Procurement-rigging legislation risks plunging government projects into chaos

Media Release: 28 June 2026

The federal government’s procurement-rigging legislation risks plunging Commonwealth-funded projects into chaos, with cost blowouts and delays due to greater union involvement, the Australian Chamber of Commerce and Industry warns.

ACCI Chief Executive Officer Andrew McKellar said the government’s legislation, which both allows and encourages the government to discriminate against businesses without union agreements in procurement decisions, would have drastic impacts across the entire Commonwealth supply chain.

“We have seen many examples nationwide of government-run projects facing cost blowouts due to union influence,” Mr McKellar said.

“By handing more power to unions, the federal government is exposing critical public projects to the same cost blowouts and delays.

“Whether it’s in defence, energy, national infrastructure — or any other sector — allowing unions to run rampant in taxpayer-funded projects is a recipe for disaster.”

Mr McKellar pointed to Queensland’s Best Practice Industry Conditions (BPIC) policy, which significantly drove up project costs and led to worse productivity.

The Queensland Productivity Commission found BPIC would drive up project costs by up to 25 per cent by 2030. It also found construction productivity in Queensland dropped by 9 per cent, with 77,000 fewer homes built since 2018.

“The federal government should be focused on value for taxpayer money and ensuring quality in the services and products being supplied to government projects, not featherbedding the unions,” Mr McKellar said.

Small and medium businesses underpin almost every major government project, from defence shipbuilding and energy generation to transport infrastructure and essential services.

“While this legislation spans more than just SMEs, they will feel the impacts acutely,” Mr McKellar said.

“In practice, this legislation means any business owner who wants to bid for government work must go cap in hand to a union to secure an agreement. 

“For many businesses, it will come down to a blunt choice: sign up to an agreement that may not suit your business or walk away from government projects altogether.”