A shrinking pool of contractors, along with a lack of suitably trained workers, is heightening the risk of corruption in major government infrastructure projects, Victoria’s public sector watchdog says.
A research report released by IBAC on Wednesday examines the corruption risks in major Victorian infrastructure projects undertaken by the Major Transport Infrastructure Authority (MTIA), one of several agencies responsible for big infrastructure initiatives in the state.
They include the North East Link Program ($14 billion), the Level Crossing Removal Project ($17.6 billion), the Metro Tunnel Project ($12.4 billion), the West Gate Tunnel Project ($10.2 billion) and future major projects including the Melbourne Airport Rail ($8-13 billion), the suburban rail loop ($130-200 billion) and the Western Rail Plan ($2 billion).
The report highlights a number of corruption risks in the construction industry including fraud, collusion and bribery during procurement, recruitment and delivery of services.
Corruption risks
IBAC says corruption risks are higher for major infrastructure projects than other public sector agencies, and contracting methods used in the construction industry are ripe for fraud, with resourcing and staffing constraints exacerbating the corruption risk.
According to Infrastructure Australia, 34 of Australia’s 50 public infrastructure occupations are potentially in shortage, with demand for labour and skills outstripping supply by almost 50 per cent this year.
“The relatively small number of major contractors able to compete for state infrastructure projects, alongside a global shortage of technical experts, has increased integrity risks for public sector infrastructure agencies,” IBAC says.
“Increases in the number of projects currently underway nationwide, combined with the relatively low number of available workers, has led to an overall shortage of suitably trained workers.
“This has complicated recruitment for Victorian agencies, as well as for contractors, because of the limited pool of providers working across many projects.
“In turn, this increases competition for securing such resources (which could lead to negative behaviours) and could present a higher risk of conflicts of interest.”
Other corruption risk factors include a complex operating environment and high pressure to deliver on time and on budget.
Recommended corruption prevent measures include:
- centralised risk assessment, detection and prevention
- information sharing between integrity, project and governance leaders
- stronger culture of integrity involving project partners and suppliers
Strong integrity frameworks needed
Public sector leaders must ‘set the tone from the top’, Acting IBCAC Commissioner Stephen Farrow said.
“Public sector organisations know that corruption prevention starts with strong integrity frameworks and corruption controls, but the culture and expectations of public sector integrity must extend to project partners and suppliers to be successful,” he said.
“It is essential that leaders set the tone at the topt about integrity and that breaches of anti-corruption policies and codes of conduct will not be tolerated.”
Public sector capital projects spend goes up
Transport infrastructure projects are the focus of Victoria’s $90 billion Big Build initiative.
As of May 2022, Victoria had committed to investing $184 billion in public sector capital projects, a net increase of $40 billion from the previous year. Around 70 per cent of this investment is devoted to transport infrastructure.
IBAC’s list of organisational, individual and and third party red flags for people and agencies responsible for major infrastructure projects is available here.
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