The builders of the troubled Wonthaggi desalination plant are ”convinced” their $1 billion claim against Victorian taxpayers will succeed as they blame bad weather and now the Fair Work laws for their woes.
In comments to analysts in France, Suez Environnement chief executive Jean-Louis Chaussade said the builders, which include the Suez-owned Degremont, were ”convinced that the robustness of its two key arguments will follow through” in its $1 billion claim.
The claim, even if it were to be partially successful, would blow a hole in the state budget and last night Water Minister Peter Walsh attacked it and said the ”Coalition government does not believe there is any basis” to the claim.
The project has been beset by a string of scandals including most recently Melbourne Water wrongly charging consumers $230 million for the operation of the plant, even though it is yet to be finished. Once built, Victorians will pay at least $1.8 million a day even if no water is used.
It comes as a leaked management memo, obtained by The Age, shows that the builders of the project, Thiess Degremont, are seeking to cut labour costs for the last part of the project. Instead of renewing the generous wages deal at the end of the year, the memo states, management wants to use subcontractors on ”competitive labour rates”. This could affect hundreds of workers used to being paid market-leading rates.
Electrical Trades Union assistant secretary Troy Gray said that for three years the project had been built on set terms and conditions and they should apply to the end of the project.
”Clearly the project won’t finish at the end of year,” he said. ”To change terms and conditions to me, seems madness.”
Mr Gray said he expected at least 200 workers to be still on the project until the end of the year, when the agreement expires.
The leaked management memo said project director John Barraclough will tell unions today that there will be no directly employed workers from the end of the year. There will also be no union delegates and pay will be at ”competitive labour rates”.
A Thiess Degremont spokeswoman, Karen Lee, said today’s meeting would ”set the framework” for upcoming negotiations but said an enterprise agreement ”will only be required” if the project is not completed by the end of the year.
She said there were 526 workers on site and this would reduce to about 150 within two months.
Ms Lee said the builder intended to complete work by the end of the year, with all defect rectification after that to be done by subcontractors on their wages and conditions.
The desal project, one of the largest in the world, was initiated by the former Labor government and is expected to cost Victorians up to $24 billion (in nominal dollars) over 28 years.
It was meant to be able to produce at full capacity by June 30 but only recently started producing at one-third capacity. With dams 80 per cent full, it is now not expected to be used for many years.
The project has also been a financial disaster for Thiess, owned by Leighton Holdings, and Degremont, owned by Suez, and between them they are expected to lose at least $800 million.
Suez’s Mr Chaussade said changes to workplace laws, which gave greater rights to unions, were partly to blame for the problems the builders had encountered.
”There have been abnormal climate conditions with cyclones, which can be considered as force majeure, or an act of God, and labour relations that have been difficult, notably because of legislative changes,” he said in unreported comments to analysts in August.
”And this, of course, had their own negative bearing on the overall productivity of the project.”
CFMEU national construction secretary Dave Noonan dismissed Mr Chaussade’s comments as ”merde”.
Builders Thiess Degremont launched a financial claim last October against project consortium AquaSure, which then in turn passed on the $1 billion claim to the Baillieu government.
