Ex-minister threatened to axe contract unless deal made with CFMEU, inquiry hears

Former Labor minister Grace Grace threatened to axe the contract for a $1.6 billion infrastructure project in Queensland if the contractor didn’t make a deal with the CFMEU, the inquiry into the union has heard.

The public hearing into the union and misconduct across the construction industry turned to the troubled Toowoomba Bypass on Wednesday – a project jointly funded by the state and federal governments.

It centred on the relationship between the CFMEU and Spanish infrastructure giants Ferrovial Agroman and Acciona, which completed the bypass as part of a Nexus Infrastructure consortium.

Former Acciona project director Jose Sanchez said he believed the Queensland government’s actions were similar to what he would expect in a Third World country such as Nigeria.

Completed in 2019, the Toowoomba Bypass is a 41-kilometre highway designed to divert heavy vehicles north of Toowoomba, west of Brisbane. Construction by Nexus was troubled, and multiple safety concerns were flagged.

Counsel assisting the inquiry, Patrick Wheelahan, said the project was a natural fit for the Australian Workers’ Union, but the CFMEU had sought to gain a foothold by using its alleged capture of Workplace Health and Safety Queensland and leveraging ministerial threats.

There were a high number of notices issued by WHSQ and the CFMEU in a short period in 2017 and early 2018. Nexus believed these were unfounded and lodged a challenge with the Queensland Industrial Relations Commission.

After several incidents – including a piece of cage coming loose and falling while being lifted – then-industrial relations minister Grace and former transport and main roads minister Mark Bailey publicly called for a meeting with Nexus representatives to discuss worker safety.

Sanchez testified that a PowerPoint presentation was prepared to address those concerns, but at the meeting – held in a temporary office on-site in February 2018 – Grace showed no interest in safety and instead aggressively told those present they had to co-operate with the CFMEU or the government would terminate the contract.

“I would expect that to happen in an undeveloped country like Nigeria, but I wouldn’t expect that to happen in Australia,” he told the inquiry.

“It was very aggressive, the tone. Not friendly at all.”

Sanchez said Bailey didn’t speak much or at all during the meeting. “Minister Grace was the one taking the lead in the conversation.”

His view was the threat was tied to the application filed in the Industrial Relations Commission. That application was withdrawn shortly after the meeting, as the company believed this was required to get the government back on side.

He conceded there had been legitimate safety concerns at the site, but said these were being managed effectively.

Enrique Blanco, the regional managing director at infrastructure giant Ferrovial Agroman which was also part of Nexus, gave a similar account of the meeting.

He said he had never experienced anything like it, and the meeting worried him “a lot” as their liability could be about $500 million if the contract was lost.

“She said if we didn’t work with the union, things could be ugly for us and the contract would be taken out of our hands,” Blanco told the inquiry.

“Coming from a minister, it’s definitely something you pay attention to.

“We could see it was a threat with potential repercussions for us and significant liabilities.”

He said he believed there were four levers being pulled to apply pressure: repeated site entries by the CFMEU, a wave of notices issued by WHSQ, the direct intervention of Grace and Bailey, and the issuing of notices personally to senior executives at Nexus.

Representing the CFMEU administrator, Chris O’Grady, KC, cross-examined the two witnesses. Both acknowledged the CFMEU did have a legitimate interest in ensuring safety on the site, and there had been genuine concerns.

The allegations were raised on Wednesday afternoon in Queensland parliament, which was sitting simultaneously about 900 metres from the Brisbane courtroom. Premier David Crisafulli described the claims as “a new low”.

“How did we reach the point in this state where decent democracy made way for Third World thuggery and threats? How? How? And I’ll tell you how, Mr Speaker, because [Labor] owe their existence to the CFMEU.”

Grace did not comment directly on the allegations.

“I’m not going to do a running commentary on the inquiry,” she said in a statement.

“I will let the commission continue with its processes and all of the evidence on this issue will come out at the appropriate time.”

Geoffrey Watson, SC, was scheduled to be cross-examined in front of the commission on Thursday from 10am.

Father and son Neile and Ryan Rosenlund, from contractor Rosenlund, fronted the inquiry on Tuesday.

They said they had been pressured to hire a “volatile” former boxer linked to the union and pay for scaffolding that wasn’t needed during demolition of Toombul Shopping Centre.

The inquiry has so far heard allegations of corruption, criminal infiltration, bullying and other malpractice by the CFMEU across Queensland.

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