the state government in a commercial dispute which showed, to his surprise, that the state’s recent engineering cost inflation was below the national average.
Eslake, a respected economist who has been a sharp critic of the state government’s economic management, said he was then contacted by Andrew Landeryou, who asked if he had done any such work.
The economist confirmed to Landeryou, a long-time colourful figure in Labor circles, that he had but would need to update the figures. Landeryou declined to comment when contacted by this masthead.
Eslake also declined to detail his fee but said the invoice was paid by the Plumbing Industry Climate Action Centre [PICAC], a registered training charity run by the plumbers’ union and employer representatives.
Eslake said that while aware of it, he had never read Watson’s report.
“Frankly I had no idea it [his research] would be used in that way,” he said. “I don’t think what I wrote proves or disproves anything about corruption. It doesn’t tell you anything about who benefited from the increase in prices; it doesn’t say anything about its distribution.
“I was not asked to make any judgment about the Big Build, and I didn’t make any – although I was obviously aware that the Big Build was a significant component of Victorian engineering construction expenditure.”
Allan again referenced Eslake’s work on Monday to argue that blowouts and price increases on Big Build projects were the result of inflation, not union misconduct.
“Economists like Saul Eslake, for example, have pointed to the fact that the inflationary rates here in Victoria have been less than those experienced in other states,” she said at a press conference, where she reiterated her apology for conduct on building sites exposed by this masthead’s Building Bad investigation.
Not all construction firms agree. Leaked documents show builders on the Metro Tunnel project in 2024 sought to claim at least $200 million in extra costs for out-of-control industrial relations, which they separated from the inflation experienced across the sector and wider economy.
The use of PICAC to pay for a report assessing Big Build corruption costs has raised eyebrows given its dominant purpose is as a training organisation that offers courses as a “centre of excellence” for the plumbing industry.
Plumbers’ union secretary Earl Setches, who sits on the PICAC board, was on long service leave and unavailable for comment. His assistant secretaries and PICAC were contacted for comment.
The Australian Charities and Not-for-profits Commission’s advice to board members for charities is that their funds be spent on relevant services.
“However charity funds are raised, the board must ensure that the money, less reasonable expenses, is put towards pursuing the charity’s charitable purpose,” the commission’s advice says.
A spokesperson for the commission did not comment on PICAC except to say its records were up to date and broadly there were circumstances where it was OK for charities to conduct advocacy.
“The public benefit of advocacy is its contribution to public discussion, which informs the public and policymakers,” the spokesperson said.
“But the way a charity undertakes advocacy, and its aims, must be consistent with the rule of law and the established system of government. It is important that charities do not cross the line into having a disqualifying political purpose and that they maintain independence from party politics.”
Separately, shadow attorney-general James Newbury on Monday referred allegations that state government officials told builders on a level crossing project to cut a deal with the CFMEU to the state’s corruption watchdog.
Last week, The Age revealed state government officials told a Big Build rail consortium that Allan, then the transport infrastructure minister, wanted the builders to negotiate an agreement with the CFMEU that would ultimately allow the disgraced union to force its preferred labour hire company onto a level crossing removal site.
Allan has denied the allegations and dismissed them as baseless.
Police have alleged that B K Labour, the company that gained access to the Gap Road project in Sunbury through these negations, is corrupt.
“We are not talking about some lighthearted issue. This is at the core of the corruption scandal that’s facing our state,” Newbury’s letter to the Independent Broad-based Anti-corruption Commission said. “This is a very serious referral, and I hope that IBAC picks it up.”
Newbury accused the premier of giving a “fake apology” heading into the state election in November, pointing to a column for The Age in which she said she was “deeply sorry” there had been violence, intimidation and organised criminal behaviour on taxpayer-funded projects.
“The only way the premier can be believed on her apology is if she calls a royal commission, and she won’t,” he said.
Allan again knocked back calls for a royal commission on Monday.
“Anyone who is calling for a royal commission is actually calling for delayed action,” she said.
The premier said she was focused on the efforts of Victoria Police, the Labour Hire Authority and regulatory agencies at state and federal levels to weed out bad actors and shutting down their methods of accessing the sector.
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