Increased Corruption in Victoria: Is the State Government to Blame?

Rising Perceptions of Corruption in Victoria

Over recent years, concerns about corruption have grown across Victoria, Australia's second-most populous state. Surveys conducted by the Independent Broad-based Anti-corruption Commission (IBAC), Victoria's primary integrity watchdog, reveal a troubling trend. In its 2024 perceptions survey of public sector employees, 90 percent agreed that corruption occurs somewhere in the state, with 69 percent viewing it as a problem overall—a rise from 66 percent in 2022. Within workplaces, 30 percent saw it as an issue, up from 24 percent previously. These figures paint a picture of increasing unease, particularly in sectors like emergency services, corrections, and transport, where vulnerability to misconduct is rated highest.

This heightened awareness stems from high-profile scandals and everyday experiences of favouritism, nepotism, and inaction. Employees report observing breaches of professional boundaries, such as bullying or harassment, at rates exceeding 50 percent in some cases. While ethical cultures are generally rated moderate to strong, perceptions of weakening integrity measures—like declining confidence in audits and reviews—add to the narrative of a state grappling with graft.

The CFMEU Scandal: 'Rotting from the Top'

At the epicenter of recent debates is the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) Victorian branch, thrust into the spotlight by Geoffrey Watson SC's scathing report titled Rotting from the Top. Commissioned as part of a Queensland inquiry but focused on Victoria, the 2026 document details systemic corruption during the tenure of former secretary John Setka. Allegations include bribery, extortion, violence, and organized crime infiltration on major construction sites, particularly those under the state's ambitious Big Build infrastructure program.

The report chronicles a 'squalid mess' where union delegates—often unqualified cronies, bikies, or criminals—were appointed to lucrative no-show jobs paying up to $300,000 annually. Enterprise bargaining agreements (EBAs) were allegedly sold on a black market for hundreds of thousands of dollars, labour hire rorted through ghost shifts, and sites used for drug distribution. Specific incidents like the 2020 Hawthorn East bashing of union organizers and firebombings underscore the lawlessness.

Alleged Misconduct on Big Build Projects

The Big Build, a suite of over $100 billion in transport projects including rail upgrades, level crossing removals, and the North East Link, became fertile ground for alleged rorts. Watson's report highlights extortion rackets, such as Mick Gatto demanding retainers from builders under threat of disruptions, costing millions. Traffic management rates were inflated from $70-80 to $110-120 per hour on North East Link alone, adding $50-60 million to taxpayer bills.

• Ghost shifts on Metro Tunnel: Delegates paid double time for non-existent work, defrauding millions.
• Bikie control: Outlaw motorcycle gangs like Rebels and Comancheros muscled onto sites like Hurstbridge for drug ops.
• Occo (out-of-core hours) manipulation: Fees skimmed from workers, preferred lists enforced via threats.
• Slush funds: The Building Industry 2000 pot, worth $1 million, funneled to political campaigns and personal gains.

These practices not only eroded site safety but ballooned costs through delays and inflated labour expenses.

Did the State Government Know and Act?

Critics, including the opposition Liberals and Nationals, allege the Labor government under Premier Jacinta Allan (and predecessor Daniel Andrews) turned a blind eye despite warnings. The Guardian reported claims that officials 'knew and had a duty to know' about CFMEU ties to organized crime. Documents suggest top bureaucrats flagged North East Link misconduct as early as 2023.

Allan has rejected royal commission calls, insisting her government acted decisively by placing the CFMEU construction division under administration in 2024 and referring matters to IBAC and police. Attorney General Sonya Kilkenny dismissed the $15 billion cost estimate as 'untested,' emphasizing eradications of illegal behavior on sites. Yet, opposition leader John Pesutto branded Labor a 'gangster government,' pointing to blocked reforms enhancing IBAC powers.

For deeper insights into the Watson report, read the full redacted document.

Photo by Mauro Romero on Unsplash

Taxpayer Burden and Economic Fallout

Estimates vary, but Watson and allies peg CFMEU-enabled rorts at $15-30 billion across Big Build—equivalent to every Victorian footing years of extra debt. Labour costs rose 20 percent on some projects, liquidated damages from stoppages piled up, and unnecessary delegates drained resources. Victoria's net debt, already ballooning, exacerbates service cuts and tax hikes.

Broader impacts ripple to businesses: ethical builders bankrupted, like Marda Dandhi after EBA denial; suppliers squeezed by union demands. Public trust erodes, with IBAC noting 52 percent fear repercussions for reporting.

IBAC's Watchdog Role and Challenges

IBAC, established in 2012, investigates public sector misconduct but faces criticism for lacking coercive powers on private entities like unions. Its 2025 survey of MPs and councillors found 81 percent of parliamentarians see corruption as a problem, with favouritism topping risks. Explore IBAC's detailed 2024 public sector findings for stats.

Referrals of the CFMEU scandal test IBAC anew, amid calls to mirror NSW's ICAC. Recent data shows over 2,600 CFMEU offences since 2003, fining $28 million.

Political Repercussions and Voter Sentiment

Polls reflect fury: 75 percent back a royal commission per Herald Sun surveys, with Labor support crashing to 28 percent alongside Liberals at 27 percent, One Nation surging to 23 percent (Freshwater Strategy, March 2026). The scandal dominates pre-2026 election discourse, amplifying perceptions Victoria lags other states in integrity.

Crossbench pressure mounts, with Greens pushing IBAC fixes Labor blocked.

Other Corruption Hotspots in the Public Sector

Beyond construction, IBAC flags risks in procurement, people management, and inaction. Historical cases like Operation Ord ('banker schools' fraud recovering $6 million) and Operation Franklin (university fund misuse) highlight persistent issues. Education sector surveys note limited reporting awareness and leadership gaps.

Photo by National Cancer Institute on Unsplash

Towards Solutions: Reforms and Accountability

Stakeholders urge empowering IBAC with public hearings, banning political donations, and site inspectors for major projects. Administration has culled half CFMEU staff, aiding cleanup. Transparent EBAs, whistleblower protections, and ethical training could rebuild trust.

Balanced oversight—holding unions, builders, and officials accountable—offers a constructive path, ensuring Victoria's prosperity isn't undermined by graft.