Designed to undermine the influence of building unions on government projects, the guidelines will forbid unions from undertaking site induction processes and make unlawful project-specific allowances which provide higher wages without productivity increases.

Employers failing to comply with the guidelines may risk losing government contracts.

Ai Group chief executive Innes Willox said NSW’s decision would ensure taxpayer funds were spent on infrastructure and not wasted on damaging enterprise agreements unions might request from builders.

"The Australian Industry Group welcomes the NSW government’s decision to implement construction industry industrial relations guidelines for state government-funded projects from 1 July,” Willox said.

“All governments face major infrastructure challenges and it is vital that public funds are not wasted through restrictive and unproductive site practices and agreement provisions brought about by union claims.

“Experience shows that employers will not concede damaging enterprise agreement clauses or implement inappropriate site practices if they are locked out of government construction work as a consequence.

“The threat of losing millions of dollars of work is an extremely powerful influence upon behaviour.”

The guidelines bring NSW into line with Victoria and Queensland.

The two neighbouring states also clamped down on unions following last year’s major industrial disputes between unions and Abigroup at the Queensland Children's Hospital in South Brisbane and Grocon at the Emporium site in Melbourne’s CBD.

At the time Grocon said the union clash cost it more than $10 million, while Abigroup reported the dispute cost it $100,000 a day in delays.

Both the Victorian government and Grocon launched legal action against the Construction, Forestry, Mining and Energy Union last September, hoping to recover the millions of dollars lost in the dispute.

The matter is currently in the hands of the Victorian Supreme Court.

Meanwhile, Unions NSW secretary Mark Lennon is arguing against the guidelines announced by NSW Treasurer Mike Baird.

Lennon said undermining union power would have an effect on the safety and accountability of the industry.

"Construction unions in this state are absolutely vital to a safe building industry," he said in a statement.

"By attacking trade union representation on building sites, Mike Baird is also attacking safety standards in one of the state's most dangerous industries.”

Lennon said NSW's building unions were known for being cooperative and constructive.

"Mike Baird needs to put the Liberal Party orthodoxy aside for a moment and engage with the objective reality of industrial relations in this state," Lennon said.