Terms of Reference released for Victorian Royal Commission into the Construction Sector

The Victorian Government has announced the focus and scope of the Royal Commission into the Integrity of Major Public and Civil Infrastructure Construction Projects in Victoria, in its Terms of Reference released 20 August 2026. Former Chief Justice of the Supreme Court of South Australia, the Honourable Christopher Kourakis AC, has been appointed Commissioner and is required to deliver the final report by 20 August 2027.

As anticipated, the Royal Commission will examine not only allegations of corruption, criminal conduct and serious misconduct in Victoria's construction industry, but also the systems, governance arrangements and commercial practices that may have enabled such conduct.

Key areas of focus

The Royal Commission will investigate:

• The nature and extent of any misconduct across the sector.
• Whether procurement practices, contracting and subcontracting arrangements, labour hire models, supply chain arrangements and industrial relations frameworks contributed to or failed to prevent misconduct.
• The adequacy of governance, compliance, reporting and risk management systems adopted by construction companies, consortia, subcontractors, labour hire providers and suppliers.
• Whether the Victorian Government and project delivery authorities appropriately discharged their oversight and governance responsibilities.
• The effectiveness of previous inquiries and reforms aimed at addressing industry concerns.

The Commissioner will also consider potential reforms to procurement, contractual, regulatory, licensing and governance frameworks, as well as measures to recover public funds obtained through misconduct.

Why this matters

For all organisations involved in major infrastructure projects, the Terms of Reference indicate that scrutiny will extend well beyond allegations of wrongdoing. The Inquiry is likely to focus on how projects were procured, governed and managed, how risks were identified and escalated, and whether existing controls were effective.

Although the Royal Commission is focused on public infrastructure projects, it will also consider whether any recommended reforms should extend to major privately commissioned construction projects.

What happens next?

The Royal Commission has been allocated funding of up to $50 million AUD to undertake the Inquiry.  Given the relatively compressed timeframe, investigative work is expected to commence shortly once the Commission's legal and investigative teams are established. The Inquiry is likely to begin with an information gathering phase, including requests for information, notices compelling the production of documents and, where appropriate, applications for search warrants in respect of premises and vehicles.

Extensive investigative powers

The Commissioner has been granted full investigative powers available under Victoria's Inquiries Act 2014 (Vic), including powers to compel the production of documents, and require witnesses to give evidence. 

The Commission's powers of compulsion substantially curtail the ability of witnesses and organisations to resist the production of documents or information. Although the Inquiries Act 2014 (Vic) provides important protections in relation to legal professional privilege and the use of compelled information, those protections are not absolute. Careful consideration should be given to any request for documents or evidence, particularly where there is potential exposure to concurrent regulatory, civil or criminal proceedings. Early legal advice is recommended to assess available protections and manage associated risks.

While the Inquiries Act 2014 (Vic) provides certain protections in relation to the use of compelled evidence, those protections are limited and do not provide complete immunity from the indirect or derivative use of information obtained through the Royal Commission process. This may be particularly significant where the Commission refers matters to regulators, law enforcement agencies or other authorities for further investigation or action.

Given the potential legal, regulatory and reputational consequences of providing documents or evidence to the Royal Commission, organisations and individuals who receive notices to produce documents or attend examinations should seek legal advice at an early stage. Early engagement can assist in assessing the scope of any compulsory notice, identifying available statutory protections, preserving privilege where possible, and managing any potential civil, regulatory or criminal exposure. Individuals and organisations affected by the inquiry will generally be entitled to legal representation during hearings and examinations.

What does this mean for industry participants?

The Terms of Reference make clear that the Royal Commission is not limited to investigating allegations of misconduct. It will examine whether procurement, contracting, labour hire, industrial relations, governance and oversight arrangements contributed to, enabled or failed to prevent misconduct.

For project owners, contractors, subcontractors, labour hire providers and suppliers, scrutiny is likely to extend beyond individual conduct to the systems and processes used to manage projects, identify risks and respond to issues as they arose.  With appropriate legal support, organisations should review document retention practices, identify key custodians and understand where relevant project records are held, while considering any legal, regulatory and privilege issues that may arise if information is sought by the Royal Commission.