The capacity reduction factors (ϕ) in AS3700-2001 have been derived by 'soft' conversion from previous working stress codes, which were themselves derived from overseas. Compressive wall strengths in AS3700-2001 are discounted by a capacity reduction factor ϕ=0.45. This factor seems low, even for masonry. The paper compares design strengths with actual wall test data to estimate the model error in probabilistic terms. This information, in conjunction with probabilistic models for material properties and loads, is used to calculate the structural reliability (complement of probability of failure) of masonry walls in compression. The existing safety levels were found to be much higher than those accepted for other materials. Based on this rational analysis, it is recommended that ϕ for walls loaded concentrically in compression be increased from 0.45 to 0.75, resulting in a 66% increase in the compressive design capacity of structural masonry.