'' Baillieu said in June. ''If this continues, we will price ourselves out of infrastructure.''
There is much political self-interest in these claims but some truth also; wages in construction have risen sharply in industry deals struck in Victoria in the past year, and some, but not all, of the Wonthaggi conditions have spread.
This ambitious and costly punt by Thiess and Degremont put much at risk - for them and the industry - and required much to go right. It hasn't.
Now they expect losses of at least $700 million, including extensive liquidated damages from delays blamed on weather and labour problems. In a project where the money has flowed but the water hasn't, these are not trifling sums.
Barraclough, brought in to fix the Wonthaggi project this year, built the Sydney desal plant in about 2½ years - the same time allowed under the Victorian desal deadline. Sydney's plant, however, was about half the size, had a local workforce to draw on, friendlier unions, was less technically complex and did not have to face the wrath of Bass Strait.
Barraclough insists the deadline at Wonthaggi was ''do-able''. That seems a stretch with the builders having to start digging while the engineering was barely started.
''They had a very tight, unrealistic time frame as was evidenced by the site agreement being so unique,'' says Dean Mighell, state secretary of the Electrical Trades Union. His union agreed to work every day of the project as part of a four-day-on, four-day-off roster. ''It was the most accelerated project time frame we'd ever agreed to.''
By August this year, relations between the builder and ETU members were so bad that the company, which was meant to be ramping up the hiring of electricians, moved to sack 160, saying they were lazy and engaged in a union-endorsed ''go slow'' to draw out the project.
On most construction jobs the lay-offs would have been easy because work in the industry is generally short-term and tenuous. But due to its detailed 191-page agreement with the unions, the builder was forced into the courts and weeks of talks. Eventually, the company made an embarrassing backdown and agreed to contract out the work with no loss of job numbers.
The judge in charge of the case was no soft touch. Richard Tracey, now in the Federal Court, was counsel assisting in the 2002 Cole royal commission that led to tough new laws covering building workers.
''Tracey knows the issues more than most,'' a senior industry executive says. ''But his judgment was, 'If you are stupid enough to give away your managerial prerogative, don't come to my court looking to get it back again.' ''
While wages on the desal project are about 20 to 30 per cent higher than on typical big Victorian construction jobs, they are similar to those on other significant metal construction projects such as the Mortlake power station.
THE senior industry executive says the real problem is not wages, although they are high. ''From a contractor's perspective, as long as you've got covered the wage costs in the bid we don't really care what it is,'' he says. ''It's the inability to run the job that is killing Wonthaggi.''
Thiess, however, was prepared to take the risk, knowing that if it made the tight deadline, the pay-off was there. It also decided to build the plant in a way that was ambitious - some say arrogant.
On large projects, head contractors often sub-contract the work to specialists to off-load responsibility and to tap into specialist skills. In an unusual move, Thiess decided to employ the thousands of staff itself and assemble a complex management structure in a remote location in quick time: an ambitious, some say impossible, task. Barraclough says it was a way for Thiess to differentiate itself when bidding for the contract against John Holland, which had an anti-union reputation.
''It was a genuine commitment to maximise the use of Victorian labour, and we did that. It's much easier to do that in a direct labour environment than in sub-contracting,'' he says. ''It was something we wanted to do, but it also enhanced our bid, it made o