CHAPTER 4
Shortly after his defeat at the March 1983 Federal election, Malcolm Fraser reflected on his period as Prime Minister and on the successes and failures of his Government. In an interview with The Sydney Morning Herald Mr Fraser said that his greatest regret was that early in the government's term of office he had not initiated a referendum designed to obtain greater powers to act in the industrial relations area.
It was the 1981 wages explosion that wrought havoc on the Fraser government's economic policies and, perhaps more than any other factor, was instrumental in the March 1983 debacle. The Whitlam government likewise was devastated by the consequences of the 1974 wages explosion. And the substantial wage increases of 1959 and late 1970 did considerable harm to the electoral fortunes of the Menzies and McMahon governments in 1961 and 1972 respectively.
The message is clear. Substantial wage increases (unmatched by rises in productivity) lead not only to higher inflation and increased unemployment -- they also undermine the electoral prospects of governments.
COMMONWEALTH POWERS
Successive Australian governments have had to accept responsibility for the economic consequences of wage explosions. But the Commonwealth, unlike the States, has no power over wages (or prices) and can only directly determine the wages and conditions of its own employees.
Section 51(xxxv) of the Constitution gives the Commonwealth 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". In 1904 the Commonwealth formed the Conciliation and Arbitration Court (later renamed the Conciliation and Arbitration Commission) to prevent and settle industrial disputes.
The Commission is empowered to bring down awards and certify agreements where there has been an industrial dispute extending beyond the limits of any one State. However, it is not too concerned with legal technicalities and sometimes hears cases in spite of the fact that its jurisdictional power is uncertain. About forty per cent of Australian employees come under federal awards determined by the Commission; about fifty per cent are covered by awards brought down by various State tribunals; and the remainder are award free. Over the years the Commission has become the accepted leader in determining overall wage levels by dint of its Basic and National Wage Case decisions. It also determines many of the key awards and these have flow-on effects throughout the community. But the various State tribunals are not compelled to follow its lead and, on occasions, have refused to do so -- usually deciding to be even more generous than the Commission.
THE CLUB
Industrial relations in Australia takes place in a club-like atmosphere. The Club's high priests preside on the Conciliation and Arbitration Commission. The majority of members of the IR Club are Melbourne-based; those who are not have reciprocal rights. The key IR institutions are located in Melbourne -- the Commission, Industrial Registry, Australian Council of Trade Unions (ACTU), Confederation of Australian Industry (CAI) and (until the early 1980s) the Department of Industrial Relations. The National Labour Consultative Council (NLCC) consists of representatives from union and employer peak councils as well as public servants. It provides advice to the government of the day on virtually all matters relating to industrial relations. The Industrial Relations Society (which exists in all States as well as in the ACT and the Northern Territory) acts as a focal point for Club activities. At its many and varied functions can be found members of employer and employee organisations, public servants, academics, journalists and industrial lawyers -- all of whom have a vested interest in the perpetuation of the system.
There is much emphasis on wine and song (industrial relations is still very much a male preserve). Participants at the 1982 convention of the Industrial Relations Society of Victoria were formally advised of the advance planning which had been undertaken by the organisers:
For the discerning palate we have again chosen what the Convention Sub-Committee and proxies consider to be an excellent variety of wines. These will be served with meals during the Convention (excluding breakfast of course). The following list gives a sample of things to come ... (1)
Many an Australian liver has been damaged in the cause of industrial relations.
The Club's verbalisers and writers traditionally behave in a discreet manner. There are few journalistic scoops in the industrial relations field. Industrial journalists rarely describe the murky side of Club life. There is very little reporting on how deals are negotiated. Scandals and corruption within unions (e.g. the Builders Labourers Federation) are rarely first revealed in the media. This is partly explainable by the fact that journalists mix more readily with unionists than with employers. As a former ABC reporter put it:
The geographical location of the industrial round is a traditional thing and for 50 years most of the major media organisations in Victoria have operated a Trades Hall rounds bureau and have got their news there or across the road at the Trades Hall pub ... (2)
Lesson for employers -- if you want better industrial coverage change your drinking habits.
Most academic members of the Club also refrain from any deep critical analysis of the IR system. Those academics who comment in the media on industrial relations invariably preach the Club philosophy. For example, during strikes they urge moderation and further talks leading to additional concessions. They are all for the carrot but see no role for the stick.
One of the many perks available to Club members is the opportunity to participate in the annual pilgrimage to Geneva, the home-base of the International Labour Organisation. The ILO is the IR equivalent of the United Nations. It has many members from countries where free trade unions and strikes are illegal. This does not prevent its plentiful bureaucracy from moralising incessantly about the problems faced by oppressed workers in Western societies. The current issue of the ILO's house journal contains an article by a Soviet government official entitled "Workers' Participation in Occupational Safety and Health Matters in the USSR". (Don't hold your breath waiting for an ILO analysis of forced labour in the Soviet Union.)
Clyde Cameron (a former Minister for Labour in the Whitlam government) has written of the "joint junketing" engaged in by members of the IR Club. He suggests that a key concern of members of the National Labour Advisory Council (the predecessor of the NLCC) was to arrange copious overseas trips -- frequently at taxpayers' expense -- to investigate this or that industrial problem. (3)
ECONOMICS AND INDUSTRIAL RELATIONS
The IR Club exudes an ethos of complacency and self-congratulation. Here can be found men and women who are truly reasonable and moderate. They alone understand industrial realities; they alone know how the system works; and it is they who can do deals and fix agreements. Within the Club there is no time for confrontation. Rather, sweet reasonableness prevails. The task is to secure industrial harmony. Economic realities take what is very much second place, if that.
From an economic point of view the C&A Court (the Commission took over some of the functions of the Court when established in 1956) got off to a bad start. Its first President, Mr Justice Higgins, in the 1907 Harvester Judgment stated emphatically that wages should not be determined by the "higgling of the market" but rather by what was "fair and reasonable". To Higgins, profit levels were not relevant to determining what was fair and reasonable for an employer to pay. In 1909 Higgins declared that it would be better for an employer to go out of business rather than pay his employees less than the fixed rate. The responses of the employees who lost their jobs as a result of this decision have not been recorded in industrial relations lore.
The Higgins philosophy prevailed until the 1920s -- when increasing consideration was given to the capacity of industry to pay. Over the last sixty years the Court has oscillated as to the weight that should be given to economic considerations. For example, in 1931 the basic wage was reduced by ten per cent but at other times significant wage increases have been granted irrespective of any increase in productivity.
The IR Club has been very harsh on those members of the Court or Commission who in their judgements have placed emphasis on curbing inflation and the necessity for wage restraint. In 1953 Chief Judge Kelly brought down a majority judgement which abolished quarterly cost of living adjustments and ruled against any increase in the basic wage. In 1965 (also a majority judgement) the Commission ruled that there should be no increase in the basic wage and, in doing so, stressed the importance of the capacity of the economy to pay.
The 1953 and 1965 decisions made sound economic sense but were treated with disdain by most members of the IR Club. Mr R.J. Hawke (then in his pre-reconciliation days) described Sir Raymond Kelly as an "Irish pig farmer". (4) Justices Sweeney and Nimmo, who were the key figures in the 1965 majority decision, were literally sent to Coventry -- neither sat on a Commission Full Bench again and in 1969 both left the Commission to take up positions in the judiciary. It is fair to say that the opposition to Justices Sweeney and Nimmo came not only from the union side but also from employer members of the Club and some fellow members of the Commission.
In 1982 one Commission judge suggested that the 1931 decision to reduce wages by ten per cent constituted a "leap into the dark". (5) This claim flies in the face of the evidence that those with jobs during the Depression did quite well. The Depression was devastating for those without jobs but not for those who had to accept a ten per cent wages cut at a time of deflation.
Sir Richard Kirby (who was made President of the C&A Commission in 1956) was in the minority in 1953 and 1965. He was instrumental in securing the overturning of both decisions -- in 1959 and 1966 respectively. Up to his retirement in 1973, Kirby was the key figure in Australian industrial relations. He was succeeded as President of the Commission by Mr Justice Moore (who was knighted in 1976). According to his biographer Blanche d'Alpuget, Sir Richard Kirby "found in Moore a common desire to help the underdog". This kind of statement harks back to the days of Mr Justice Higgins. Indeed Kirby has described Higgins as a "courageous industrial reformer" and d'Alpuget has written that Higgins "was the chief judge most admired by Kirby". (6)
Both Sir Richard Kirby and Sir John Moore have frequently argued that, so far as the Commission is concerned, economics should take second place to industrial relations. In his dissenting judgement in the 1965 National Wage Case, Mr Justice Moore stated:
It is a question of competing priorities; whether the Commission should act as if its primary function were to attempt to create or sustain a favourable economic climate and its secondary function were to attempt to resolve problems of industrial relations or whether the last is the Commissions's primary function and the first its secondary. In my view the Commission should always give priority to problems of industrial relations.
Recently Sir Richard Kirby was still defending this approach. He wrote:
... [M]any consider that the Commission should go as far as it can to achieve some sort of economic policy, whether in line with that of the government of the day or otherwise. I am of the strong opinion that it should not ... (7)
THE I.R. ETHOS
The tendency to regard industrial relations as some kind of "art" or "science" with a life independent of economic realities or government policies has been a prevailing Club orthodoxy, especially in times of prosperity. Certainly within the Club there are internal divisions, conflicts and competing interests. But what divides Club members is of less significance than the IR ethos that unites them. Central to this ethos is a conciliatory attitude that sanctifies consensus and opposes sanctions.
Consensus is reached by negotiation or -- to put it bluntly -- by doing deals. In the early stages of any dispute the concept of ambit is very much to the fore. Both sides make ambit claims more substantial than they hope to achieve. Protracted discussions then take place -- very often as adversary proceedings before the Commission. Eventually a negotiated settlement is reached which invariably fails to satisfy the aspirations of either party. Thus are sown the seeds for further disputation which will, in turn, lead to further claims, more negotiations and yet another settlement. Once again emphasis will be placed, from the Commission down, on the necessity for conciliation and compromise leading to concessions. This commitment to consensus goes hand in hand with opposition to the exercise of sanctions. To members of the IR Club the very concept of punishing unions for award breaches is almost anathema.
Since 1956 the Commission has not had the power to enforce its own awards, orders and agreements. This situation was welcomed by Sir Richard Kirby who wrote in 1967 that:
[I]t is ... beyond controversy that the system works better when the arbitrating body has not the responsibility and distraction of enforcing awards. It is all to the good that the Commission's statutory aim of promoting goodwill in industry by conciliation and arbitration should not be made more difficult by the conflicting power of punishment ... (8)
The Industrial Court (the functions of which were taken over by the Federal Court in 1977) was willing -- perhaps at times too willing -- to impose fines for breaches of bans clauses which had been inserted in particular awards by the Commission. But in the late 1960s the Commonwealth government backed down on collecting fines imposed by the court -- with the result that penal sanctions have been, in fact if not in law, virtually a dead letter since then.
If an employer breaches an award, he can be prosecuted under the Conciliation and Arbitration Act. But unions are not bound by awards to the same extent as employers; moreover, if a union commits an award breach it is virtually never prosecuted. To the members of the IR Club this is described as "industrial realism".
LEFT AND RIGHT TOGETHER
The existing IR system is particularly kind to unions -- whether they be of the left, right or centre. While these groups differ markedly on broad political issues they share many common IR positions and most of their leaders fit readily within the Club.
The left is entrenched in the heavily protected secondary industries. Consequently its leaders consistently call for wage increases and greater protection. Mr John Halfpenny (of the AMFSU) has threatened the Commonwealth government that his union might drop its support for the wages-prices accord unless additional protection is given to the manufacturing industry. (9)
The right and centre would agree that the tariff walls should be built even higher -- irrespective of the deleterious impact on consumers and importers.
The right is strong in the white collar and services industries. Its leaders are highly suspicious of new technology and extended shopping hours. Mr John Maynes of the Federated Clerks Union has argued that "for Indian domestic purposes, the open-hearth method of steel manufacture, as opposed to the oxygen-injected method, is preferable". (10) Better Ghandi than Lee Kuan Yew. Mr Jim Maher of the Shop Distributive and Allied Employees' Association (SDA) believes that the housewife has only a certain amount of money to spend on groceries each week. Consequently it "doesn't matter what time she shops, she has, or he has, this fairly fixed amount of money to play around with". (11) One wonders what explanation Mr Maher would give for the consistent high level of savings in banks and building societies. But it is doubtful if such a critical question would come from the left or the centre.
The attitude of the SDA to hours of work is not inconsistent with the views expressed by Mr Justice Macken of the NSW Industrial Commission. Justice Macken has called for the abolition of scaled union pay rates in industries that employ children as casual and part time workers. In his view the fast-food industry is particularly "notorious" in this regard. (12) It would seem that if the judge had his way all employees in fast food outlets would be on adult pay (including penalty rates). McDonald's would still have it all for you -- but you would no doubt have to pay more.
The centre is no more rational when it comes to economics than the left or right. A year ago ACTU President Cliff Dolan came up with the novel suggestion that a job-generating inland diversion of NSW coastal rivers could be financed from a special note issue:
You print the money to do the job and then call it back and burn it. (13)
An incinerator-led recovery, no less -- but one in which the right and left would be happy to participate.
POWERS OF THE CLUB
A key sector of the Australian economy is virtually controlled by Club members. The Commission determines overall wage levels which have a direct impact on Australia's ability to compete on world markets. The Department of Industrial Relations advises the Government on industrial relations issues -- including wage policy and proposed amendments to the C&A Act. Union and employer members of the Club have considerable influence with the ALP and the coalition respectively.
Club members have been so successful in promulgating their IR ethos that it has become one of the sacred cows of Australian politics. This was reflected in the Searby/Taylor Report on the Conciliation and Arbitration Act. In April 1981 the Fraser government appointed consultants to examine the Act and make recommendations on how it could best be simplified and clarified. The consultants were provided with support staff from the Department of Industrial Relations. Mr Searby QC is a prominent Victorian Barrister and Mr Taylor is a former Deputy President of the C&A Commission.
In their report Messrs Searby and Taylor commented on the manner in which the "industrial relations community" frequently disregarded the "more general provisions of the Act" in its concern "to arrive at a resolution of an industrial situation". The consultants continued:
Accepted practices have, accordingly, been long engrained. Some of them depend upon cases but others are unwritten: all have become part of the fixed impedimenta. There is a developed lore by now built in to the operation of the system. If a provision of the Act were to be altered significantly, in such a way as to preclude the parties from acting in the way they have become accustomed to under the umbrella of the Act, the operation of the system would be damaged. (14)
The Searby/Taylor Report suggested that the existing "norms of established utility" should not be upset. The implication was that an elected government should tread warily before changing the existing IR system or the "lore" that sanctifies it.
This graph illustrates that (after a certain time lag) substantial hikes in average weekly earnings are invariably followed by peaks in unemployment.
Sourced from Aust. Bureau of Statistics' figures contained in the following: Australian Economic Statistics: 1949-50 to 1978-79, Reserve Bank of Australia, Occasional Paper No. 8A, July 1980; Average Weekly Earnings, Australia, March Quarter 1983 (Preliminary); and The Labour Force, Australia, May 1983 (Preliminary).
EVALUATING THE CLUB
Mr Alan Wood of Syntec Economic Services recently referred to the "Melbourne industrial relations establishment" as a "group which, if judged on results rather than intentions, has done more to create rising unemployment than any other like-sized group in this nation". (15) Mr Stan Carter of Western Mining Corporation echoed these sentiments when he claimed that it "would be a revelation and a wonder for all to behold if the public was given the Club's achievements during the last 20 years in the field of industrial relations". (16) After about eighty years of almost untrammelled influence in the industrial relations field, the Club has little to show for its efforts. In spite of all the rhetoric, industrial disputes in Australia remain at unacceptably high levels. Take the shipping industry for example. In the five years to January 1980, Australia accounted for forty-three per cent of international insurance claims arising from industrial disputes; yet during this period Australian cargoes amounted to only ten per cent of total international shipping. Australian strikes have a particularly harmful effect on our international trade because they are so unpredictable.
Despite prevailing myths, there is no evidence that the IR Club has been successful in bringing about a very much more egalitarian wages structure in Australia than that which exists in those countries where collective bargaining, rather than centralised wage fixing, prevails. (17) If the total workforce including the unemployed is considered, there is no evidence that the outcome is egalitarian.
Another Club-promoted illusion is that a commitment to consensus and compromise leads to more harmonious industrial relations. But the fact is that in recent years employees in countries such as Japan, the United States and West Germany have been more willing to moderate wage demands to preserve the jobs of fellow workers than have their colleagues in Australia.
Measured by the incidence of industrial disputation and the high levels of inflation and unemployment, the Club can hardly be classified as one of Australia's more successful institutions. And yet it has one of the most enticing career structures in Australia -- all the way up to the most glittering prize of all, a position on the Commission itself.
CLUB LIFE IN THE FRASER YEARS
Prior to his election as Liberal Party leader, Malcolm Fraser was Opposition spokesman on industrial relations. While in opposition the Liberals issued two policy documents on industrial relations -- in April 1974 and July 1975. The former was quite moderate; the latter somewhat tougher. Mr Fraser's 1975 election speech contained little specific on industrial relations. On its election to office the Fraser Government came face to face with the harsh realities of Australian industrial relations. It inherited not only a system that operated without sanctions but also a wages policy that was built on inflation.
In 1967 the Commission introduced the total wage -- previously there had been a basic wage plus margins for skill. The total wage concept had the strong support of employers but it contained unforeseen consequences. In 1975 the Commission brought in wage indexation which differed significantly from the cost-of-living adjustments which had existed from 1922 to 1953 since it provided for indexation of the total wage. Under automatic cost-of-living adjustments it was the basic wage only -- and not margins -- that was indexed. Wage indexation had the effect of enshrining existing high levels of inflation into the wages structure.
Any realistic assessment of the Fraser government should acknowledge that it did not approach industrial relations with a big stick. Of the four Liberal Ministers for Industrial Relations, three (Tony Street, Andrew Peacock and Ian Macphee) stressed the necessity for compromise and consensus. The only exception was Ian Viner -- who lasted for only thirteen months. Mr Viner was the only one of the four not readily accepted within the IR Club. Dr Anne Summers has written that Ian Viner did not spend much time in the Melbourne central office of the Department of Industrial Relations. Moreover he was "not around for the informal gatherings where relations are forged and, sometimes, problems sorted out" and (horror of horrors) he did not attend Melbourne (VFL) football matches on Saturday afternoons. (18)
Certainly the Fraser government threatened much Draconian industrial legislation. But little of it was actually introduced and virtually none of it was implemented. The system remained without real sanctions and the comfortable IR Club was disturbed but a little. The popular perception of the Fraser government was that it was opposed to a consensus approach to industrial relations. But the facts suggest otherwise.
SUCCESSES OF THE FRASER YEARS
The Fraser government achieved some important successes in the industrial relations field.
First, it created an awareness of the economic problems inherent in increasing wages without an increase in productivity -- for inflation and unemployment. In 1976 the C&A Act was amended to require the Commission to consider the likely effects of its decisions on the levels of employment and inflation.
Second, the December 1982 wages pause was a truly significant success -- given the traditional opposition of the IR Club to this concept. The Commonwealth argued for a twelve months freeze. The Commission decided on a six months pause which was to be reviewed at the end of the 1983 financial year. It is interesting to note that it was not only union members of the Club who opposed the Commonwealth's case. The Director of the Victorian Chamber of Manufacturers, Mr Brian Powell, was quoted as supporting a six months pause but not one that would last for twelve months since such a proposal was unrealistic. Mr Powell also suggested that there should be guaranteed pay rises at the end of a six months pause because this would be in the best interests of industrial relations: "I don't see our position as being weak", he declared, but "if we aren't bloody-minded with the unions now they probably won't be bloody-minded with us in six months." (19)
Mr Ian Spicer of the Victorian Employers Federation went even further, claiming that "a wages freeze by itself won't work, that there has to be some monitoring of prices, and that the system by which that occurs would probably have to wait another day". (20) And the then Minister for Industrial Relations, Mr Ian Macphee, was reported as having informed journalists in a background briefing that employers might settle for a three to four months wages pause (21) (note that at this time virtually all employer organisation were advocating nothing less than a six months freeze and the CAI was eventually to argue for twelve months). Some months earlier Mr Macphee had been even less optimistic. He suggested that although unions in export competitive countries were accepting real wage cuts because of the economic downturn, he did not believe it was realistic to expect union leaders in Australia to advocate reductions in real wages. (22)
One of the lessons of the wages pause should be that industrial relations realists are often wrong -- their predictions are as fallible as anybody else's.
Third, the government's most important legislative initiatives were taken with reference to its own employees and public sector unions. By means of the Commonwealth Employees (Employment Provisions) Act; the government on occasions took action against Commonwealth public servants who were participating in what was deemed to be unreasonable industrial activity. In addition, in 1981 military aircraft were used to mount a relief operation for stranded Australian and New Zealand tourists who were victims of a Qantas industrial dispute. After a few days the strike was ended.
Finally, the Trade Practices Act was amended with the intention of prohibiting secondary boycotts which were designed to damage a particular business or substantially lessen competition in a market. Section 45D of the Act was used or threatened with considerable effect in certain specific cases.
FAILURES OF THE FRASER YEARS
The most notable failure of the Fraser government was the 1981 wages explosion which did grievous harm to its economic policies. Certainly the government did not initiate the wages blow-out -- responsibility for this must go to the unions concerned and the ACTU which urged its constituents to obtain higher wages and shorter hours by direct negotiations with employers (who, at times, were State governments) outside the existing wage guidelines. But it could have resisted the 1981 development with greater fervour. Certain employer groups, as well, should have fought much harder to moderate wage increases.
The 1981 wages blow-out provided a salutary-lesson on how a government can be undermined by industrial relations developments over which it has no direct power. From the time of its election in December 1975 the Fraser government stressed the necessity for wage restraint. It consistently argued before the Commission that indexation should be discounted to take account of certain government decisions and international developments and it continually stressed the damage that existing high levels of inflation would do to the economy and, in particular, to employment. The unions, on the other hand, argued for full indexation which was to serve as a base for additional wage increases which were to be achieved by means of "work value" cases and, where possible, individual agreements with employers.
Evidence presented at the Economic Summit indicates that from 1974-75 until 1979-80 there was a downward trend in wages share as compared to profits. But the wages share increased again in 1981-82 and this continued into the first half of 1982-83. The consequences can be seen in the significant increase in unemployment that occurred in 1982 and early 1983.
In 1981 there were an increasing number of agreements on wages and hours reached between unions and employers -- in spite of the fact that they were outside the existing wage guidelines. In addition some State tribunals commenced giving wage increases in excess of those laid down by the Commission in national wage cases.
On 24 July 1981 the government met senior ACTU officials -- in the presence of Sir John Moore. Apparently employer interests were not invited. At this time Australia was in the grip of several severe industrial disputes -- especially in the transport, Telecom and shipping areas. Both the government and the ACTU agreed that the wage fixation principles "should not operate to prevent a resolution or prevention of industrial disputation by inhibiting the examination of claims on their merits". The end result was that industrial peace was won -- but at a heavy cost indeed.
On 31 July 1981 the Commission, in a two-page judgement, abandoned wage indexation but replaced it with no alternative system. The government had not advocated this -- but the Commission's decision was welcomed by Mr Viner. What had been envisaged as the solution to the 1974 wages explosion had proved to be manifestly incapable of dealing with its 1981 successor.
When the Commission abandoned wage indexation in July 1981 it did not abolish centralised wage fixation. Rather the Metal Trades Award became the unofficial pace-setter in determining wages and conditions. In December 1981 metal trades employers (after experiencing sustained industrial pressure for a lengthy period) reached an agreement with the unions over pay and conditions. This settlement amounted to an average increase in hourly wages of about twenty-five per cent. This increase was later reflected in other awards as what the IR Club euphemistically calls the "community round" of subsequent award adjustments took effect. As Mr Justice Ludeke pointed out in June 1982, the metal industry agreement virtually took over the place previously occupied by wage indexation. (23)
The unintended consequence of the resultant wages explosion was a worsening of the economic climate and substantially increased unemployment -- especially in the metal trades industries. Unfortunately the government's temporary weakening of resolve in mid 1981 strengthened both the private and public sector unions' hand at a crucial period. It was to suffer for this in the March 1983 election.
The second failure of the Fraser years was that little was done to disturb the complacency of the IR Club. By and large the government's industrial advice came from within the Club (i.e. the Department of Industrial Relations and the National Labour Consultative Council).
Finally, in spite of the considerable amount of legislation that was passed, little effective action was taken to protect the rights of individuals who incurred the displeasure of unions -- particularly independent contractors and the self-employed.
MR HAWKE'S OPPORTUNITY
Prime Minister Hawke (as a former leading participant) has an unparalleled knowledge of how the IR Club works. Consequently he had a unique opportunity to break the vicious cycle of increasing wages (unrelated to productivity growth), high inflation and sky-rocketing unemployment. The question is whether he will use this knowledge to attempt to circumvent the influence of the Club, or whether he will seek to govern by means of "deals" and "fixes" with influential Club members.
At the April National Economic Summit the government indicated that its preferred wages policy (Scenario A) was one that would allow for a small increase in 1983 and full wage indexation in 1984. In advocating this option the Government effectively negated a proposal (Scenario C) that there should be no additional wage increases until April 1984 and then only partial indexation. This scenario was rejected in spite of the fact that it would have led to lower unemployment and lower inflation then any other proposal discussed at the Summit.
Mr George Polites (the Director-General of the Industrial Council of the CAI) informed the Summit that in his view Scenario C was "perhaps beyond the limit of available consensus". (24) And yet the official CAI policy is for no wage increase at least until the end of 1983 -- i.e. it is broadly consistent with Scenario C. The Summit's technical committee (which consisted of, among others, employer and union representatives) was somewhat blunter. It described Scenario C as not "fully consistent with the [ALP-ACTU] prices and incomes accord as it now stands and might well be judged unrealistic on industrial relations grounds". (25)
According to IR Club members, the Hawke government's proposal to end the wages freeze is (you've guessed it) "realistic". This is in spite of the fact that a recent Morgan Gallup Poll demonstrated that seventy per cent of Australians wanted the pause extended until the end of December 1983. (26) It indicates just how far the Club is removed from the day-to-day concerns of ordinary Australians -- many of whom belong to organisations headed by Club members.
SOME POSSIBLE REFORMS
No effective attempt can be made to achieve long-term reforms in industrial relations unless due consideration is given to the role and attitudes of the IR Club. Wherever possible, responsibilities should be taken away from Club members; where this is not feasible Club members should be made responsible for the consequences of their own decisions.
As an initial step, the Commission should be given power to enforce its own awards. (This proposal, which formed part of Mr Fraser's March 1983 policy statement, would require a constitutional amendment.) It is a sound principle that bodies that make decisions should be responsible for the consequences of their own actions.
In the enforcement of awards/agreements no distinction should be made between the legal obligations imposed on the various parties, whether they be individual employers, employer organisations or employee organisations. Awards should be equally enforceable on all parties -- or none. It may be necessary to enshrine this principle in the C&A Act.
As previously indicated, the Fraser government altered the C&A Act to ensure that the Commission took note of inflation and employment when arriving at its decisions. This section of the Act should be further amended to require that the Commission produce impact statements on the likely economic consequences of its own judgements -- with particular emphasis on employment. It is worth noting that, at present, the Industries Assistance Commission is required to give much more detailed emphasis to the impact on employment of its recommendations than is the Conciliation and Arbitration Commission.
Consideration should be given to abolishing the power to vary an award as set down in the Act. (27) At present an award, once made, can be varied by the Commission if one of the parties creates a new industrial dispute. In March 1975 Mr Clyde Cameron remarked that an agreement that had been negotiated in April 1974 was subject to an arbitrated award variation some five months later. The abolition of the power to vary would necessitate that all the parties give greater thought to the actual construction of awards and would ensure that awards were regarded as having a more binding, long-term nature than is presently the case.
For many years, wage levels in Australia have been determined by both national wage decisions and collective bargaining. The results of collective bargaining are usually enshrined in an award by the Commission (which, at times, plays an active part in the actual negotiations). Traditionally the Metal Trades Award has been the wage pace-setter in the collective bargaining area. As a result wage levels have very much been determined by one of the least competitive (and most protected) areas of the Australian economy. This anomaly cannot be overcome by tinkering with the wage determination system. Rather the Industries Assistance Commission should be required (either by government instruction or, if necessary, by legislation) to take account of wage agreements when determining appropriate levels of industry protection. Those industries which have become less competitive as a result of wage increases should not be able to recoup their losses by means of higher tariffs and quotas.
Wherever possible, provisions relating to rights of individual members of organisations (whether employer or employee) should be taken out of the industrial relations area and placed instead in "human rights" type legislation. Whatever the intention of the legislature, it seems that the IR system is not well attuned to protecting individual rights. This reflects the fact that the C&A Act places primary emphasis on the rights of registered organisations.
Individual employers should be encouraged to offer their workers a "no-strike" end of year bonus. (28) This would give workers a clear incentive not to strike and would assist certain employees who wish to oppose a union directive at the shop floor level.
CONCLUSION
There is no simple solution to Australia's industrial relations problems. Nor can there be. The IR Club is almost eighty years old and its impact cannot be suddenly overturned. Ironically the Club's longevity is used as a rationalisation for its continued existence. The Liberal spokesman on employment, Mr Ian Macphee, has disparaged the view that "somehow 80 years of history" can be banished. (29) Normally this would be regarded as a tradition-bound (almost reactionary) position. But to members of the Club it is simple realism -- nothing more, nothing less.
A reforming government which seeks to achieve changes in industrial relations will have to take on not only the union leadership and the IR bureaucracy -- it will also have to confront the industrial "heavies" in some employer peak councils. This is no mean task, as Malcolm Fraser found in early 1980. Then the CAI's George Polites (who was described in the National Times as a "man so powerful ... that he has been known not to bother to return a telephone call from a Cabinet minister") publicly commented:
Our policy is to work within the framework of conciliation and arbitration. If Fraser pushes for a tough attitude on penalties by the employers we would still be aiming for conciliation and arbitration. (30)
Simple solutions do not violate the laws of economics. But they do violate the laws of politics. As Max Weber pointed out, politics is about slow boring through hard boards. At times there will be opportunities for change -- if only because there will continue to be competition within employer and employee organisations as well as between them. These divisions will provide possibilities for reform -- provided governments and individuals grasp the nettle.
At the moment there is some evidence of an increasing awareness among certain members of the Club (employer representatives, unionists and Commission members alike) of the importance of economic factors. In recent years there have been several important decisions of the Conciliation and Arbitration Commission that have explicitly recognised the capacity of individual employers and/or industries to pay wage increases. This is an important breakthrough which indicates that some members of the Commission are becoming increasingly conscious of the economic consequences of their decisions. Let a hundred realists bloom!
On the wages front there can be no panacea. Over the years virtually all systems of national wage determination have been tried and found wanting. The current debate over the virtues or otherwise of centralised wage fixing misses the point. What matters is not so much who makes wage decisions, but whether they are made according to tough-minded economic criteria.
If the majority of members of the IR Club continue to disregard the harsh realities of the economy, the Hawke government (or any Liberal successor) will have no option but to use fiscal and monetary policies to ensure that the lid is kept on wages and conditions except where there has been a manifest and demonstrable increase in productivity. To fail to do so will be to ensure eventual political demise amidst ever rising inflation and unemployment.
ENDNOTES
1. The Sydney Morning Herald, 11 April 1983; see also Australian Financial Review, 11 April 1983.
2. I. Baker, "The responsibility of the media in industrial relations". Paper delivered to a seminar on "Industrial Relations and the Media" at the Footscray Institute of Technology, 18 April 1980.
3. C. Cameron, Unions in crisis, Melbourne, Hill of Content, 1982, pp 121-139.
4. Quoted in Australian Financial Review, 21 August 1980; see also B. d'Alpuget, Robert J. Hawke: a biography, Schwartz, 1982, p 99.
5. Mr Justice Ludeke, quoted in The Australian, 17 December 1982.
6. B. d'Alpuget, Mediator: a biography of Sir Richard Kirby, Melbourne, Melbourne University Press, 1977, p 163, p 114. See also the reference in note 7 at p 160.
7. Sir Richard Kirby, "Conciliation and arbitration: can governments control it?" in K. Colke (ed.), Power, conflict and control in Australian trade unions, Ringwood, Pelican, 1982, p 166.
8. Sir Richard Kirby, "Conciliation and arbitration in Australia -- advantages, defects and trends", supplement to The Chartered Secretary, July 1967, p 6.
9. The Age, 18 June 1983.
10. J.P. Maynes, "New technology and unemployment", The Australian Computer Journal, May 1979, p 72.
11. Melbourne Sun, 17 September 1981.
12. Melbourne Sun, 7 November 1980.
13. Melbourne Herald, 20 August 1982.
14. Report by consultants to Department of Industrial Relations, October 1981, p 6.
15. Business Review Weekly, 18-24 September 1982.
16. Business Review Weekly, 9-15 October 1982.
17. L.G. Rowe, "Reason, force or compromise: egalitarian wage structures under bargaining and arbitration", Journal of Industrial Relations, June 1982, p 245.
18. A. Summers, "A sandgroper's view of industrial relations: Ian Viner as Minister", Journal of Industrial Relations, September 1982, p 457.
19. The Age, 29 November 1982.
20. The Age, 27 November 1982.
21. Workforce, No 420, 10 November 1982, p 1.
22. The Age, 15 May 1982.
23. Melbourne Sun, 23 June 1982.
24. National Economic Summit Conference Documents and Proceedings, Vol 2, Canberra, AGPS, 1983, p 125.
25. Business Review Weekly, 23-29 April 1983.
26. The Bulletin, 17 May 1983.
27. This suggestion was made in July 1981 in a paper written by Mr J.D. Keary.
28. See the letter by H.W. Arndt in Australian Financial Review, 20 August 1982.
29. The Sydney Morning Herald, 26 May 1983.
30. The National Times, 30 March 1980.
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