The legislation abolishes the Howard-era Australian Building and Construction Commission, a Labor election promise, and implements the recommendations of an inquiry led by Justice Murray Wilcox.

New safeguards for workers' rights will be introduced in the legislation, but building workers can be compelled to testify about workplace practices under threat of six months' jail.

Prime Minister Kevin Rudd and Ms Gillard championed the legislation at an exhaustive 212 hour caucus meeting.

Three amendments designed to further soften the legislation had been proposed by former union chief Doug Cameron and ACT senator Kate Lundy, but all three amendments were defeated.

Mr Rudd said the legislation ensured better legal protections for workers required to testify about illegal industry practices.

He dismissed concerns from the union movement.

''Complaints from the union movement, complaints from industry would probably suggest that the Government has got the balance right in acting in the national interest,'' he said.

Ms Gillard said the new laws would have a sunset clause of five years, and that good behaviour would be rewarded via an opt out ''for projects that have good industrial behaviour and a good record''.

An independent assessor would decide what constituted good behaviour, she said.

''We have also accepted his [Justice Wilcox's] recommendation that the exercise of the coercive powers and the hearings that result should be videotaped, the videotape provided to the Ombudsman and the Ombudsman should periodically report on the conduct of those hearings,'' she said.

''We have also accepted his recommendation that a person required to attend for a coercive powers hearing should have all of their costs wages lost, travel, and the costs of a lawyer met.''