This article is more than 3 years old

This article is more than 3 years old

Building companies risk losing government work immediately if they fail to renegotiate industrial agreements to meet the government’s strict new code after a backflip by senator Derryn Hinch.

On Wednesday the Turnbull government introduced a new bill to bring forward the operation date of the building code attached to the Australian Building and Construction Commission Act, which passed in November.

Hinch told Guardian Australia that over summer he discovered he was “suddenly regarded as a villain by small and medium builders and subcontractors” because he had negotiated a two-year phase-in period for the code.

In an amendment that is certain to pass because it is supported by Hinch, the Nick Xenophon Team and David Leyonhjelm the government will now cut the phase-in period to nine months.

But a second amendment provides that, between the bill’s passage and 1 September, companies with industrial agreements that fall foul of the government’s procurement policy may bid for but cannot be awarded government work.

The amendment means the about 3,000 companies with union-approved enterprise agreements will miss out unless they renegotiate deals, a change aimed to punish those that gave conditions more generous than the code and reward builders who resisted union pressure, such as Kane Constructions.

Hinch said the government had originally wanted the code to apply retrospectively from April 2014 so building companies, many of which negotiated new agreements in 2016, “knew what was coming”.

But the head of industrial relations at a major builder has told Guardian Australia the amendment will “hand power to the Construction, Forestry, Mining [and] Energy Union”.

He noted that companies cannot unilaterally change their agreements because variations have to be agreed to by their employees.

The union can indirectly determine who wins government work by refusing to grant a company a code-compliant agreement. That provides leverage to ask for better pay in return for agreements that lose other conditions knocked out by the code, such as regular rostered days off.

“They’ll take their pound of flesh, or they’ll pick and choose who they trust,” he said. “They won’t sit down with Kane [Constructions], they’ll sit down with Lend Lease and Multiplex.”

The head of industrial relations said the amendments would “crack bedlam in the industry” because it would take months to years to negotiate new agreements and companies would not tender for work during the nine-month phase-in period if they risked being ineligible to win it.

The CFMEU’s national secretary, Dave Noonan, said the backflip was “a dirty deal done by a cowardly senator” who had chosen to listen to “a small group of construction companies and property developers” rather than the wider industry or workers.

“These are laws that will have serious consequences for workers in the industry,” he said. “There will be no limitations on overtime, no restrictions on temporary work visas and the union will be banned from advocating for jobs for apprentices.”

The Master Builders Association’s chief executive, Wilhelm Harnisch, said most companies would welcome the deal because they had “held out for over two years against massive union pressure to sign non-compliant [agreements] so that if the ABCC came back they could do commonwealth funded work”.

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“A two-year transition period to establish code compliance was made with good intentions, however the consequence has been to disadvantage those who tried to do the right thing.”

Labor opposes the amendment because it will immediately prevent companies from winning government work based on agreements that comply with the Fair Work Act but not the stricter code.

The Greens’ industrial relations spokesman, Adam Bandt, said that Hinch’s backdown and Xenophon’s support for the nine-month phase-in “gives the government everything they wanted” and removed minimal protections.

“The original ABCC legislation caused chaos in the building and construction industry and the latest move by Derryn Hinch and Nick Xenophon is a recipe for this chaos to return,” he said.

“By removing the grace period before some of the worst parts of this legislation came into effect, agreements that had already been struck between companies and workers will now be up in the air.”