Senate Rural and Regional Affairs and Transport Legislation Committee, , 31:24 to 41:08
Discussion on whether the Commonwealth should suspend milestone payments to projects under investigation for corruption and the potential consequences for contractors and workers.
Topics: Infrastructure, Government spending, Integrity
Speakers: Hon Bridget McKenzie, Mr. Jim Betts, Jessica Hall, Lachlan Wood, Unknown Speaker
>> So they were required to report to us, the Victorian government under the FFA was required to report to us.
>> And were you confident from 2024 that they were doing that?
Well, they were reporting to us
>> and you were confident that their contractual arrangements ensured that they captured the information we needed as a when I say we, I mean Commonwealth.
I think it's certainly fair to say that in the intervening period, our confidence in this has grown as um the various jurisdictions have operationalized detailed protocols including the unacceptable behavior guidelines which were generated by the state jurisdictions themselves in order to give effect to the funding uh federal funding agreement provision. And now the system is fully up and running and you can see that in the data that we've provided to you today.
So the January 2026 date was for new contracts. Why did it take 18 months from the announcement to embed this requirement in new contracts >> to embed the 2024 requirement by Minister King into uh Victorian infrastructure project contracts?
That's a question for Victoria Senator. how they wanted to implement the requirements is up to them
>> really.
>> Yep. They were on the hook. Um they have chosen the pathway to um give effect to their obligation under the federal funding agreement among other things through the new clause which is being inserted in contracts
>> and milestone payments continued to be made despite them not having embedded those changes into their contract contracts,
So, Senator, they continue to report to meet the requirements. They have a range of other governance arrangements that they have in place similar to the governance arrangements that we have with them. They have similar governance arrangements with their contractors. They would have regular meetings. They would have um oversight. Vita would have oversight of a number of their projects. Um, so as the secretary said, this would be more of a belts and braces approach as opposed to um not getting any information out of their contractors at
Can you just describe honestly belts and braces approach? The minister rightfully says in response to letters from myself over time, we need to have some serious oversight and assurance that Commonwealth taxpayer money isn't um being misused and misappropriated uh in infrastructure projects instigates a change so they have to mandatorily report. And yet we've got a jurisdiction in Victoria that doesn't actually put it in new contracts for 18 months, doesn't uh review existing contracts for an extended period of time. Did the department did Mr. Wood or others uh raise concerns about the go slow in Victoria uh with respect to implementing Minister King's uh requirements?
So, Senator, I think we've had a significant number of meetings with Victoria in regards to how they report the information that they provide um and um how they get the information um through governance meetings. I don't know if Mr. Wood would like to go into so I think as it has been very much a um work in progress as we've worked with regulators as they have worked with regulators as as they have worked with a variety of their um uh organizations as well. I think at the last Senate estimates, we went through a number of changes that Victoria actually did put in place um in regards to its registration authority um and um other um provisions um these things some of these things do take time some of them don't. I appreciate that. Um
>> new sorry Miss Hall new contracts shouldn't take time. I mean, the federal infrastructure department shouldn't having shouldn't be having to uh cover up uh the Victorian Labor Party's corruption on infrastructure projects. Like it is well tilled soil here. Your minister has done the right thing and I am hearing a federal department attempting to cover up Victorian >> continued corrupt activities
>> Have to object to that characterization. We've just provided you with a list of all of the allegations which are on foot at the moment. We've explained the process by which those are being uh investigated by the relevant authorities. We've put in place a big apparatus for making sure that this information is brought to light and that all allegations are appropriately investigated. And to suggest there is a cover up is I don't think you really
months, Mr. Betts. All right, let's let's do it this way. Milestone payments continue to go out the door.
>> Yes, they do.
>> When we are No, we've gone through list after list, estimates after estimates, projects of fraud, bullying, harassment, corruption, undisclosed conflict of interest. This is all going to come out in the Royal Commission. And I'm thankful that the department has been prepared to stand up and attend that royal commission on behalf of Commonwealth taxpayers. So let's do it this way. What are the milestone payments to these projects where corrupt activity was alleged and referred to the appropriate body? How much money left in milestone payments for let's start with the
So, Senator, the payments on Northeast Link are 2.618 billion.
>> 2.168 billion.
>> Sorry, 2.618.
Um and that was in the 18 months between you being reported >> um allegations of criminal and corrupt behavior >> and today's date.
>> That is total today.
>> Total today.
>> Well, I would like to know from when the department was advised that there were criminal and corrupt allegations on this project, how much money left the building >> to Victoria?
>> That I don't have. I would like that on
>> I can find it for you. >> Suburban rail loop east again where there are allegations of criminal and corrupt behavior notified to the department and then to the public through this committee. How much money has left the building since you became aware since the department became aware of those allegations?
>> Senator, we don't have the data presented in that way. would have to take that on notice to compare that and
>> well when we get to IIP um I would like it broken down from the date of allegation awareness to today's date how much money has left the building because I think there is a serious question around the Commonwealth being aware of criminal and corrupt allegations and continuing to fund projects whilst they're under investigation.
>> So I think it may be relevant here to uh look at comments from um Jeffrey Watson FC uh whose comment and he has been a very active anti-corruption campaigner argued that shutting down construction sites by withholding milestone pavements on the basis merely of allegations would mean that some workers and contractors could end up being paid despite work stopping. But equally innocent contractors could be driven out of business. So it will be a very big call for anybody to suspend milestone payments when the jurisdiction is complying with its obligations under the federal funding agreement to report to relevant authorities. But they are merely allegations which have yet to um be appropriately investigated. It will be a big call to disinvest from infrastructure projects across the country merely because of an allegation.
But it's okay to continue to pay for what will be found. Corruption on site of a systemic nature in Victoria.
>> Well, I would await the Royal Commission and I would await the outcome of the individual investigations. But if the proposition is that the Commonwealth should suspend investment in infrastructure projects across the country because of allegations, that would be an option. But it will be a big call to put all those people out of business and out of work.
>> It's not infrastructure projects across the country, Mr. Betts, I could give you the five projects in Victoria. I do. But anyway, Senator Scarr, you have a