The Queensland Government has budgeted pay rises for the CFMEU. 

The Palaszczuk government is planning to offer a pay increase of up to 30 per cent over five years to workers on its $10 billion worth of health construction projects. 

The government has advised bidders on its Capital Expansion Project, the state's largest health spend, that they should allow for increases of up to 6 per cent a year under workplace guidelines, known as Best Practice Industry Conditions (BPIC), which apply to state projects.

Industry experts have suggested that this is the first time the government has flagged specific pay rises in its procurement process, with some concerned that it could effectively cement increases in negotiations with the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU). 

Pay rises of 6 per cent a year would set a new standard for CFMEU agreements that have largely stayed at 5 per cent and would come as Reserve Bank of Australia governor Philip Lowe warns that big pay rises could perpetuate higher inflation.

Civil Contractors Federation Queensland chief executive Damian Long said such pay expectations would likely flow on to civil projects in road and rail. 

“We’re doing our best to make these projects efficient and cost-effective, why would you factor in 6 per cent increases? You are artificially inflating costs for the sake of it,” he said.

However, Master Builders Association Queensland chief executive Paul Bidwell said the provisioning for cost rises could avoid firm collapses, such as the recent failure of PBS Building. 

“This is first time they’ve done it,” he said. 

“It could be a good outcome because they’re flagging what those increases might be and builders should be aware of that and take that into account when doing their costing. But it depends on whether by signalling it they in essence have locked in the price, which would be fairly extreme.”

A spokesperson for Queensland Health says the department provided the information as part of a confidential tender process to advise potential contractors that the Department of Energy and Public Works was drafting new BPIC. 

“This was in response to the managing contractors’ request for information, given the current BPIC expires in June 2023, and the need for tenders to take into account the new BPIC and make adequate allowance in their escalation calculations, noting the percentage was a recommended upper limit not a commitment,” he said.

The BPIC is based on the Construction, Forestry, Maritime, Mining and Energy Union’s latest industry agreement, and the government uses it as a “guideline” for rates and conditions in tenders for government projects. 

But the CFMEU Queensland branch is currently negotiating its next industry deal, the first in the country since the Albanese government was elected, and the updated BPIC will capture tenders issued this year.

Industry sources have said that Queensland Health told bidders that the current BPIC only referred to pay rates for the year starting July 1, 2022, and that tenderers should allocate up to 6 per cent a year to the rates for the next five calendar years in their responses. 

The department has already faced more than $150 million in cost blowouts on its projects, the biggest in its satellite hospitals program, which was 35 per cent over budget.

The Queensland government also recently awarded pay rises of 4 per cent over two years to teachers and nurses with a bonus of up to 3 per cent if inflation exceeds the base offer.