EXCLUSIVE

Industrial relations: Fears of a backlash prompts the government to put on hold a review.

Industrial relations: Fears of a backlash prompts the government to put on hold a review. Photo: Tanya Lake

The federal government has put an ambitious review of workplace laws on hold as it spends political capital on selling its unpopular budget and amid fears of a ferocious campaign from Labor and the union movement that is expected to revive the spectre of Workchoices.

The terms of reference for the Productivity Commission's review of the Fair Work Act - the centrepiece of the government's industrial relations policy at the election - have been all but finalised.

But Prime Minister Tony Abbott's office has intervened to delay the launch of the review until the second half of this year so it can focus on steering the budget through the unco-operative Senate.

Admits to delay: Eric Abetz.

Admits to delay: Eric Abetz. Photo: Andrew Meares

Earlier this month, Employment Minister Eric Abetz told a Senate hearing the review terms should be released ''shortly'', but admitted: ''I think I may have said that at the last estimates [in February].''

Senior government sources have confirmed the government is not ready to launch a new political debate over industrial relations.

Business groups and Liberal MPs are urging a bold industrial relations policy be adopted before the next election, although senior Coalition insiders believe there is no rush to address the issue yet.

"We know it's coming, it would be really good for it to be in the public arena": Kate Carnell.

"We keep being told next week": Kate Carnell. Photo: Alex Ellinghausen

With one eye on the 2016 election, the government's political strategists have pencilled in late next year or early 2016 as the report-back date for the review, which will allow the government time to cherry pick the most politically palatable recommendations and take them to the voters.

The review's final terms of reference are expected to contain only minor changes from the draft terms of reference, a copy of which was obtained exclusively by Fairfax Media in March.

That revealed the review would examine workers' pay and conditions, including penalty rates, union militancy and workplace flexibility.

It would also examine the Fair Work Act's impact on unemployment, productivity, business investment and the ability of the labour market to respond to economic conditions.

The launching of the trade union royal commission and the government's desire to pass other workplace law changes, such as restoring the Australian Building and Construction Commission, have also contributed to the delay.

Industry groups are increasingly agitated about the delay. The Australian Chamber of Commerce and Industry chief executive Kate Carnell said it had seen the leaked terms of reference and was eager for the review to begin.

''We know it's coming, it would be really good for it to be in the public arena so we can put together the best submission possible,'' she said, adding that ''we keep being told next week''.

Labor employment spokesman Brendan O'Connor said Mr Abbott was holding back because ''he knows this review means workers will lose and, in the wake of the most unfair budget in living memory, he can't stomach more broken promises''.

ACTU national secretary Dave Oliver said the government had delayed the review because it knew ''the Australian people will reject their toxic views on IR, whenever they eventually decide to be honest about it''.

Senator Abetz's office declined to comment on Tuesday.