The Federal Government believes jobs and capital are at stake, as it moves to reduce union power on building sites.

Employment Minister Eric Abetz has confirmed that a tough new building code in the works is aimed at cutting the rights of unions and their representatives, which he says are holding the industry to ransom.

Mr Abetz says the code will restore “the rule of law” on work sites, stamp out intimidation, enhance the abilities of smaller contractors and end what he calls the “closed shop” arrangement between big contractors and unions.

“Head contractors do sweetheart deals with trade unions which then requires any subcontractor on major projects to sign up to trade union enterprise bargaining agreements,” he told the ABC.

“[That] might be completely contrary to the arrangements the subcontractors have.”

“There's no logical reason why a head contractor would demand that of the subcontractor other than the pressure that has been brought to bear, and threats and intimidation made, by elements of the trade union movement,” he said.

The Employment Minister says changes will come through amendments the Fair Work Act and the restoration of the Australian Building and Construction Commission.

The size and shape of the new code has not yet been revealed, but Mr Abetz says the plans are currently “before the Parliament”.

The Abbott government maintains any changes will not resemble a return to the Howard government’s ‘WorkChoices’ arrangements, and indeed the moves signalled so far do target more specific laws and legislation than were used to set up WorkChoices.

Construction, Forestry, Mining and Energy Union (CFMEU) national secretary Dave Noonan says the people are being tricked.

“The comments about closed shop are simply rhetoric from Mr Abetz,” Mr Noonan said in reply.

“What the Government is saying is that they wish to use their procurement power as a client.

“They wish to coerce other clients in the building industry into demanding that there are key clauses in workplace agreements which replicate important parts of the WorkChoices legislation.”

The construction industry changes on the way are part of a progressive plan to get back to WorkChoices through a number of separate avenues, Noonan said.

“The other parts of this plan are of course their Royal Commission into unions, and the Productivity Commission inquiry into the industrial relations system,” he said.

“All of these are designed to enact radical workplace reform, precisely the thing that Mr Abbott said that he would not do before the election.”

In an interview with News Corp publication The Australian on the weekend, Prime Minister Tony Abbott said he had big plans for workplace and industrial relation reforms, but was banking on being elected for a second term to enact many of them.