Assistant Treasurer Michael Sukkar believes if a rogue union like the CFMMEU can't be deregistered then no other organisation would ever qualify.
Last week Industrial Relations Minister Christian Porter said the peak construction and mining union, the CFMMEU, should be deregistered.
He is seeking to bring back to parliament a bill enabling the Federal Court to disqualify officials if they are not a "fit and proper person" and cancel the registration of unions on a range of grounds.
"The Labor party could assist the CFMMEU and other rogue organisations reform themselves and improve their performance and improve they way they operate within the law by actually putting some pressure on them," Mr Sukkar told Sky News on Sunday.
He said the Labor party did everything it could to give the CFMMEU a free pass by opposing every piece of legislation put forward to improve governance or the integrity around unions.
"I think there is a very good argument to be made that says if you don't deregister organisations like the current CFMMEU then which organisation would ever qualify to be deregistered," he said.
The CFMMEU's Victorian leader John Setka is in court this week on harassment charges.
Labor Leader Anthony Albanese wants Mr Setka expelled from the Labor party, but there still remains support for him within the CFMMEU and other unions.
Shadow treasurer Jim Chalmers backs Mr Setka being expelled from the party but says other issues around his role in the union movement are up to the ACTU.
"The bit that we control is his role in the Labor party," Dr Chalmers told ABC television.
Mr Sukkar said Labor has accepted Mr Setka's behaviour over a very long period of time.
"Presumably the Labor party can't bite the hand that feeds them," he said.
