Construction, Forestry, Mining and Energy Union ACT secretary Dean Hall confirmed the deal this week, saying the 250 workers amounted to about three-quarters of the ordinary construction workforce on the project. The decision of head contractor Pacific Partnerships (formerly Leighton) to employ them directly would deliver job security and more money to workers, instead of paying a cut to subcontractors, Mr Hall said.

He was responding to fears from Canberra's business community that the project will be locked up in expensive union-controlled enterprise deals, costing taxpayers millions more than it should, and distorting the wider construction industry.

After the ACT government confirmed it had given the two shortlisted tram consortiums copies of the controversial memorandum of understanding between unions and the government, Master Builders Association head Kirk Coningham said he had "deep concerns" about the process, which had "raised eyebrows" from the consortiums.

Civil Contractors Federation ACT president Peter Middleton said in a project as big as the $700 million light rail, excessive pay rates could distort the wider industry in Canberra with a roll-on effect throughout the city.

"It's a slow-moving train wreck if this thing gets up. The project, because it's so big, has the ability to pollute the normal costs of doing projects around Canberra," he said.

"Once a big contractor is awarded a huge infrastructure project, for instance the light rail, they effectively have a monopoly on all of that construction work. So whatever they say goes. The dirty deals they do become the dominant paradigm for that geographic area, that's how the CFMEU's influence extends throughout the industry."

With the government expected to sign a contract with the lead consortium as early as this month, Mr Middleton called for urgent clarification.

But it appears the employment deal has already been done, with Mr Hall saying negotiations were 95 per cent complete, covering construction works, form workers, concreters and the like. It provided for job security and maximum flexibility, with workers required to work outside normal hours to minimise traffic disruption, and it included a clause saying the head contractor would strive to employ indigenous people, women, people with disabilities and apprentices.

"We've gone back to the golden old days of construction where the principal contractor directly engaged the workers and there was no middle man," he said.

"We've done a deal to ensure the money goes to workers and families ... Why does the MBA and its members want to stick their snouts in the trough and take it out of their pockets?"

He did not reveal pay rates but said the extra money for workers was coming from the cut that would otherwise go to subcontractors so taxpayers would not pay more.

A Capital Metro spokeswoman said the consortiums had been given the MOU on August 13. The companies were required to propose an "industrial relations management plan" as part of their bid. Asked whether the consortiums had expressed any concerns or issues about the MOU, she said "matters of clarification" had been addressed during the bid.

But Mr Coningham said he understood that within 24 hours of the consortiums getting the MOU, the CFMEU had given them a list of acceptable contractors.

And Mr Middleton, whose company is Woden Contractors, predicted taxpayers would pay $40 million to $80 million more than they should.

In a comparison of recent agreements, Mr Middleton said local civil engineers Guideline paid a typical bulldozer driver 35 per cent more than the award in a non-union agreement. Cord Civil, in a union agreement, paid 39 per cent more. And Fulton Hogan in its union deal paid 77 per cent more. The Fulton Hogan example is what he fears will happen with Canberra's tram.

"With what is a very politically sensitive job I'm just flabbergasted that the light rail authority would think it appropriate to be encouraging either of the two large contractors to get into bed with the unions because they must know that that would increase significantly the cost of this massive public works undertaking," he said, with tier 1 companies such as Leightons preferred "to buy industrial peace ... by means of an outrageous EBA".

Mr Coningham said the impact in such a small market was difficult to overstate. The union agreements could "severely impact competition in the territory's construction industry for the duration of this major project and beyond", and many, if not most, of the territory's construction firms might not get a look-in.

"We are working with the preferred bidder in an effort to head off the worst of this. At this late stage, and given the government's unambiguous demand for union agreement, it will be difficult," he said.