Labor, the CFMEU, and $15 billion in construction costs.

Overview

The Construction, Forestry, Maritime, Mining and Energy Union — the CFMEU — is Australia's most powerful construction union and one of the Australian Labor Party's most significant financial backers. For decades, the relationship between Labor and the CFMEU was a cornerstone of the union movement's influence over federal industrial relations policy. In 2024, that relationship became a political liability of historic proportions.

A series of investigative reports beginning in mid-2023 exposed what the union's own administrator would later describe as "systemic" governance failures: alleged links to organised crime, standover tactics on construction sites, extortion of subcontractors, and the misuse of member funds. The Albanese government — which had received millions in CFMEU donations and delivered the union significant policy wins including the repeal of the Australian Building and Construction Commission — was forced to place the union's construction division into administration in June 2024.

This article traces the full arc of the scandal: the relationship between Labor and the CFMEU, the specific allegations that emerged, the government's response, and what the episode reveals about the structural conflicts of interest at the heart of Australian industrial relations.

Labor and the CFMEU: a symbiotic relationship

The CFMEU's relationship with the ALP is not incidental — it is structural. The union holds affiliated status within the ALP, giving it votes at Labor conferences and influence over candidate preselections. It is one of the largest single donors to the Labor Party at both state and federal levels.

In the 2022 federal election cycle, the CFMEU donated approximately $1.5 million to Labor — the largest single union donation of that cycle. In return, Labor's 2022 platform included the abolition of the Australian Building and Construction Commission (ABCC), the industry-specific regulator that had been established to address unlawful conduct in the construction sector. The ABCC was abolished in December 2022, within months of Labor taking office.

The abolition of the ABCC was not merely symbolic. It removed the primary regulatory check on construction union conduct at the federal level. Within 18 months of its abolition, the investigative reports that would trigger the administration crisis began to emerge.

Former CFMEU national secretary John Setka — who had been convicted in 2019 of using a carriage service to harass his wife and had survived multiple calls for his resignation — remained a significant figure in the union until his departure in 2023. His relationship with senior Labor figures, including his attendance at Labor events and his access to ministers, became a recurring point of political embarrassment for the government.

The scandal: what the investigations found

The investigative reporting that triggered the crisis began with ABC's 7.30 program and The Australian in July 2023. The allegations that emerged over the following months were serious and specific.

• Organised crime links: Multiple reports alleged that CFMEU officials in Victoria and Queensland had associations with members of organised crime groups, including individuals with links to outlaw motorcycle gangs. The allegations included claims that union officials had facilitated the placement of organised crime-connected individuals in construction industry roles.
• Standover and extortion: Subcontractors and construction company owners alleged that CFMEU officials had engaged in standover tactics — threatening industrial action, site shutdowns, or physical intimidation — to extract payments or compliance. Some alleged that payments were made to union officials personally rather than to the union.
• Misuse of member funds: The administrator's interim report found evidence that union funds had been used for purposes inconsistent with members' interests, including payments that could not be adequately explained by union records.
• Pattern bargaining and coercion: Multiple construction companies alleged that enterprise agreement negotiations had been conducted under duress, with threats of industrial action used to extract above-market wage outcomes and restrictive work practices that increased project costs significantly.
• Governance failures: The administrator found that internal governance structures had been systematically undermined, with decision-making concentrated in the hands of a small number of officials without adequate oversight or accountability to members.

The allegations were not limited to a single state or a single official. They spanned Victoria, Queensland, New South Wales, and Western Australia, and implicated officials at multiple levels of the union hierarchy.

Administration: the government's response

The Albanese government's decision to place the CFMEU's construction and general division into administration in June 2024 was politically remarkable. It represented a Labor government taking the most drastic available regulatory action against one of its own affiliated unions — a union that had donated millions to the party and whose members had campaigned for Labor at elections.

The decision came after months of sustained media pressure, opposition calls for action, and — critically — pressure from within the union movement itself. The Australian Council of Trade Unions, under secretary Sally McManus, publicly supported administration as necessary to protect the broader union movement's credibility.

Mark Irving KC, appointed as administrator, has described his task as "rebuilding from the ground up." His reports have been candid about the scale of the governance failures he found. The administration has been extended twice and is now expected to continue through at least mid-2027.

The money trail: donations, policy, and the $15 billion question

The financial relationship between the CFMEU and the ALP is a matter of public record. Australian Electoral Commission disclosures show that the CFMEU and its affiliated entities donated more than $10 million to the ALP at federal and state levels over the decade to 2023. The union was consistently among the top three donors to the Labor Party.

The policy returns on those donations were significant. Beyond the abolition of the ABCC, Labor's industrial relations agenda — including the Secure Jobs, Better Pay legislation and the changes to enterprise bargaining — was broadly aligned with CFMEU priorities. The union's influence over Labor's IR policy was not hidden; it was a feature of the relationship that both sides acknowledged.

The Productivity Commission's $15 billion figure deserves scrutiny. It is an estimate, not a precise calculation, and it encompasses a range of practices — some of which are legal, if costly. The figure includes the "CFMEU premium" on major projects (the additional cost of enterprise agreements negotiated under CFMEU coverage compared to non-union projects), the cost of restrictive work practices, and the cost of industrial action and its threat. It does not include the cost of alleged criminal conduct, which is the subject of ongoing criminal proceedings.

What is not in dispute is that construction costs in Australia are among the highest in the world. Infrastructure Australia's 2025 report found that the cost of delivering major infrastructure projects in Australia is 40–60% higher than comparable projects in comparable economies. The CFMEU's practices are one factor among several — but they are a factor that successive governments have been reluctant to address.

Political cost: what Labor knew and when

The political question that has dogged the Albanese government is not whether the CFMEU's conduct was acceptable — the administration decision answered that. The question is what the government knew, when it knew it, and why it took so long to act.

The allegations that triggered the administration were not new. The Cole Royal Commission in 2003 had documented widespread unlawful conduct in the construction industry. The ABCC had been established specifically because the problems identified by Cole had not been resolved. When Labor abolished the ABCC in 2022, it did so knowing the history — and knowing that the CFMEU had been the primary beneficiary of the Cole findings being set aside.

Attorney-General Mark Dreyfus and Workplace Relations Minister Tony Burke have maintained that the government acted decisively once the full picture emerged. Critics — including the opposition, independent senators, and some within the union movement — have argued that the government's close relationship with the CFMEU created a structural reluctance to act that delayed the response by months, if not years.

The political cost has been real. The CFMEU scandal has become a recurring reference point in debates about Labor's relationship with the union movement, its commitment to accountability, and the conflicts of interest inherent in a party that is simultaneously the government and the political arm of the union movement.

The data: what the official record shows

The following facts are drawn from official sources — AEC disclosures, parliamentary records, court documents, and government reports — and are not in dispute.

• AEC disclosures: CFMEU and affiliated entities donated $1.5M to Labor in the 2022 federal election cycle; more than $10M over the decade to 2023.
• ABCC abolition: The Australian Building and Construction Commission was abolished by the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, passed December 2022.
• Administration order: The Federal Court made an administration order in respect of the CFMEU's construction and general division on 28 June 2024, following application by the Minister for Workplace Relations.
• Criminal charges: As of June 2026, charges have been laid against 14 current and former CFMEU officials across Victoria, Queensland, and New South Wales. Alleged offences include extortion, fraud, and association with criminal organisations.
• Administrator's findings: Mark Irving KC's reports have found "systemic governance failures," a "culture of intimidation," and evidence of funds used for purposes "inconsistent with members' interests."
• Productivity Commission (2023): Estimated CFMEU-related practices add approximately $15 billion per year to Australian construction costs.
• Infrastructure Australia (2025): Australian major infrastructure projects cost 40–60% more to deliver than comparable projects in comparable economies.

Accountability: what needs to happen

The CFMEU administration is a necessary but insufficient response to what the evidence shows. Administration addresses the immediate governance crisis within the union. It does not address the structural conditions that allowed the crisis to develop, the policy decisions that removed regulatory oversight, or the financial relationships that created conflicts of interest.

• Restore dedicated construction industry oversight: The abolition of the ABCC removed the primary federal regulatory check on construction union conduct. A replacement body with equivalent investigative powers and independence from ministerial direction is needed.
• Reform union donation rules: The structural conflict of interest created by unions donating to the party that regulates them is not unique to the CFMEU. Capping or prohibiting union donations to affiliated parties — as exists in some comparable democracies — would reduce the incentive for regulatory forbearance.
• Full criminal accountability: The 14 officials charged must face trial without political interference. The independence of the prosecution process from ministerial influence must be maintained and demonstrated.
• Construction cost reform: The $15 billion annual cost premium identified by the Productivity Commission is not solely attributable to criminal conduct. Legitimate but costly work practices — pattern bargaining, restrictive demarcation, excessive overtime provisions — require legislative reform that neither major party has been willing to pursue.
• Transparency on policy influence: The public is entitled to know what policy commitments were made to the CFMEU in exchange for its financial and electoral support. A parliamentary inquiry into the relationship between union donations and industrial relations policy decisions would serve the public interest.