Police are accused of signing a secret "memorandum of understanding" with the CFMEU to stay out of an industrial turf war.

The author of a damning report into Queensland's CFMEU made the extraordinary allegation on Wednesday, saying state police agreed not to intervene in industrial disputes.

Barrister Geoffrey Watson told an inquiry he was shocked to discover the Queensland Police Association had signed the alleged deal, ensuring officers stayed out of the CFMEU's escalating battle with hated rival Australian Workers Union.

"The memorandum of understanding - that I saw - which was in effect to mean that they (the police) had no jurisdiction once it became an industrial dispute," Mr Watson said on day two of an inquiry into Queensland's CFMEU and misconduct in the construction industry.

See Full Page