Fresh concerns have emerged over the Federal Government’s proposed procurement reforms, with anti-corruption experts, independent MPs and business groups all warning that the likely-to-pass legislation could weaken procurement integrity and increase corruption risks.
The latest criticism follows concerns previously raised over the Workplace Relations Legislation Amendment (Building Cooperative Workplaces No. 1) Bill 2026, which was introduced into the Federal Parliament on 3 June.
The amendments would allow the Federal Government to give preference to suppliers with union-backed enterprise bargaining agreements (EBAs) when awarding government contracts, grants and other taxpayer-funded opportunities.
The Bill is expected to pass the Senate this week after Labor reached a deal with the Greens.
According to the Australian Financial Review, the two parties passed a motion in parliament on 23 June to vote on the controversial Bill without any Senate committee inquiry and cut debate time to an hour.
Business groups – including the Business Council of Australia, the Australian Industry Group and Master Builders Australia – have argued the reforms represent a significant departure from Australia’s longstanding procurement principles, which prioritise value for money, open competition and supplier capability.
Those concerns have now intensified after influential anti-corruption barrister Geoffrey Watson SC warned the proposal could recreate conditions that previously led to corruption within Victoria’s construction industry.
Speaking to The Sydney Morning Herald (SMH), Watson said the main risk is any system that gives a small group of people significant influence over access to valuable commercial contracts and opportunities.
“What I saw when I was doing the work of the CFMEU was that the power to give an EBA was concentrated in the hands of a few people, and that meant that it was very, very easily corrupted,” he said.
“It meant that the people who held that power could control the market.”
He also pointed to findings from his Rotting from the Top report, which examined corruption within the Victorian branch of the CFMEU and found that control over agreements led to distorted competition, pushed out legitimate businesses and allowed organised crime to penetrate the construction sector.
“In particular markets, an EBA can be extremely valuable. It means that you can contract for work, or if you don’t have an EBA, you may be shut out from contracting,” Watson told the SMH.
“It also means that people will pay bribes to get EBAs. People will solicit bribes to give EBAs.”
Watson’s warnings have been echoed by several independent MPs, who argue procurement decisions should continue to be based on merit rather than industrial arrangements.
Independent MP Allegra Spender said the proposal risks distorting government purchasing decisions while disadvantaging smaller businesses.
“The ability to preference union-backed enterprise agreements creates the risks that government procurement practices will actually drive corruption, as well as disadvantage small businesses who are much less likely to have enterprise agreements,” she said.
This sentiment was echoed by Independent MP Kate Chaney, who moved to strip the procurement provisions from the bill and questioned whether enterprise agreements should influence procurement outcomes.
“Government contracts should go to businesses that can deliver – on merit, on value, on capability – not to the businesses that hold the right union agreement,” she said.
The Business Council of Australia (BCA), which has consistently opposed the procurement provisions, has urged the Senate to block the union procurement bill after new reporting has alleged taxpayer money is still flowing to underworld figures on Victorian government projects.
“The Federal Government is using this bill to rewrite the rules for how public money can be awarded in this country, and we should not allow that to occur,” said BCA Chief Executive Bran Black.
“Once industrial arrangements become a factor in access to government-funded work, they carry commercial value. That creates greater risk of improper pressure, preferential treatment and potential corruption. We have seen exactly where that can lead.
“At the very least, the Senate should support Senator David Pocock’s amendment. It would stop the Bill’s procurement changes taking effect until the National Anti-Corruption Commissioner has had the chance to examine the risks, or has told Parliament no inquiry will proceed.”
The BCA argues the impacts would extend far beyond major construction projects to sectors including health, defence, energy and other industries reliant on Commonwealth procurement and funding.
It also warns that the proposed requirements could flow through supply chains, affecting subcontractors and suppliers that may have little practical ability to negotiate EBAs.
Elsewhere, the Coalition has continued to oppose the procurement measures, arguing they should be removed from the broader industrial relations package.
Shadow Minister for Employment and Industrial Relations, Senator Jane Hume, said the provisions risk embedding a national CFMEU tax through Commonwealth procurement.
“Labor are trying to sneak a national CFMEU tax through this Parliament, a regime that has cost taxpayers when it has been implemented elsewhere,” she said.
“We support measures that improve the functions and efficiency of the Fair Work Commission that are in this bill. But Labor are attempting to use them to sneak through this dodgy union procurement measure.
“Minister Rishworth must explain why she is tying the right for the government to discriminate in favour of union mates, to clearing the backlog for workers and small business at the Fair Work Commission.”
Meanwhile, Shadow Assistant Minister for Employment and Industrial Relations, Zoe McKenzie, said lessons from the CFMEU scandal were being ignored.
“The Watson Report exposed serious allegations of corruption and misconduct linked to the CFMEU’s influence over enterprise agreement arrangements in the construction industry,” she said.
“After Victoria’s $15 billion CFMEU corruption scandal, Australians have every right to ask: how many billions of taxpayer dollars is Labor prepared to expose to the same risks?
“Parliament should be closing the door on the culture that enabled corruption and inflated costs, not opening a new one through Commonwealth procurement.”
The Federal Government has maintained that the broader Building Cooperative Workplaces Bill is intended to strengthen workplace cooperation and improve employment standards.
