The Victorian branch of the CFMEU has suffered a significant write-down after its newly built training and wellness facility, funded largely through Incolink grants, was found to be worth less than one third of its construction cost. Built next to the union's Melbourne headquarters, the facility received $27 million in funding but was independently valued at only $8 million this year. This represents a 70% decline in value.
Incolink, a $1.3 billion industry redundancy fund supported by employer contributions from the construction sector, provided more than $14 million in grants for the CFMEU project during the last financial year. The decision to allocate such substantial capital grants has come under scrutiny due to limited regulatory oversight and the significant gap between the amount spent and the resulting asset value. The union also recorded a broader $27.6 million impairment across land and buildings, which contributed to a $1.6 million loss for the year ending March.
Despite the steep write-down, the administration stated that all expenditures were in line with appropriate procedures and adhered to the intended scope of the grants. Incolink requires independent business case submissions and expenditure reports for capital project grants. However, it has not yet received a final report for this project, including audited financials. The project was launched under previous leadership and completed with the involvement of a construction firm linked to the union.
Industry observers say this constitutes the sharpest asset devaluation in Melbourne property in recent memory. While office buildings in similar areas have seen values fall since COVID, the average drop has been about 28%, making the decline in this case an extreme exception. The situation raises fresh questions about how redundancy funds like Incolink distribute surplus investment earnings through grants, often without the financial accountability applied to publicly managed funds.
As ASIC reviews long-standing regulatory exemptions for such funds due to their growing asset bases and evolving financial roles, this case highlights the likely need for greater transparency and independent oversight.
