CHAPTER 12
In many ways, the main obstacle to reform of industrial relations in Australia is the Arbitration Commission itself. By regulating labour markets in ill-considered ways, the Commission has done untold damage to the Australian economy. By setting wages to placate the stronger unions, it has become a major cause of poverty and unemployment, and by establishing a pattern of strike first, arbitrate later, it has become a cause of strike action. The Commission has acted always to preserve its own supremacy, and in doing so has effectively sabotaged the growth of collective bargaining procedures or workable, decentralised labour market arrangements.
Any approach to reform should have as its purpose the abolition of the arbitration system in its present form and the design of alternative arrangements that give some promise of lessening industrial conflict by way of strikes, boycotts, bans, limitations and the like, and of allowing the labour market to work smoothly and flexibly. The aim of such a reform, of course, should be to let unions concentrate on the protection of their members, while allowing economic growth and the minimisation of unemployment.
In every matter that appears before the Australian Conciliation and Arbitration Commission, there are, as if in a real judicial matter, "parties" who argue their cases. These will usually be the employers on one side, the unions on the other, with the Commonwealth and often State governments representing their interests or views. But of course it is immediately obvious that these parties do not exhaust the possible lines of argument on the merits of a particular wages or conditions claim. The unemployed are not present as a "party", nor is the social welfare lobby, still less is there present any genuine or self-styled representative of the public interest, although perhaps the Commission itself might lay claim to this latter role. But the truth of the situation is that there is always one party before the Commission that is never explicitly named or referred to, and that is the Arbitration Commission itself.
The interests of the Commission are represented at every hearing, and the form and nature of the final decision takes account of those interests. They are, of course, first the continuance of the role and influence of the Commission, and second the expansion of the Commission's empire throughout the labour market of Australia. This helps explain the Commission's veering back and forth before prevailing winds of government policy, trade-union militancy, and economic events. There has been a degree of inconsistency in the actions and attitudes of the Commission which cannot be adequately explained otherwise, whether by changing circumstances, changing personnel, or changing interpretations of what is happening in the Australian and world economies.
Perhaps the most obvious example of the Commission's trimming is its series of decisions related to the existence of earnings drift. Earnings drift is a concept peculiar to the Australian arbitration system and refers to the divergence of actual earnings above (never of course below) the award rates set by the Commission. From time to time, as a result of pressures in the labour market and successful bargaining at the firm and industry level, wages and salaries tend to increase faster than award rates. This might seem an unobjectionable development in normal times, as it would tend to the establishment of a dual system whereby the Commission's awards operated as a structure of minimum wages; but the Commission always tries to recapture the appearance, if not the reality, of total control of wages by granting increases that lift the award rates to something like the prevailing market rates. That is, it has consistently chased the market so as to give the impression that it is in control of the market rate.
On the other hand, in times of weakness in the labour market it may accept that the rate of increase of award wages must be limited, but it is ready to accept devices such as wage indexation which ensure that it continues to be seen by many in the community as playing an active role in granting wage increases and maintaining living standards in the face of opposition from employers (and sometimes from governments). In this way it actively curries favour with the union movement.
The experience of indexation from 1975 to 1981 is an excellent example of this, and of the way in which the Commission ignores the interests of the unemployed. This whole indexation experiment amounted to the deliberate maintenance by the Commission of real wages set at the level of the 1974-1975 wages explosion in the face of high unemployment. There is no doubt that in the years of recession, wage levels would have fallen back substantially in real terms if it had not been for the Commission. The unions were not in a position to mount effective campaigns to raise money wages to keep up with price inflation.
The period 1981-1982 is often presented by supporters of the Commission as an example of how the disorder and chaos of collective bargaining demonstrated the need for an active role by the Commission. In fact, it can as well be treated as a demonstration of how the Commission picks its timing -- maintaining an active presence when it can be seen as the determinant and the Father Christmas but strategically withdrawing when its own actions have built up irresistible pressures, only later to re-enter and recapture the high ground by endorsing actual wage movements and underwriting them in times of labour market weakness.
The Arbitration Commission, therefore, has a ratchet effect on both money and real wages which ensures that gains, once made, are protected regardless of the state of the economy, the exchange rate, or Australia's competitiveness in world markets.
It is sometimes argued that the Arbitration Commission does not affect wages in the long run, and that these are determined by the market, the Commission only recognising market outcomes. To some extent this is true, in that over a longish period wages (and profits) cannot grow faster than the real rate of growth of the economy. By granting short-term real wage increases at inappropriate times, or by maintaining real wages when they ought to be falling, the Commission ensures a poorer performance of the Australian economy, a lower rate of growth and therefore lower real wage growth over time. That is, while the Commission can determine wages directly in the short run, it cannot determine them directly in the long run. It can, however, affect them indirectly in the long run to the extent that its activities lower the rate of growth of real income.
Here again, the Commission's interest in its own aggrandisement enters the argument. For many years it has vacillated between accepting that it has a role and responsibilities with respect to economic management, and denying that its fundamental responsibilities go beyond the settlement of industrial disputes. Thus, whenever the Commission might be forced to make a decision in terms of economic realities which cannot be gainsaid and which the unions are clearly unwilling to accept, it tends to fall back on a reiteration of its constitutional role.
This role, however, is not at all clear. It is often overlooked that the Constitution does not mention the Arbitration Commission in any of its manifestations. Section 51(xxxv) of the Constitution simply provides that the Commonwealth shall have power to make laws with respect to "conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one state". The establishment of the Commonwealth Court of Conciliation and Arbitration -- as it originally was -- in 1904 was only one possible way of implementing this power. It is by no means clear that it would preclude the making of laws that would require some arbitral authority to settle disputes purely with reference to economic conditions.
Of course, the Conciliation and Arbitration Act has contained for some years a provision that economic circumstances must be taken into account. But this does not require the Commission to pay more than lip-service to the state of the economy, and it certainly does not require that it should be given predominant weight. Nor does it provide that economic considerations such as the effects on particular industries, regions or segments of the labour force should be considered.
Whenever the Arbitration Commission is subjected to sustained criticism and it is suggested that it might be abolished or replaced by some other institution or set of institutions, its defenders inevitably declare that there is no real alternative to it. The first line of defence is to point to the similarity of experiences between Australia and countries that have predominantly collective bargaining systems (or something that looks rather like that), such as Britain. Even if it were true that dissimilar systems produced similar results over time, it would not be an argument for arbitration on the Australian model, but rather a reason to look for other, more deep-seated similarities.
The influence on Australia of British trade union structure and, perhaps as significantly, shop steward attitudes could not be ignored. However, the fact that long-standing institutional structures produce similar unsatisfactory results after many years in place could as well be treated as evidence for the fact that any institutional structure needs root and branch reform from time to time; regulatory institutions tend to become captives of those whose behaviour they are meant to modify in the public interest.
In the Australian context there is a tendency, too, to treat arbitration as having no alternative but free, unregulated and anarchistic collective bargaining. Moreover, it is argued, abolition of the federal Arbitration Commission would not necessarily be followed by similar moves towards unfettered collective bargaining in the States -- the result of radical reform by the Commonwealth might simply be the creation of six (plus the territories) separate systems of industrial tribunals and labour regulation, even more confusing than the present system in which at least the Commonwealth system has national scope and moral authority and is generally followed.
Reform of the system should, it is said, take the form of a simplification and unification by subordination of State authorities, or preferably their total subsuming as branches of the central authority under the Arbitration Commission, or, at the very least, a system of joint sittings and sharing of jurisdiction by Commonwealth and State tribunals. This viewpoint is favoured by the Labor Party (but not all the unions), by many practitioners in the industrial relations field, by many employers, especially those in the east coast metropolitan areas, and by determined centralists in the bureaucracy and the legal profession. It is even favoured by most Australian economists, who have the same yearning as have the bureaucrats for nice, straightforward lines of authority from the centre that make Keynesian-type policies easy to implement according to textbook models.
So it may well be that the removal of the centralising influence of the Arbitration Commission would allow wage differentials to develop once again, promoting genuine relocation of industry. (One very good reason for New Zealand to continue the process of economic union with Australia but to resist entry into the federation is to preserve its now considerable cost advantage relative to Australia. New Zealand has enough trouble without adding the Arbitration Commission to its burdens.) Hence the argument concerning the persistence of State tribunals has little validity and depends mainly on the presumption that uniformity of wages and conditions is desirable. It is attractive to employers whose operations in Sydney or Melbourne compete with producers elsewhere, but many more would enthusiastically relocate in cheaper land areas if lower labour costs compensated for the transport cost disadvantages; differences in industrial practice are easily offset by real cost differences.
However, is there no alternative as far as federal action is concerned to vacating the field to the State tribunals? It is worth once again looking at the wording of Section 51(xxxv) of the Constitution. This bestows upon the Commonwealth the power to legislate for "conciliation and arbitration for the prevention and settlement of industrial disputes ..."
As has often been the way since Federation, the High Court for a long time took a perverse position on the meaning of the terms in this section of the Constitution. Apart from the reference to conciliation and arbitration, the operative terms here are "prevention", "settlement" and "industrial dispute". One would think that the word "prevention" would be interpreted in its normal sense, but one would be wrong. The prevention of illness refers to health measures taken prior to illness; the prevention of pregnancy relates to the use of contraceptives (or abstention from sexual activity); yet as long ago as 1910 (Whybrow's Case) the High Court interpreted "prevention" as applying only to the processes of conciliation and arbitration after a dispute had commenced. This is like saying that the prevention of pregnancy only refers to abortion.
This strange twisting of ordinary meaning has become a central feature of our industrial relations system. Fortunately there is some sign of change in the High Court's approach to the meaning of S.51(xxxv), most notably in the Australian Social Welfare Workers Union Case (1983). This decision must go down as one of the landmark decisions affecting industrial relations. First, it redefines the meaning of the term "industrial dispute". For a long time the High Court insisted that this had to mean a dispute in an industry, and much heart-burning went on in the attempt to define "industry" (as was customary, the Court did not bother to consult the large body of work by economists on just this topic). By taking a narrow and snobbish view of what an industry was (the legal business could never be considered an industry) the Court vitiated a large area of discussion concerning wages and working conditions. In the ASWU case, the court finally brought itself to accept that an industrial dispute in ordinary usage means and always has meant, in the context of the labour market, an argument about wages and working conditions.
The word "dispute" has also been the source of much hair-splitting, and the invention of the "paper" dispute, and the ridiculous device of the ambit claim, was occasioned by this. But the most important aspect of the ASWU case was that remarks by judges indicate that the Court might be willing to revise the interpretation of "prevention" so as to allow it to refer to measures taken before the existence of any particular industrial dispute, provided these were in the context of conciliation and arbitration.
This has the potential to become a major element in any recasting of the industrial relations system. It means that some body responsible for regulating industrial relations could exist under a basic law that established a series of conditions which would have to be set before a strike was considered legal (such as cooling-off periods, observance of no-strike clauses, proper votes by members, and so on), laid down criteria as to the economic factors which must be taken into account (not just lip-service paid to them), and specified non-legalistic arbitration procedures.
Starting with the new commonsense approach to the meaning of s.51(xxxv), such a law could lay down a framework in which collective bargaining took place freely, without regulatory provisions designed to segment the labour market and prevent the movements of labour between industries and occupations. Basic control of industrial relations should remain within individual enterprises, rather than being held externally. There is a case to be made for the establishment of minimum wage provisions and for some prevention of discrimination on irrelevant (that is, not work-related) grounds in the workplace. But these are matters of welfare and human rights, hardly part of the functions of an industrial relations system, except to the extent that excessively high minimum wages are used by unions as a device to disadvantage the weaker sections of the workforce.
There are many possible designs for an industrial relations system which would work better than our present one, and which would give much greater scope for and priority to collective bargaining. Conciliation can be seen as a useful element in most stages of this procedure, but arbitration ought to be the very last stage of any such process, with no appeal.
Yet arbitration is often the first stage in contemporary Australian industrial disputes, being followed by strike activity, conciliation, and eventually collective bargaining. Part of the problem is undoubtedly the fact that the Arbitration Commission has systematically encouraged the erosion of its own real authority (as distinct from mere prestige) over the unions, preferring instead to join with them in exercising authority over government and the labour market. In the process, its pretensions to be a quasi-judicial body have totally eroded the respect of unions and their leaderships for the law, to the extent that many unions consider that in the pursuit of an industrial dispute they are above the law.
Moreover, there is a belief among participants in the industrial relations system that industrial disputants who remain within the law should not be allowed to prolong the processes of collective bargaining to their ultimate resolution; that a union should not be permitted to prolong a strike to the point of collapse either of the firm or the union. This is wrong. Provided that a union is prepared to accept the consequences of the financial collapse of a company or the defection of its own members, there is no reason why a strike should not be taken to that ultimate conclusion if no more satisfactory settlement of a union's claims can be reached.
The present system involves a permissive attitude to illegal actions by the unions. The one piece of legislation in place that places legal restrictions on sanctions additional to the withdrawal of labour in the context of collective bargaining is section 45D of the Trade Practices Act, which prohibits "secondary boycotts". The unions are mounting a major campaign to have this legislation repealed, even to the extent of taking reprisals against companies that invoke it -- a classic case of contempt for the law. This contempt has to a very great degree been fostered by the Arbitration Commission, which has encouraged unions in the belief that legal sanctions cannot, should not, and will not be taken against unions which do not follow the "rules of the game".
The inability of the Arbitration Commission to exercise any final authority, and its pathetic and desperate attempts to maintain and extend its own role in the wage fixation and industrial relations system by cajoling the unions to co-operate in its pretense of authority, has led to a widespread belief that industrial relations, far from being "a new province for law and order", is a province for the exercise of arbitrary power and coercion. Mr Justice Higgins's dream has come to a sorry end when law and order are excluded from industrial relations by a pusillanimous Arbitration Commission and a union movement contemptuous of legal authority: not that the commission, whose self-interest has been demonstrated, is entirely to blame except in that it has deliberately encouraged the illusion that at some time in the future its good offices might produce a better state of affairs. But the situation now is that the state of mind which the commission has fostered in the union movement has led to a general contempt for the law, which is apparent across the whole spectrum of the union movement.
The present situation is very largely the result of the collapse of the authority of government in 1969, when the unions forced the Arbitration Commission and the government to back down after union leader Clarrie O'Shea was imprisoned for contempt of court by Mr Justice Kerr. Kerr's approach was ill-advised since it concentrated the matter on the issue of imprisonment for contempt, rather than on more general questions of the application of the law to trade unions.
The section 45D issue is rather different and is significant in that it takes an offence by a union (or other body) out of the context of industrial relations as such, and treats it as an offence in a more general context. The real threat perceived by the union movement here is that it might have to face up to real courts, determined to uphold the authority of the legal system, and not, like the industrial tribunals, inclined to back down in front of their clients, the union movement.
The authority of the commission in the industrial relations field is discredited to such an extent, and the harm that it does to the economy is so great, that its retention in its existing form would make the reform of industrial relations and wage-fixation an impossibility. It would be better simply to get rid of the present commission altogether, and to replace it with a network of conciliation commissioners and arbitrators without judicial titles or pretensions, whose function would be to facilitate collective bargaining and act as arbitrators on request, without the pretence of power to enforce their decisions.
The real reason why a simple abandonment of arbitration under the present system and the removal of an official framework for collective bargaining would not work is that the conditions for free, collective bargaining do not exist. In Australia we have a union movement which considers itself, not without reason, beyond the law. It is organised so as to exercise monopoly control over labour markets and to prevent the settlement of disputes on a freely-negotiated basis between employers and employees in a specific company or group of companies. The union movement is determined to exercise a wide degree of control over the future of profitable investment, while making no commitment to the profitability of particular investments.
This is a far cry from the role of unionism as originally conceived, the protection of the weak. It is a role which ensures that increasingly privileged sectors of union membership do well, while the costs of adjustment and low growth are concentrated on the casualties of society. It is wasteful, counter-productive, and eventually self-defeating. Reform of industrial relations, and the establishment of an efficient system of conciliation and arbitration, requires that the union movement be brought back within the law, and that unionism, like industry, become competitive and decentralised. The Arbitration Commission, as the main defender of centralism and monopoly in labour markets, is the main obstacle to reform.
CONCLUSION
The involuntary unemployment of willing and able people is a serious social and economic ill, whether because the jobs do not exist or because they are in abeyance on account of industrial action. The employment of people and capital in ways that produce less than could be produced with the same effort and a better allocation of resources is an economic cost. Social tension generated by the "them and us" attitudes of management and workers is unpleasant, wasteful, and potentially dangerous. All these circumstances are often discussed in terms which ascribe blame to one or more of the parties engaged in the productive processes. This sort of analysis is not necessarily irrelevant -- people often act stupidly, immorally or illegally and the fact should be pointed out -- but the policy it has generated has not obviously improved the functioning of the labour market.
Another approach is to examine the rules of the employment game: to treat the ills as cases of market failure rather than moral failure. One still faces strongly-held opinions and considerable distrust, but to the extent the players can be assumed to be rational, one has a framework in which to analyse, predict and prescribe. This framework is the tested one of microeconomics.
This volume nevertheless began with macroeconomic analysis. I identified the cost of providing employment as the prime reason that some people are involuntarily out of work. I saw the events surrounding the 1982-84 recession as evidence that unions have an effective veto over macro-economic policy. "Consistent expansionary policies designed to keep the unemployment rate at, say, 6 per cent, would have involved a continuous wage-price spiral, and eventually an inflation rate well above 16 per cent. ... [U]nions can always set wages so as to ensure an unemployment rate that they consider tolerable."
I wrote that "increases in real wages which are reflected in real labour costs do cause employment demand to be less than would otherwise be the case. In a situation where employment is less than full, therefore, rises in real wage costs actually destroy employment. This conclusion is inescapable for an internationally trading economy." I concluded that real wage restraint is essential if Australia is to return to macroeconomic health, and that the case for wage restraint is "largely independent of the ideological stances taken by individual economic analysts".
That real wages affect employment is now accepted almost everywhere except in trade union rhetoric. Rhetoric aside, there is mounting evidence that some senior ACTU office-holders accept that there is necessarily a trade-off between the number of jobs and the rewards of employees. The "Accord" struck between the ACTU and the Hawke government recognised the necessity of keeping the lid on wage demands in the interest of economic recovery and the unemployed. The Hawke government accepted the need for wage restraint at the 1983 National Economic Summit Conference; but as far back as 1975 the then Labor Treasurer Frank Crean had said that "one man's pay rise is another man's job".
I showed that pay increases have been one important factor among several that have brought about current high teenage unemployment, and that minimum award wage rates encourage employers to discriminate against youth, women and racial minorities. Examining the extension of the award wage system to Aborigines in the 1960s, I also demonstrated that pay rises cost jobs and that minimum wage laws can disadvantage the very groups they were intended to protect.
Rules and practices that increase the cost of employment are increasingly defended in terms of "industrial reality" rather than the more traditional "fair shares" or "just rewards". This is exemplified by the recent Hancock Report which accepted trade union power as something like the weather, unchangeable but not unchanging. The Hancock Committee seems to have seen union power as a constraint on the industrial relations system, not as a part of it:
The analogy with civil litigants and sporting contestants ignores a major ingredient of the industrial relations scene -- the phenomenon of power. If we ask why litigants and sportsmen usually accept the adjudicators' decisions, we find part of the answer in the ethics accepted by the disputants; but part, too, lies in their relative weakness. The two factors are inter-related: the ethic of accepting decisions gains strength from the difficulty of doing otherwise. By contrast, trade unions are, to varying degrees, centres of power: they replace the powerlessness of individual workers with collective strength. It is a mistaken view of the pluralistic society to assume that every "subject" is equally dominated by the might of the state and its arms of enforcement. (1)
This is equivalent to stating that might is right, that the powerful should be allowed to oppress the weak so as to enjoy the fruits of the power -- and to accept it is to deny the value of democracy, the whole history of which has been the history of equalising the domination, of striving to overcome the natural tendency for the powerful to get special treatment because of their power. In his chapter, written before the Hancock Report was published, I too drew attention to the essentially undemocratic nature of trade unions which have acquired such great power that they claim, and can often enforce, the right to win. The violence done by unions, with the encouragement of the "system" to freedom of association and the right to work would not be tolerated in any other area of Australian life.
That the question of trade union power is central to any discussion of useful industrial relations reform is apparent also from the chapter which considered the potential economic cost of a system which imposes the same wage structure on prosperous and impoverished firms and on enthusiastic and reluctant workers, and allocates similar rewards to the skilled and the unskilled. The evidence led me to the conclusion that wages are not much more uniform in Australia, where we have centralised wage fixing, than in the UK and USA, where they do not. In effect I warned against expecting much improvement in resource allocation, and by implication in employment, merely by abandoning the arbitration system in favour of collective bargaining among the same or similar organisations.
Generally unsympathetic to the union cause, I reminded readers that modern unions are a product of the industrial relations system, their legal personality conferred by the legislation that created the system. I described them as "creatures of the state, yet not subservient to it -- unruly principalities rather than vassals". Of the industrial tribunals, I said "they were established not to control the unions but to encourage them, not to protect the public from irresponsible unions but to protect workers from a greedy public".
What of the future? Many readers of this book would agree that the labour market is badly flawed; in the face of recent levels of unemployment this would be hard to deny. They would agree further that the market is characterised by cartels, one group of which -- the unions -- possesses considerable independence/sovereignty/power. In the short run it is not possible to alter this situation without great industrial disruption, perhaps even bloodshed. In this sense the Hancock committee's craven submission to union power is understandable; in this sense the unions are above the law and are able to enforce the right to win in the face of democratically-made decisions. This is the background to "industrial reality".
The Hancock Committee was established in 1983 to examine industrial relations law and systems and to propose reforms in Commonwealth law and Federal-State interaction. The three members were all life members of the IR Club. Shortly before the Report was submitted to the government, I published a set of criteria to help people evaluate the Hancock recommendations, or indeed any proposals for industrial relations reform. The criteria are:
Do the report's recommendations at least set us on course for a more flexible and efficient industrial relations system, or are they merely for minor and cosmetic changes to the present system?
Does the Report examine the likely effects of implementation of its recommendations on the labour market as a whole, and on the economy as a whole?
Does the report consider human rights in the labour market? Do its proposals uphold them?
Does the report look below the surface of the industrial relations institutions and examine the underlying forces which determine employment and wages?
What does the report say about centralisation and decentralisation?
Would the recommendations make the tribunals take account of the interests of people other than the employees directly affected by a decision? How?
Does the report recommend a way of achieving downward flexibility of wages? Is employees' consent required? How is consent gauged?
Does the report examine the problem of union monopoly power? Does it recommend ways in which it can be reduced (for instance, implementation of the right to work and the right to freedom of association, application of the ordinary law of contract and torts to employment and industrial relations, extension of the provisions or principles of the Trade Practices Act to employment and industrial relations)?
Do the recommendations for dealing with "maverick" unions such as the Builders' Labourers Federation have a chance of working? Do the recommendations cover situations like the Argyle, MCG and Omega disputes? (2)
It is not worth examining the Hancock recommendations in detail. Suffice it to say that 147 of the 148 recommendations were for "minor and cosmetic changes" principally directed at removing frustrations and inconveniences the current system presents to IR Club members: that the problems of union power and "maverick" unions were not tackled; and that the Committee was not free of the traditional IR Club belief that the labour market is exempt from the laws of economics.
The exception is Recommendation 21, for a means of opting out of the Commonwealth arbitration system. Its exact intention is, perhaps deliberately, far from clear. From the beginning, the Conciliation and Arbitration Act has provided a mechanism for "industrial agreements" between parties, which, as the Report points out, has not been used, perhaps because it does not actually allow "real freedom" from Federal or State tribunals. Recommendation 21 proposes revision of the industrial agreement mechanism so that it could permit independence from the tribunals.
What is not clear is who the Committee sees as being allowed to opt out, and in what circumstances. Combined reading of Part X of the Act and the relevant sections of the Report (3) leaves several interpretations open. As the Act now stands, at least one of the parties to an industrial agreement must be an "organisation" (that is, a registered union or employer body); the other recommendations on registration would make it very difficult for new organisations to be formed merely so their members could opt out of the system. Judging again from the present Act, there are scant grounds to hope that Recommendation 21 would allow employer and employees in a small enterprise to agree to opt out and decide terms and conditions for themselves. The Constitution only allows Commonwealth laws to deal with industrial disputes "extending beyond the limits of any one State" and it is hard to see how this could cover the typical small business.
The importance of Recommendation 21 is that it constitutes a recognition from within the IR Club that there is a place for non-Club IR, an acceptance -- in a way a corollary of the recommended abandonment of penal sanctions for breach of the tribunals' rules -- that the arbitration system need not be all-encompassing. The importance of this recognition should not be underestimated. It would have been more encouraging had this been based on considerations of human rights and freedom of choice rather than a desire to "combat perceptions of the ... arbitration system as an imposed arrangement" and "strengthen the arbitration system by countering the contention that it regulates parties who feel no commitment to it". (4)
The limits to any implementation of Recommendation 21 will be set by the tastes of the government of the day and by the Commonwealth's constitutional powers. The constitutional limitations can be overcome by joint action by Commonwealth and State governments. As pointed out in the Report, the cooperation of even a single State would permit such a system to operate within that State. (5) Recommendation 21 could be used to justify a parallel, lightly-regulated industrial relations system which could bring about the labour marked reform this country so badly needs. There would be many problems in implementing such a system -- mainly relating to friction where the two systems, unlike parallel lines, met -- but these could be overcome by a determined government. The continuance of the conciliation and arbitration system and the voluntary nature of the new system would reduce opposition to the change, and in the long run, the more efficient system could be expected to dominate.
In the long run, the choice is between industrial relations reform and democracy. When the union movement has so much power that the "right to win" ceases to be merely part of its mythology and becomes part of the community's daily experience, when decisions reached by the representative processes of democracy are liable to be reversed at the behest of groups whose power does not rest on the consent of the people, then a country is no longer a liberal democracy. What is needed is not public and governmental acceptance of union power and accommodation of policy-making to it, but rather acceptance by union leaders and union members of liberal democracy and its policy outcomes. The practical question is not what can be done to force the union movement to accept a diminution of its power, but what can be done to convince it that some of it should be ceded to rank-and-file unionists as individuals, and to all people as workers, as employers, as consumers, as voters. The question is what can be done to reduce the concentration of power and to make its exercise for political coercion or in ways that cause personal or economic harm to the community, unthinkable.
ENDNOTES
1. Australian industrial relations law and systems: report of the committee of review (Hancock Report), 3 vols, Canberra, AGPS, 1985, vol 2 p 663.
2. "Some critical aspects of the Hancock Report", Economic Witness, 23 April 1985; see also J. Nurick, "The Hancock Report: how does it measure up?", Economic Witness, 22 May 1985.
3. Hancock Report vol 1 p 9, vol 2 p 243-44, vol 2 p 367-69.
4. Ibid, vol 2 p 244.
5. Ibid, vol 1 p 3.
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