Workplace Relations Minister Tony Burke on Sunday announced building code regulation changes would come into effect from Tuesday, before he introduces legislation later this year to abolish the construction watchdog.
The Australian Building and Construction Commission's powers will be reduced to the "bare legal minimum" before reverting to the Fair Work Ombudsman and to health and safety regulators.
The announcement caught many in the industry by surprise, Master Builders Australia chief Denita Wawn said.
"We acknowledge the government has got a mandate to do this, but we were hoping that they were going to consider some level of safeguards rather than just ripping everything to pieces," she told Sky News on Monday.
"The removal of the components of the building code is all about giving the unions carte blanche to go in and dictate what happens on building sites."
Union militancy will "absolutely" return to building sites without the commission, she said.
But Greens leader Adam Bandt said the ABCC has "got to go".
He said people working in dangerous industries like construction have fewer rights at work because of the current arrangements.
"The ABCC is an affront to the rule of law. The sooner it is gone, the better," he told reporters in Canberra.
Deputy Prime Minister Richard Marles said the changes are about ensuring workers are bound by equal laws.
"What there should be is the same laws across the entire industrial relations system applying to every single worker," he told ABC News.
"The way in which this particular sector has been singled out under the ABCC was not fair."
Newly-elected independent senator David Pocock said the government needs to find the right balance between ensuring workers have access to union support without intimidation returning to worksites.
"I'm asking for a sensible discussion about what the plan is for once (the ABCC) is gone, and how do we actually focus on safety, productivity and worker wellbeing," he told ABC radio.
"Clearly, this has been a political football over the last decade and the focus really needs to be on the almost 1.2 million workers who work in construction and how we get good outcomes for them."
Opposition spokeswoman Michaelia Cash said the short-notice announcement by the government would damage the economy.
"If Labor go ahead and abolish ... the Australian Building and Construction Commission you will see approximately a $47.5 billion hit to the economy between now and 2030," she told reporters.
"Why would you put this type of economic hardship on the construction industry?"
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