‘The whole industry is so rotten’: Stark warning after Sydney metro scandal

NSW Treasurer Daniel Mookhey has warned that Italian engineering company Webuild needs to demonstrate why the public should have confidence in it after one of its subcontractors building a railway line to Western Sydney Airport was found to be involved in serious wrongdoing.

The damning findings of an independent inquiry have forced Webuild, which is also constructing the troubled Snowy 2.0 hydro scheme, to sack labour hire company Future Form from the multibillion-dollar airport metro rail project.

The type of conduct alleged against Future Form is rampant across the industry, Sydney-based liquidator Stephen Hathway said, especially in trades requiring significant numbers of builders involved in formwork and scaffolding.

“The whole industry is so rotten. It’s not just Western Sydney Airport,” said Hathway, managing director of Helm Advisory.

Aside from the latest findings, the airport train project is dogged by a long-running dispute between the Minns government and a Webuild-led consortium that is claiming up to $2.2 billion for delays, scope creep and disruption to construction of the 23 kilometre railway line.

The investigation by Max Kimber, SC, found Future Form and other subcontractors engaged in suspected tax evasion, worker exploitation, safety breaches and insurance fraud.

Asked whether the NSW government was willing to terminate the contract with Webuild if integrity agencies made adverse findings against the engineering firm, Mookhey said the contract stipulated illegal behaviour as grounds for ending the agreement.

“It’s fair to say that regardless of whether you are the head contractor [or] whether you are the subcontractor, you have to follow the law,” he said.

Mookhey declined to say that he retained confidence in Webuild, instead saying: “It’s for Webuild now to demonstrate why the public should have confidence in them.

“It is now for Webuild to be very, very upfront about how it’s going to change and how it also can provide assurances to taxpayers that they can be a trusted partner when we are delivering these complex projects.”

Hathway – who has more than 30 years’ experience in the sector – said that construction businesses with many employees usually operated on three levels: a public-facing top-tier company that tendered for work; a second level responsible for administration; and a company at the bottom responsible for staff.

These third-tier companies usually had zero assets in the bank and quite often a director from overseas who was untraceable after it folded. Once the third-tier company accumulated a sizable tax debt with the Australian Taxation Office, builders were moved into a new shell company, leaving behind tens of millions of dollars in owed PAYG tax, Hathway said.

“This practice is well established and there are significant incidences of it across Australia,” he said about construction firms evading tax.

“You’re not paying a third of the employment cost, so you can underquote anyone who is doing the right thing. It has been going on for 15 to 20 years.”

Infrastructure NSW had been instructed to examine its books for any Future Form involvement in the state’s other projects.

The Herald has previously revealed that the dispute over the airport metro project will delay the line’s completion until December 2027. Opening the line at the same time as the airport late this year had been promised by successive state and federal governments.

Confidential Sydney Metro documents have also shown that, as of November 2024, the agency was targeting a completion date of late December 2027, which was a year later than originally planned.

Transport Minister John Graham said the removal of Future Form would result in “minor delays” to the project, though he did not elaborate on whether that would result in the driverless train line opening later than December 2027.

In a shot across the bows of the Webuild-led consortium, Graham warned that the government would not be paying billions of dollars to settle the commercial dispute. “We want to get this metro line finished, but we’re not having taxpayers on the hook,” he said.

In December, the government confirmed that legal claims made by the consortium might raise the airport rail line’s total price tag by $1 billion-plus to more than $12 billion.

Graham said the findings of the independent inquiry related largely to Future Form but noted there had clearly been a failure of systems at Sydney Metro to detect alleged wrongdoing.

“There was not the visibility … that the public would expect about what’s going on with these projects. That has raised the government’s concerns,” he said.

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