Proposed changes to Australia’s federal procurement rules have drawn criticism from major industry groups, which warn that allowing enterprise agreements to influence government procurement could undermine value-for-money principles.
The concerns centre on amendments in the Workplace Relations Legislation Amendment (Building Cooperative Workplaces No. 1) Bill 2026, which was introduced into the Federal Parliament last Tuesday.
The amendments would allow the Federal Government to give preference to suppliers who have entered into enterprise agreements “negotiated in good faith and genuinely agreed, where appropriate to do so” when making procurement decisions.
The proposal has prompted a strong response from several groups, including the Australian Industry Group, the Business Council of Australia and Master Builders Australia, which say the changes could shift government procurement towards industrial relations considerations.
Australian Industry Group Chief Executive Innes Willox argued the measures would undermine longstanding workplace relations principles.
“Federal Government legislation that opens the door to favouring employers who have enterprise agreements with unions for taxpayer-funded procurement services is both deeply alarming and concerning,” he said.
“A cornerstone of our workplace relations system is the principle of ‘freedom of association’, which is the idea that workers have a right to join or not to join a union.
“Legislation introduced into the parliament today completely risks undermining this vital principle by opening the door to either the current or future governments forcing employers and their employees to strike deals with unions in order to commercially deal with the government.”
Willox questioned whether procurement decisions should be influenced by industrial relations considerations rather than by supplier capability, performance and value for money, citing previous failures.
“Deliberately distorting government procurement to deliver on the industrial relations objectives of unions has proven disastrous, time and time again, particularly at state level,” he added.
“We don’t need to look any further than the parade of scandals and billions of dollars wasted in the construction sector in both Victoria and Queensland to understand that linking government procurement practices with enterprise bargaining is a proven recipe for delays, cost blowouts and union misbehaviour.”
According to Willox, the risk is not confined to construction alone.
“If this bill passes, the risk is that this won’t only be an issue for the construction industry. The same problems could arise in other sectors if the government was able to make the awarding of contracts or funding dependent upon particular enterprise agreement outcomes.”
The Business Council of Australia and Master Builders Australia echoed these concerns, warning the changes could expose procurement processes to increased integrity risks.
Business Council Chief Executive Bran Black said the proposal represents a fundamental shift in the way government contracts are awarded.
“This would give unions effective control over where taxpayer money goes. It is being introduced against every lesson the country has learned from the recent CFMEU investigations,” he said.
“Geoffrey Watson SC found some enterprise agreements in construction were bought for cash and awarded to criminals, and that these practices could drive legitimate businesses out of the market.
“Now, the Federal Government wants to make those same agreements a gateway to public contracts and grants. That creates a major corruption risk.”
Black argued that public money should go to businesses that can deliver, rather than businesses that have signed the right union agreement.
“The reach goes far beyond a single contract. A single Commonwealth project could impose these conditions on every business in its supply chain. The consequences would ripple through entire industries,” he added.
Meanwhile, Master Builders Australia said the Federal Government should heed the lessons learnt from the construction industry.
“Builders know from experience how this policy plays out in the market when a government signals an expectation for union enterprise agreements if a tender is to be successful,” it said in a statement.
“In the end, this provision will send a message that if you don’t have a union-backed bid, then don’t bother lodging a tender.
“Master Builders Australia is calling for this provision in the Bill to be opposed. The utilisation of public procurement processes by various governments to the benefit of unions at the expense of taxpayers needs to end.”
The Federal Government has defended the proposal, saying it would support fair bargaining outcomes and ensure public spending aligns with broader workplace relations objectives.
