Treasurer Joe Hockey believes corruption whistleblowers from the construction industry need a forum to be heard but does not think an inquiry need extend beyond unions to employer groups.
Amid mounting allegations of improper deals by union officials, Mr Hockey said the actions of the movement "need to be fully exposed and addressed".
"Someone has to stand up for the workers and we're prepared to do that," he told ABC TV on Wednesday following a counter-attack from unions during the day over claims of corruption and misconduct.
Prime Minister Tony Abbott said the government would make "every effort" to ensure workplaces are free of misconduct and corruption, including restoring the Australian Building and Construction Commission and holding a judicial inquiry.
He challenged Labor and the unions to show the public on whose side they were.
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"Are they on the side of law-abiding citizens or are they on the side of people with a tendency to break the law?" Mr Abbott asked.
Stopping short of backing a full royal commission into the matter, Mr Hockey said the inquiry need not extend to all employer groups.
"There are no suggestions of other representative groups engaging in this, what appears to be, systemic corruption," he said.
The federal government should see what comes out of any inquiry before looking at expanding it to other organisations, he said.
Among those making accusations are Brian Fitzpatrick, a former industrial officer with the Construction Forestry Mining and Energy Union in NSW, who alleged he had been offered $300,000 to leave the union quietly.
Melbourne builder Andrew Zaf told ABC's 7.30 program on Wednesday he had been forced by CFMEU members to hire the father of a senior unionist to work on a site in the western suburbs, and that the man once threatened to kill him.
"Well when someone threatens to kill you, what are you going to do?" Mr Zaf told the ABC when asked why he did not sack the union organiser's father.
Mr Zaf also claimed he provided free materials for the house of Victorian CFMEU heavyweight John Sekta in return for peace on industrial sites - a claim vigorously denied by Mr Sekta.
ACTU president Ged Kearney said the Fitzpatrick matter had been referred to police, which was appropriate.
It was "absolutely absurd" for the prime minister to suggest a royal commission was needed because of the allegations, she said.
"Taxpayers' money will be wasted - $100 million will be spent on what is nothing more than a political witch-hunt."
The CFMEU's NSW construction division secretary Brian Parker insists the union's legal department called the police as soon as Mr Fitzpatrick had alerted them to the threats.
But the former official did not pursue the matter with police.
The man who allegedly made the threat, Darren Greenfield, denied having done so, so the union could not form a conclusion on the truth of Mr Fitzpatrick's claim, Mr Parker said.
The union did not offer Mr Fitzpatrick $300,000 but had provided a confidential exit settlement over an unrelated employment issue.
"The CFMEU does not employ gangsters or members of motorcycle gangs and our office is not infiltrated by criminals," Mr Parker said.
A spokesman for Labor leader Bill Shorten said police should be allowed to investigate.
"They're the best people to do it," he said, adding if Mr Abbott and Senator Abetz were serious about the issue they should let police get on with their job rather than play "pathetic politics".
