With Opposition Leader Bill Shorten making higher wages a key battleground, Mr Laundy insisted demands for a "living wage" - which the ACTU wants pegged at 60 per cent of the median wage - were simply unaffordable.

"If a desperate government offered to lift the wage of Australians by 28 per cent to get people to vote for them, with no economic modelling, no idea of how it would impact the economy without having run the economy themselves, you'd have armageddon," he said.

"If a business is not making money today, they're gone tomorrow under that scenario."

Acknowledging that Labor was making an potent political promise to put more money in people's pockets, Mr Laundy said the government's task was to get the millions of pay-as-you-go taxpayers to understand what business owners were going through to dampen pressure for big pay hikes.

"What we have to explain to the Australian working community is the healthier your employer is, the safer your job is. That's got to be the counter-narrative," he said.

"I've started doing this with the major industry groups. We have to call on our employers in this country to have a conversation with their employees."

Mr Laundy said workers were already seeing pay rises as companies profitability increased and last year's minimum wage case flowed through to other awards.

Noting Rio Tinto chief executive Jean-Sebastien Jacques' comments that the miner expected salaries to rise, Mr Laundy said as skills shortages emerged in other industries, wages would go up, citing health as one sector already seeing increases.


He said complaints by both unions and employer groups that enterprise bargaining was dying were incorrect, pointing to how two major employers in Coles and Dominos were close to finalising new agreements.

Mr Laundy said the bad behaviour by union officials uncovered by the Australian Building and Construction Commission and the Registered Organisations Commission was "scary" and highlighted why the merger between the CFMEU and MUA should be blocked.

With the Fair Work Commission expected to rule any day whether the merger should go ahead, Mr Laundy said the government was still trying to get legislation through the Senate ahead of the decision to prevent it, with talks "ongoing" with crossbenchers.

If the commission does approve the merger, the decision can be appealed but Mr Laundy conceded there was nothing the government could do afterwards to unpick it.

"The problem with this merger is twofold in my opinion: firstly it is a behemoth to whom fines would become inconsequential and secondly they would be in control of unionised labour in the entire supply chain, from the port to the business," he said.

"The adverse impacts of this would be large."

With union membership plummeting, particularly in the private sector, Mr Laundy said unions' relevance had "decreased remarkably" over the past 20 years. But he believed unions would not fade away.

"I don't have a personal gripe with unions," he said.

"I want transparency. I don't want industrial action."

