Industrial relations in Australia -- the need for change

CHAPTER 10

INTRODUCTION

The case developed throughout this chapter is that there are strong industrial relations and economic arguments for changing the Australian industrial relations system to one that could be described as a decentralised collective bargaining structure.  While it will be asserted that these arguments stand in their own right, some related questions also need addressing.  These include:

1. If there are strong arguments for change, why has the system survived for over three quarters of a century, and why are there still powerful apologists for the system?
2. What sort of system of collective bargaining would be set in place of the existing institutional structure and how would this change be brought about?
3. What changes to union structures would be necessary?

A response to these questions follows, and leads into the separate industrial relations and economic argument for change.

WHY HAS THE SYSTEM SURVIVED?

The view of the author is that the system has survived because of a combination of mythology, political fear, and something that could be described as "institutional momentum".

Mythology

Every society needs its myths;  cultural developments rest upon them and depend upon them.  Whether Australia needed the "arbitration myths" is doubtful, but the myths abound.  Those about the origins of the Australian conciliation and arbitration system have ranged from the academically respectable:  "... Institutions do not materialise out of thin air.  They arise from the interplay of economic, technological, social and political forces and the historical context in which those forces operate ..." ⁽¹⁾ to the romantic assertion that the Australian system was "forged in the fires of Federation", ⁽²⁾ and therefore should not be lightly cast aside.

The greatest myth of them all was that the Australian conciliation and arbitration system created a "New Province of Law and Order" and that

... There should be no more necessity for strikes and stoppages in order to obtain just working conditions than there was need for the Chinaman of Charles Lamb to burn the house down whenever he wanted roast pork.  The arbitration system is devised to provide a substitute for strikes and stoppages, to secure the reign of justice as against violence, of right as against might. ⁽³⁾

That the redoubtable Henry Bournes Higgins, perhaps the most tenacious myth-maker in Australia's modern history, could blandly assert these things after presiding over the work of the Australian system during one of the most disastrous periods of the country's industrial relations experience, is testimony to his total commitment to building up a particular system and to the power of propaganda. ⁽⁴⁾  Higgins set out in the nineteenth century to establish his vision of a particular industrial relations system in Australia and he made this his life's work.  He was not one to allow the reality of experience to dissuade him from his self-appointed mission.  To understand the tenacity of purpose that he displayed, it is necessary to refer back to events in the last decade of the nineteenth century.

Henry Bournes Higgins was one of the Victorian delegates to the various Constitutional Conventions of the 1890s.  While others had promoted the idea of establishing an arbitration system, it was Higgins, on the last day of the final session of the convention in 1898, who carried the day. ⁽⁵⁾  The subject had received little support on the occasions on which it had previously been debated. ⁽⁶⁾  It is important to note that even as late as 1898 there was considerable opposition to providing the proposed Australian government with any powers in the field of industrial relations. ⁽⁷⁾  (The traditional view has been that the industrial relations experience of the great strikes in 1890 was the reason for the establishment of the Australian system of industrial relations based on conciliation and arbitration.)

Higgins parried the opposition with an appeal that must have sounded statesmanlike:

I do not ask the Committee to say that arbitration shall be compulsory or even that any steps shall be taken to secure the settlements of industrial disputes -- I simply wish to give the Federal Parliament power to legislate on the subject ...  I merely want to leave the thing open and I think I may appeal even to those who are opposed to conciliation and arbitration in industrial disputes in this respect ... ⁽⁸⁾

Finally, a vote was taken and Higgins's proposal was adopted 22 votes to 19. ⁽⁹⁾  By a mere three votes after seven years of debate, the Australian Constitution included the well-known nineteen words in Section 51(xxxv) which led -- six years later -- to the setting up of the Australian ⁽¹⁰⁾ conciliation and arbitration system.

The uneven course to the 1898 decision, and the narrow voting margin cannot be viewed as support for arguments that the stream of history flowed inevitably in the direction of the establishment of an Australian conciliation and arbitration system.  Nor did events justify the mythical assertions about the emergence of "a New Province of Law and Order".

Political fear

While three ministries fell in the first four years of Federation over the introduction of arbitration legislation, it is the dramatic events of 1929 that most loudly ring alarm bells in the minds of politicians when the question of changing the industrial relations system is raised.

In that year, Prime Minister Bruce proposed repealing the Conciliation and Arbitration Act.  Much of that year's election campaign centred on this issue.  Bruce not only lost the election;  he also lost his seat. ⁽¹¹⁾  Bruce later became Lord Bruce of Melbourne.  As one commentator put it:  "... disapprobation, elevation and castration, all on the altar of arbitration ..."  Is it any wonder that tremors of fear run through the corridors of power whenever anyone mentions legislative action to change the system?

Institutional momentum

It is no easy task to master the intricacies of and become expert in the elaborate procedures which characterise the Australian conciliation and arbitration system.  Large numbers of extremely competent people dedicate their lives to making the system work.  Large and complex organisations have been established to represent the interests of the various actors in the system.  The system only works as well as it does because of the expertise and dedication so many people bring to their appointed tasks.  Because of the demands upon the participants, it is unlikely that detailed proposals for changing the system would emanate from them.  Rather, it is more likely that a conservative reaction critical of any such proposals would be forthcoming from those most closely involved in the system.

Dabscheck has postulated that the Commission itself "... behaves as if it is motivated by the instinct to survive ...", ⁽¹²⁾ and others have asserted that "... management, unions and tribunals have become a common interest group concentrating on short term compromise solutions rather than tackling more basic issues.  The arbitration industry is self-perpetuating. ⁽¹³⁾

The authors believe that there is some force to these assertions and that they have to be recognised as relevant in any analysis of the reasons for the survival of the system.  It has been argued elsewhere that it is the attitude of people that is important and not the institutional structure;  that better industrial relations will come from changing attitudes and not from changing the system.  The author here contends that the rules of the game will influence the way people play the game, and that the system needs to be changed to make the central actors, the employers and the employees, more directly involved in and responsible for industrial relations decision making.

WHAT CHANGES SHOULD BE MADE, AND HOW?

It is the view of the author that "revolutionary" or "imposed" change to the system is neither possible nor desirable.  The Australian community as a whole would need to perceive the advantages that would flow from change.

An Australian model

There is no reason to assume that any particular model of collective bargaining should be imported into Australia.  The existing institutional structure could be modified to establish a purely Australian model.  A Conciliation Commission could be established, under the umbrella of which decentralised collective bargaining could proceed.  The registration of agreements could proceed along similar lines to those in the United States of America.  Section 51(xxxv) of the Constitution could still provide the authority for this national framework;  alternatively, the Trade and Commerce power in Section 51(i) of the Constitution could possibly be the source of authority.  The wording of the trade and commerce powers is identical to that in the United States Constitution, and it is that power which underpins legislative control of the American labour relations system. ⁽¹⁴⁾

The States

An obvious question:  what of the State systems of arbitration which could conflict with the proposed enterprise by enterprise system?  There are three major responses.  First, it would be preferable, if there were a strong national consensus for change, for the States to withdraw from the regulation of industrial relations matters;  alternatively, they could pass complementary legislation.

Second, if the first response is not possible, federally registered agreements would, as today, override conflicting State agreements.

Third, State systems of arbitration can coexist with a nationally based system of collective bargaining.  No less than eighteen states of the United States of America have legislated for compulsory arbitration for some categories of public employees, and compulsory arbitration "is becoming especially common in statutes applicable solely to police and fire fighters". ⁽¹⁵⁾

There seem to be, in the opinion of the author, no legislative impediments to the establishment of a different institutional model of industrial relations in Australia.  The impediments lie elsewhere;  their relevance and validity need to be tested.

UNION STRUCTURE -- NECESSARY CHANGES?

This is not a central issue in the argument for reform of the system.  The arbitration system has certainly fostered the growth of unions, 15 but the usual arguments that there are too many unions in Australia are overstated as problems for industrial relations.  Nearly one third of the unions registered under the Conciliation and Arbitration Act are associations of employers.  Overseas experience allows no conclusions to be drawn about the relevance to Australia of the number and type of unions which may be appropriate for an effective industrial relations system oriented to collective bargaining.

Whatever reforms an appropriate body might consider desirable for union structures, these reforms would be peripheral to the fundamental issue of reform of our institutional structures in industrial relations.

IMPERATIVES FOR CHANGE -- INDUSTRIAL RELATIONS ARGUMENTS

The adversary system

Anyone who has attended arbitration proceedings can see that the court room procedures of the Commission heighten the atmosphere of conflict in industrial relations issues and can be seen as a force acting against the development of constructive co-operative relations at the enterprise level.  A major problem with this sort of system, with the rituals of the Court (the bowing to the Bench, the calling on of cases, the swearing in of witnesses, the whole paraphernalia of examination, cross-examination and re-examination of witnesses in open court with media representatives present) is that the "advocates" for the parties to a formal dispute are very much on trial themselves for their performance.

The "advocates" or professional mouthpieces are there to win for their clients, and individual conflicts can occur between them which may do little for the parties and certainly nothing for human relations between employers and employees.  Verbal "blood-letting" in the court-room has led to appropriately worded admonitions by the Commission from time to time.  The contests between the advocates, and between the parties, are very much public affairs.  "Industrial roundsmen" from the media are generally present, and the more dramatic the conflict, the more likely the whole story will appear on the front page of newspapers and on the radio and television news.  The battleground atmosphere of the court proceedings is in no way lessened by the attitudes of the arbitrators, their expectations of the advocates and the potential that any hearing has for appeal proceedings, either on matters of merit or law.

While arbitrators do not assume an attitude of intellectual tabula rasa at each hearing, it is precisely because an arbitrator will be influenced by his past experience and knowledge, ⁽¹⁷⁾ that industrial tribunals have stated:

[I]t becomes so important, particularly in matters of major significance, that parties appearing before a tribunal should exhaust all possible avenues to ensure that all matters which may have relevance to a proper conclusion are fully ventilated. ⁽¹⁸⁾

As appeal proceedings are normally not argued de novo ⁽¹⁹⁾ but on the decision of the arbitrator arising from the matters before him, there is clearly point to the observation quoted above;  but the detailed, ritualistic, and not infrequently antagonistic unfolding of events in this way can be an alienating process for the people at the level of the enterprise.  Further, even if something is "gained" by a union at a "hearing", it very often is seen as only a partial victory and the flames of discontent can be kept burning for the next approach to the Commission.  The "award" may simply be seen as an instalment.  A system less suitably designed to improve employer-employee relations is hard to imagine.

Employment policies -- complicated and confused by Federal-State Systems

The constitutional division of industrial relations power between the Commonwealth and the States has resulted in the development of competing and more than occasionally conflicting federal and State industrial tribunals.  A State commission may reject a claim for an allowance, based on certain criteria, for certain employees, yet the federal commission may grant an allowance based on the same criteria to people working alongside the first employees but under a federal award. ⁽²⁰⁾  The consequences for employer-employee relations, especially when the one employer may employ people under both federal and state awards, are easily imagined.  Dissatisfaction, disruption, and strained employer-employee relations follow, until some financial accommodation can be reached.  Regrettably, even after an issue such as this is resolved, nothing has been done to improve inter-personal relations on the job.  For example, at intervals during the period of wage indexation 1975-81, the Australian and Western Australian Commissions were pursuing different policies. ⁽²¹⁾  It may not be taking too jaundiced a view to suggest that such inconsistency of decision making by the tribunals can actually cause disputes, particularly when the complexities of both federal and State awards can impinge on the one employer.

That there has not been a massive groundswell of resentment against the irrationality of a system -- or systems -- of industrial relations which necessitate multiple employment policies in the one establishment, is testament to the long-suffering nature of personnel and industrial relations practitioners in this country.  One employer in Perth is bound to no less than 32 federal and State awards.  Not only have these been amended at different times for rates of pay, but provisions for sick leave, overtime, ratios of juniors to adults, and many other provisions, also vary from award to award.  During the period of wage indexation, 1975-81, general wage increases also varied as to amount and timing. ⁽²²⁾

The potential for disruptive employer-employee relations is obvious;  the difficulties in the way of developing a rational employment policy are also obvious.  Such problems were further compounded in December 1982 when the Western Australian government proclaimed legislation that prohibits "preference of employment" for unionists under State awards. ⁽²³⁾  So what is obligatory in employment policies concerning people employed under federal awards is absolutely prohibited in relation to employees employed under State awards in Western Australia.

Is it any wonder that industrial relations in Australia more than occasionally resembles the Mad Hatter's tea party, and has led to the suggestion that Lewis Carroll may well provide a reference point for those trying to unravel the mysteries of what we loosely call the Australian system of industrial arbitration.

UNREALITY OF REMOTE ARBITRAL PROCESSES

The artificial atmosphere in which arbitral decision making occurs inevitably leads to inappropriate, irrelevant and often quite damaging economic and industrial consequences for many employers who have no direct involvement in proceedings.  That this so often occurs is not necessarily the fault of the arbitrator, who has to work within the framework of the system, a system so structured that inflexible centralised decision making is inevitable.  A striking example of this was the decision of the Australian Conciliation and Arbitration Commission in the 38-hour week issue in respect to the building industry, in January 1982. ⁽²⁴⁾  This was a Full Bench decision of the Commission from which there were no rights of appeal.  One group of employers, the National Industrial Executive, which represented the various Master Builders' Associations and the Australian Federation of Construction Contractors, had reached agreement with the respective unions on the introduction, among other things, of the 38-hour week.  As far as these employers were concerned, a 19-day month with a set, unalterable rostered day off every four weeks was acceptable, and they sought with the unions to have the award amended accordingly.

A great many other employers, however, working both directly and indirectly in the building industry in all States, and bound by the pecularities of "respondency" to observe that award, took strong exception to the suggestion that they have imposed upon them a "deal" to which they were not a party, and which was quite inappropriate for their particular operations.  While these employers saw little point in resisting the introduction of the 38-hour week at that time, what they did quite reasonably seek was flexibility in its introduction.  They argued that, particularly in mixed industry sections, a total close-down every fourth Monday was impractical and disruptive, as only a portion of the workforce (those bound by these awards) would be rostered off while other operations continued.

The three learned persons on the Commission, sitting in Melbourne, noted that "... there was opposition on the part of a number of employer associations to the method of implementation ...," ⁽²⁵⁾ but later said "... We acknowledge the desirability of maintaining a flexibility on the institution of any major change to the operations of working methods of employers in this industry.  At the same time we are reluctant to depart from the terms of a package which has been negotiated between the major parties to the awards." ⁽²⁶⁾

The sensible, rational thing to do, one would have thought, would be to allow these "willing parties" to a rigid system of a rostered day off to have what they wanted and at the same time allow those who wished to have flexibility to avoid disruption of employment patterns and trade to follow that course.  Not a chance.  Every employer in Australia bound by the awards, regardless of the composition of his workforce, or the multi-industry nature of his enterprise, was ordered to follow the purely construction deal of a 19-day four weekly cycle.  There was no apparent consideration of the consequences for enterprises whose workforces were also covered by State awards, or other awards of the federal system.

Cargo cult mentality

It can be argued that remote decision making by Australian arbitrators -- strangers to the enterprise -- has actually inhibited the development of constructive employer-employee relations and bolstered views that the market and its economic pressures are irrelevant in setting working conditions.

From the earliest times, the industrial tribunals have taken the view that the settlement of disputes and the setting of appropriate rates of pay could be done without regard to the economic consequences of their decisions.  In 1909, Mr Justice Higgins ruled that the federal Court could not prescribe a lower rate in order to keep an unprofitable mine going. ⁽²⁷⁾  Professor Shann pointed out in the 1920s that "... the propriety of a wage the legal award of which would abolish other jobs was not plain to the copper-miners at Wallaroo and Moonta in South Australia in 1921." ⁽²⁸⁾  The workers very sensibly arranged with management for a fluctuating wage having regard for the price of copper and thus they preserved their jobs.

Nevertheless, over the decades, the industrial tribunals have implicitly and explicitly behaved as though their institution has been able magically to overcome the reality of the market.  According to Mr Justice Higgins in 1907, fair and reasonable wages "... must mean more than the level set by the barbarous higgling of the market", ⁽²⁹⁾ and as late as 1981 an industrial tribunal could say:

The primary function and responsibility of the Commission is the prevention and settlement of industrial disputes ... the Commission is not responsible for the management of the economy. ⁽³⁰⁾

Coupled with statements of apparent pride over the years in furbishing the cherished doctrine of comparative wage justice that purports to allow the setting of uniform rates of pay for each classification across a variety of industries without regard for the state of these industries, ⁽³¹⁾ is it any wonder that there has been a lack of awareness of economic reality by workers at the enterprise level?  There has always seemed to be another money basket out there in the Commission, which can be unlocked in response to incantations recited before an industrial altar.  It has not helped matters that the arbitrators in the rarified court room atmosphere "hand down" decisions or judgements concerning money, or "award" money payments, and then issue "orders" for the new law to be observed -- by employers.  Even the word "award" means a prize or a payment and adds to the "lucky dip" mentality in the wage setting area.

The grim reality of market forces finally caught up with Australia in 1982-83, when the lucky country exhausted its capacity to cope with the unrelenting pressure for higher wages and reduced hours of work, regardless of economic capacity.  Unions, however, appeared to be so conditioned to the cargo cult that even in the face of massive unemployment and support for a wage pause by seven Australian governments (including three state Labor governments) and a National Wage Bench decision establishing a wage pause, ⁽³²⁾ the ACTU resolved on 18 January 1983 to refuse to cooperate with the Arbitration Commission's six-month wage freeze.

The cargo cult syndrome also owes much to the manner in which "national productivity" has been distributed through national wage cases over the years.  The total absurdity of a group of people sitting in a Melbourne courtroom purporting to determine, by little better than witchcraft, the economic capacity to pay wage increases of over 400,000 enterprises in Australia, from a bicycle shop in Northam to the SEC in Victoria, has only to be stated to be seen for what it is.  Yet year in, year out, the solemn rituals are observed by people described by Professor M. Fisher as having "... no special skill -- and as the government of the day has to accept their decisions they in effect have the power to determine unemployment, as they do not know whether or not the Government will validate any inflationary settlement by monetary expansion." ⁽³³⁾  I do not question the integrity or general capacities of the arbitrators.  The system simply requires that the people involved act out a charade.  As one astute observer put it:  "... It is almost as if a medieval ecclesiastical court took over the economic planning of Australia." ⁽³⁴⁾

The Australian community accepts the system because it is there, and also because of the myths that have developed about its virtues.  These myths are discussed elsewhere in this chapter.  There is a growing realisation that the real objective of Australian industrial relations must be to get decision making back to the level of the enterprise.  The cargo cult could be dissolved in this way.  But effective developments to this end are not occurring in spite of the existence of quite compatible policies on employee participation that have been officially adopted by employers, unions and all political parties. ⁽³⁵⁾  Employee participation has become a "motherhood" subject in industrial relations:  everyone subscribes to its virtues but there are few signs of increased participation.

It can, moreover, be argued that the existence and pervading influence of the Conciliation and Arbitration system are enormous barriers to development in this area.  The Australian Treasury perceived this and responded explicitly in August 1982:  "... A more decentralised approach to wage determination which worked to reduce the rigidities in the wage system by bringing the focus of responsibility for bargaining outcomes closer to the workface and to the fortunes of the individual firm involved -- and its employees -- should assist ... both sides of the bargaining table, management and employees alike, to take into account the inescapable economic inter-relationships between wage levels, price competitiveness, profitability and employment ..." ⁽³⁶⁾

The law -- a barrier to dispute settlement and a cause of disputes

In many academic publications, industrial relations is described as a multi-disciplinary area at the crossroads of economics, politics, psychology, management, law, and history.  In the Australian system, emphasis is placed on law as the pre-eminent basis for industrial relations.  The most senior members of the Australian Commission are former legal practitioners and their appointment as Deputy Presidents of the Commission provides them with the designation, rank and status of a judge. ⁽³⁷⁾  The President of the Commission must have been a barrister or solicitor of the High Court or of the Supreme Court of a State or Territory of not less than five years' standing. ⁽³⁸⁾

Inevitably there is an emphasis on legalistic rituals which can cause legal disputes to have precedence over actual industrial disputes.  This can cause delays which can inflame industrial issues and, at the very least, do nothing to improve employer-employee relations on the job.  Additionally, the rights or wrongs of matters being decided on fine legal points not only adds an air of unreality to industrial relations but can produce absurd consequences.  The formal side of proceedings, the institutional side, takes on a life of its own, and the matters or dispute in issue become incidental to the orderly life of the court system and the participants in these hearings.  Not infrequently, a matter at issue in some remote part of Australia, for example the Pilbara of Western Australia, will be listed for hearing in Melbourne or Sydney.  This meets the convenience of the Commissioner and the barristers involved.  It also ensures that the workers and employers actually in dispute do not participate in nor are in a position to wonder about the mystical proceedings of the professionals.  Decisions by members of the Commission are frequently "handed down", not merely in another State from the area of dispute, but in another State from that in which hearing took place.

Unreality of remote proceedings -- the High Court

It is not to the credit of the system that so many industrial relations cases come before the High Court.  And it is even less satisfactory that the issues can get lost in fine legal points and even finer points of language, once the matters become enmeshed in the rarified, esoteric world of that august body.  The spectacle of learned men bending their undoubted intelligence to determine the best "legal" response to issues can be awe-inspiring.  The results of their deliberations can, however, appear quite unrealistic and occasionally can be quite harmful in the area of industrial relations.

In a famous case dealing with the Australian Conciliation and Arbitration Commission's jurisdiction to grant "preference of employment" to union members, one of the five High Court judges had this to say about the particular "preference" clause which was the "vehicle' for the case:

[T]he wording of the proviso to Clause 2(a) appears involute and to have aberrations of tenses and in the use of the subjunctive mood.  But if the meanings of both the protasis and apodosis sufficiently emerge we need not be concerned by inelegancies appearing on a syntactical analysis ... ⁽³⁹⁾

The learned judge did point out that:  "... The question is not one of lexicography but of semantics in the proper sense of that word.  It is the concept of preference in employment as understood in the context of Australian industrial law." ⁽⁴⁰⁾  It is, of course, the complexity and convoluted nature of Australian industrial relations law which produces the sorts of verbal wonders and other worldliness quoted above.

Another example is provided by the remarkable High Court decision which was delivered in June 1981 in connection with a demarcation dispute over the rigging work on the construction of the Omega navigation transmitter tower in Victoria. ⁽⁴¹⁾  The disputing unions were the Federated Iron Workers' Association (the FIA) and the Australian Building Construction Employees and Builders' Labourers' Federation.  The history of events that led to the High Court proceedings would justify a study in its own right.  Suffice to say that the Arbitration Commission had determined that the FIA members were the workers appropriate for the task which in essence was the construction of a communications tower.  The constructor's description says:  "A typical Omega transmitting installation consists essentially of a 427 metre high steel lattice mast supporting from the top an umbrella of antennae consisting of 16 cables radiating out and down to concrete anchor blocks on the ground." ⁽⁴²⁾

The unions' rights to coverage of the work turned on whether the construction was a "structure" or a "building".  The Commission had held both at an initial arbitration and in a Full Bench appeal decision that the work was not a building but a structure.  Finally, the High Court, in a split 3-2 decision, found that the words in the BLF constitution referring to "building operations" were wide enough to embrace the work which thus became considered a building.  Two of the judges, however, found that the mast was not in fact a building.

This sort of exercise demonstrates the artificiality of such decision-making in industrial relations.  Although a total of only 13 workers were covered by the decision (there were more people actually participating in the appeal proceedings), the decision resulted in a campaign being unleashed around the country by the BLF to make further inroads into areas of work covered by the FIA and the AWU. ⁽⁴³⁾  It can be argued that the remarkable decision, which demonstrated that five learned judges could not determine unanimously whether a steel tower was a building or a structure, actually caused industrial disputes right across Australia.

Less than eighteen months later, in yet another case on not dissimilar "constitutional" arguments involving the BLF, FIA and the AWU, the High Court took a much narrower interpretation of "building operations" (thus a decision more consistent with the minority decision in the Omega case) and in a 6 to 1 decision rejected BLF claims for work on electricity transmission towers, steel tanks, a furnace stack and a structural steel framework at a power station. ⁽⁴⁴⁾

There really has to be a better system than this.

Bureaucratic inflexibility

An appearance, at least, of institutional infallibility emerges when the inflexibility of policing machinery set up to enforce the pronouncements of the Arbitration Commission is considered.  Despite the fact that the economic downturn through 1981 and 1982 hit firms at different rates and at different times, workers and employees were sternly forbidden by the Australian Commission and its watchdog, the Industrial Relations Bureau, to alter the purity of awards in order to save jobs.  In other words, those best placed to assess the impact of economic forces on the operations of enterprises are forbidden under the rules of the Australian system from making appropriate arrangements amongst themselves.  With emptying order books and workshops to match, many employers, in order to preserve jobs and retain their workforces, opted to work a four-day week.  Faced with the option of 80 per cent of a week's work and appropriate pay, or no work at all, workers had little difficulty in making a decision. ⁽⁴⁵⁾

Similarly, union officials generally had little difficulty in accepting these developments.  Not so the guardians of Australia's sacred institution, the Conciliation and Arbitration Commission.  One member of the Commission recognised the merits of the arrangements but had to point out that they were illegal and could have adverse consequences if a worker or workers decided to press for a complete week's wages as set out in the awards. ⁽⁴⁶⁾  The then watchdog for the system, the Industrial Relations Bureau, was rather more blunt about it:

Parties who fail to bring themselves into conformity with legal requirements when requested, or are unduly tardy about it, can expect that the Bureau will take appropriate action to secure the award provisions. ⁽⁴⁷⁾

The sanctity of the law clearly has precedence over economic reality in the area of industrial relations.

Given what some perceive to be the Australian predilection for bureaucratic social models, ⁽⁴⁸⁾ it is not surprising that people at the centre of the system apparently did not see the incongruity of the sanctity of official rules prevailing over the livelihood of real men and women.  These matters alone provide a strong argument for decentralising decision making in industrial relations in Australia.

Lopsided compulsion -- or periodic impotency

The capacity of the system to discipline employers who breach the awards or the Conciliation and Arbitration Act, and its almost total incapacity to discipline recalcitrant unions, have taken employers to a point of despair and rendered the enforcement procedures a farce.  The system has become a compulsory arbitration system in the sense that only employers are compelled to obey it.

In 1981, a Full Bench of the Commission dealt with an application by the Metal Trades Industry Association for a determination on standard hours of work.  The application sought, among other things, an endorsement of the 40 hours standard for the forthcoming three years.  The respondent unions did not bother to attend the hearing which resulted in the employers' application on the 40 hours being granted, although the retention period was set at two years. ⁽⁴⁹⁾  The consequent events are now history.  Unions embarked on a massive campaign of industrial action which disrupted, at enormous cost, the metal industry in New South Wales, Victoria and Queensland.  Within months the 38-hour week and wage increases were wrung from a shattered industry.  The Australian Conciliation and Arbitration system and the Industrial Relations Bureau viewed the battleground from afar, although the Commission did chair the armistice talks and record the capitulation of employers.  The contribution of these events to the rapid increase in unemployment in 1982 has been noted elsewhere, ⁽⁵⁰⁾ so it was a pyrrhic victory for union members.  It would be difficult to avoid the conclusion that the unions involved treated the system with total contempt as they proceeded by means of the application of force to gain their objectives, illusory though these were.

These events have done more than anything else in recent times to destroy the credibility of the Australian system of industrial relations.  The assumption by the unions that the system was not capable of providing any control mechanisms except against employers was borne out.  Significantly, there are now signs that employers are looking more to the civil jurisdictions to redress the balance of power in industrial relations. ⁽⁵¹⁾  This could be a firm evolutionary step towards a collective bargaining structure.

The Arbitration Commission, which has always had a strong instinct for survival, has always had to gauge how firm it could be with unions without losing their custom.  This has been long recognised. ⁽⁵²⁾  The Commission has been less concerned about reactions of employers.  On a recent notable and remarkable occasion, one member of the Commission was even prepared to order employers to pay additional monies to employees to enforce changes in work practices and management.  With a naivety that borders on the incomprehensible, the commissioner said that he would cease to require the employers to pay the special amounts when conditions improved so as to "... eliminate day-to-day work frustrations." ⁽⁵³⁾  In effect, the commissioner was fining employers and directing the employers to pay the fine to employees.  The whole matter, not surprisingly, became the subject of appeal proceedings, but the event and the metal trades matter referred to above demonstrate that it is far easier for the Commission to be firm with employers than it is for it to discipline unions.

This has caused the system to lose a great deal of credibility, and has led to people suggesting that, in order to survive, the Commission has to seek the custom of the very unions that the system created.  Employers, on the other hand, are forced to come before and abide by the decisions of the system once the unions decide to take their business to the Commission.  It is only in times of market downturn that the Commission can afford (as a "survivor") to be tough with unions.  "Apparently tough decisions can be handed down as unions have lost the ability to gain concessions elsewhere." ⁽⁵⁴⁾  Even in these situations it can be argued that it is the unions and not employers who benefit from the system as the market in recession applies its own discipline.

The pulpit syndrome

Perhaps because of the emphasis placed on legal trappings in the Australian industrial relations system, arbitrators in many cases have developed a penchant for delivering pseudo-judicial pronouncements along with whatever the dispute-settling formula may be.  Insofar as such literary excursions expatiate on legal precedents and extracts from various pieces of legislation, they do little harm other than to consume an excessive amount of the time of people who are obliged to read them.  Unfortunately, some arbitrators use the decisions to launch attacks on employers and unions and frequently expound at length their value judgements about the behaviour and capacities of the parties to the dispute. ⁽⁵⁵⁾  These tirades are very damaging to employer-employee relations, can be damaging commercially where an employer is involved, and certainly harm the public image of the parties concerned.  Such performances do not contribute to improving relationships at the workface.

The development of a conciliation and decentralised collective bargaining model of industrial relations would eliminate this particular hazard from the field of industrial relations.

The public interest -- or who is running the country?

Dabscheck has examined the role of governments as opportunists in the world of industrial relations and postulated that "appropriate" industrial relations policies will often form part of electoral strategies for survival. ⁽⁵⁶⁾  These policies will range from confrontationism to neutrality.  Each approach has had varying degrees of positive or negative influence.

How is it possible for governments to maintain such a high profile, such important roles, often interventionist and occasionally mischievous, in industrial relations in Australia?  The answer probably lies in the emphasis given to the "public interest" in industrial legislation across the country.  The government, as one of the recognised actors in the scheme of things, has a permanent watching brief over all matters before the tribunals and can intervene virtually at will.

It seems clear that the present institutional model of industrial relations in Australia encourages and facilitates the involvement of governments in matters that would not attract such interventionist roles in other countries.  The authors are of the view that a diminution in the role of governments in industrial relations would be in the interests of improving employer-employee relations.  Such diminution is not likely to occur unless the institutional structure is changed to one of decentralised collective bargaining.

Big is beautiful -- or zoological wonders of the south

I referred earlier to the prominence given by the media to industrial relations issues, and to some of the reasons for this and some of the resulting problems.  Central to the whole problem of the public nature of industrial disputation, however, is that a dispute, by definition, has to be big before the Arbitration Commission can legally act.  A dispute has to extend beyond the "limits of any one state" ⁽⁵⁷⁾ before it can come within the jurisdiction of the Commission.

Apart from the criticism that may be levelled at a system which allows a total stranger (that is, the arbitrator) to set working conditions for an enterprise he may not have seen and may never see, the very nature of these exercises in dispute finding ensures that "disputes" are never small and ensures a continuing and major arbitral role for the Commission which, in itself, may not be in the interests of closer employer-employee relations at the enterprise level.  Reinforcing the "larger than life" dispute structures arising out of such charades is the question of "ambit".  An arbitrator in the Commission can only issue an award on matters in which the parties are in dispute.  "If a clause in an award is not within the limits or ambit of a dispute, then it has been made without jurisdiction." ⁽⁵⁸⁾

Consequences of this are the grossly inflated claims lodged by unions in "letters of demand".  Unfortunately these exaggerated claims may serve to create unrealistic expectations in the community and do nothing to diminish the cargo cult syndrome.

Garran has also pointed out the philosophical or metaphysical problem posed by the Constitution allowing the Commonwealth to legislate (as it has done) to provide the means for the prevention and settlement of disputes extending beyond the limits of any one State.  A dispute can only be prevented before it comes into existence.  "But before it exists, how can it extend?" ⁽⁵⁹⁾  Truly a jurisprudential and semantic wonder from the antipodes to match the biological wonder of the kangaroo and the duck-billed platypus.

IMPERATIVES FOR CHANGE -- ECONOMIC ARGUMENTS

Economics, industrial relations, wages and employment

There is a strong (and to my mind a deplorable) tendency among the bright young labour specialists, not merely to let economics go by default out of ignorance, as was customary among the older generation of writers on this subject, but to cast it out of the window bodily, with shrill cries of jubilation.  One can hardly pick up a new book on labour nowadays without finding the author jumping gleefully on what he thinks is the corpse of demand and supply, or proclaiming with trumpets, "The labour-market is dead, long live human relations!" ⁽⁶⁰⁾

The view that, because labour relations is concerned with "living, breathing, emotional human beings" and/or "powerful union 'monopolies' ", the labour market is not like other "normal" markets for goods and services and hence the lessons of economic theory are not applicable, has a long history in Australia.  The redoubtable H.B. Higgins, referred to earlier in this paper, was quick to express his contempt for the "so-called" economic laws of supply and demand, in effect declaring them dead. ⁽⁶¹⁾  That those responsible for presiding over Austalia's industrial relations systems should have had scant regard for "cold" economic reality (compared to the "warmth" of human relations) is hardly surprising.  As Hancock has commented:

[A]n important part of the history of Australian arbitration consists of the efforts of men with no formal training in economics to understand the economic implications of alternative courses of action. ⁽⁶²⁾

But it is more surprising when a member of the Commission, with a very strong background in economics (a rare exception), is not more careful with his choice of words and perhaps inadvertently adds to the myth that supply and demand do not operate in the labour market.  For example:

It will be obvious from what I have said that the determination of wages is not the result of a freely operating labour market ...  The "sale" of labour services is different from the sale of inanimate objects.  Human feelings about what is fair and unfair are involved and those feelings can be harnessed and given effective expression by organised action on the terms of employment at the negotiating table and in the field.

It follows also that ... the price of labour is not determined in an impersonal way by the forces of supply and demand. ⁽⁶³⁾

The author suspects that what Deputy President Isaac meant was not that supply and demand do not operate in the labour market, but rather that the labour market does not operate according to the results predicted by "ideal" neo-classical economic theory. ⁽⁶⁴⁾  That is, he was not implying that the "invisible hand" did not exist, but rather that it had more than one thumb.  A quick reading of statements such as this one unfortunately reinforces the views of those who would like to deal with industrial relations regardless of economic constraints.

The real issue, however, is to consider whether the final economic result (in terms of wages and employment) would be different under collective bargaining compared with Australia's present centralised compulsory arbitration system -- and whether the different result would be preferable.

Collective bargaining

Some commentators and people within the system ⁽⁶⁵⁾ argue that Australia had a situation of decentralised collective bargaining during the second half of 1981 and 1982 (led by the Metal Trades round) and that the experience should convince everyone that it is not desirable to move away from the present system.  The authors do not accept that this was decentralised collective bargaining nor, in particular, that the results of that wage round reinforced the so-called advantages of centralised arbitration.  The particular situation of late 1981 and 1982 is better described as the worst of both worlds.

First, it was centralised wage fixing.  For instance, only two parties represented the employers and the unions.  What role did small metal fabrication shops play in that particular process?

Second, negotiations took place with the arbitration system in the background.  Both parties knew that once an agreement was reached, it would be possible to have it recognised by the Commission so it would flow through to all workers in the metal trades area throughout Australia and, perhaps just as importantly, so that no competitive advantage would be lost.

As has been mentioned previously, the authors have no particular view of a formula for an Australian system of collective bargaining.  A central theme running though this chapter is, however, that decisions about wages and industrial relations should be made by the parties directly involved;  that is, those decisions should be as decentralised as possible.  While there is a compulsory arbitration system in the background as a last resort, the sense of responsibility for one's own action will not be achieved.

The metal trades round of 1981-82 was not collective bargaining.  But what it did illustrate was the flexibility of the Commission as discussed above.  This flexibility might, in part, explain the system's survival.

Survival of the Commission

If the market forces (even though modified by social forces or monopoly power) are largely responsible for the level of real wages and employment in Australia, particularly over longer time periods, then how does one explain the long survival of an institution that attempts to regulate wages?  Does the arbitration system follow the market and in its decisions establish wages that are generally consistent with market forces?

That the system has survived because it has followed the market is a view frequently expressed by commentators on the Australian industrial relations scene.  For example, Blandy has said:

It is my view that although the Commission sometimes does not follow the market, mostly it does follow the market, for otherwise it would not have survived. ⁽⁶⁶⁾

and Hancock:

In the end, the tribunals bend to economic and industrial pressures, external to themselves ... their success in doing so may be the secret of their survival. ⁽⁶⁷⁾

This is not to say that the Arbitration Commission produces a similar result to a freely competitive labour market.  Rather, given the various sources of monopoly power and the social considerations that may exist in their own right regardless of the system,

it is likely that in most cases the compromise reached under one system [of industrial relations] would not be very different from the compromise under the other. ⁽⁶⁸⁾

Whether the arbitration system has established its own social forces, and so could give a different result, is discussed later.

Some commentators have argued that trade unions are dependent on the system for recognition and effectiveness. ⁽⁶⁹⁾  I have argued elsewhere in this volume that,

Trade unions are organisations established under the Conciliation and Arbitration Act to carry out the purpose of that Act and their existence as democratically governed organisations is a by-product of the Act's assertion that such organisations are necessary for the Act's purposes ...

Australian unions are a part of the State ...  They are creatures of the State, yet not subservient to it -- unruly principalities rather than vassals ...

It is no great revelation, to observe that union principles have "captured" the arbitration tribunals.  The tribunals were established not to control unions but to encourage them;  not to protect the public from irresponsible unions but to protect them from a greedy public. ⁽⁷⁰⁾

To the extent that the existing system has encouraged and increased any monopoly power of the trade union movement, this would result in a higher level of real wages and a lower level of employment -- higher unemployment -- than would exist in the absence of the arbitration system.

Absolute level of wages

One of the factors that will determine the final wage outcome is the "willingness" of employers to resist wage rises.  It can be expected that the greater the degree of competition in the product market (and hence the lower the ability of employers to raise prices) the greater will be the resistance to wage rises.  (The level of overall demand will also affect this "willingness" through its effect on prices.)

Evidence of this has been given in a paper by Brown et al. ⁽⁷¹⁾  In a study of the underlying factors influencing over-award payments in the Adelaide labour market in 1974, they concluded:

Establishment-specific effects dominate the results.  The second major conclusion is that the size of these effects is strongly influenced by the degree of competition (as measured by concentration ratios) in the product market.  Putting these two positive findings together, we conclude that it is not possible to divorce labour market processes from those in the product market. ⁽⁷²⁾

If the Arbitration Commission has somehow played a role in lessening the degree of competition in the product market, then the overall level of real wages could be higher (with higher unemployment) than would be the case under collective bargaining, particularly if the collective bargaining was very decentralised.  There are two ways this could have happened.

First, as I have argued,

Any wage increases which can be recouped by price increases will be less costly than the deadweight losses caused by an industry-wide strike, let alone a general one.  "Taking wages out of competition" by securing "comparative wage justice" between all comparable workers means that competitive pressures cease to help in restraining wage rises. ⁽⁷³⁾

Unless, that is, the competitive pressures are international ones.  While the notion of comparative wage justice is not unique to Australia (as will be argued later), it is true that the arbitration system does provide a means of ensuring that all are affected by a wage increase and that the granting of a "sanctioned" wage rise does not mean a competitive disadvantage.  Again, as will be discussed later, it may also be that the "flow-ons" occur more rapidly under the Australian system.

Second, and related to this, is the relationship between tariffs and the Arbitration Commission.  Leaving aside the overall argument for or against tariffs, it does appear that the dual existence of the tariff and the Arbitration Commission has, by removing competition in the product market, led to higher wages than would exist in its absence.  As Deakin explained it in 1907:

[New Protection] aims at according to the manufacturer that degree of exemption from unfair outside competition which will enable him to pay fair and reasonable wages.  [I]t does not stop there.  Having put the manufacturer in a position to pay good wages, it goes on to assure the public that he does pay them. ⁽⁷⁴⁾

That the duality of tariffs and compulsory arbitration has meant a higher wage level is put another way by Dabscheck and Niland:

[T]he emergence of industrial tribunals in Australia was linked to the erection of tariff walls, and ... the arbitration-tariff link is a significant feature of the political economy of Australian industrial relations.  The wage policies pursued by the Commission are one of the reasons Australia has such a high level of tariff protection. ⁽⁷⁵⁾

So far, this section has examined demand-side reasons for there being a higher overall level of wages under the arbitration system.  There is also a possibility that the existence of the system has led to more pressure from the union movement for higher wages than would otherwise be the case.  To the extent that the unions have monopoly power, this would tend to raise wages and lower employment.

The development of a "cargo-cult" mentality under a system of centralised arbitration has been discussed earlier.  The removal of wage decisions from those most directly affected by those decisions gives an unreal picture to employees of the effect that wages could have on their employment.  It is possible that this would lead to unrealistic expectations on behalf of union members which they expect their elected representatives to fulfil.  Even if the union leaders understand "economic reality", the present system does nothing to make their "employers" -- the unionised workforce -- understand the same economic reality.

If employees were more directly involved in and responsible for wage determination and more aware of the impact those decisions might have, it is possible that wage claims would be more relevant to the current economic climate than is currently the case.

RELATIVE WAGES AND COMPARATIVE WAGE JUSTICE

One of the most widespread myths surrounding the Australian industrial relations system is that it produces a more equal wage distribution than would exist in its absence.  Supporters of the existing system contrast this fair, egalitarian approach, protecting the weak and restraining the strong, with collective bargaining where power struggles are said to be the order of the day and the weak fall by the wayside.  Comparative wage justice is said to be unique to the Australian system.

It is surprising that this myth continues to exist despite considerable evidence that it is incorrect, and no evidence (at least that the author is aware of) that the relative wage structure is much different from that applying in other countries.  Comparative wage justice is not unique to Australia.  It is a concept well established in other countries, although under different labels -- "fair wage comparison" in Britain and "pattern bargaining" in the United States, for instance.

I do not propose to deal in depth with this question but rather to take it as read that the Arbitration Commission does not perform an egalitarian role by compressing wage relativities:  first, because the myth is perpetuated not by detailed studies but rather by "throw-away lines" in the public pronouncements of those groups party to or supportive of the existing system;  and second, because Rowe has published a paper dealing at length with this specific topic.  The conclusion of that paper is:

Previous studies, the new evidence presented, and the explanation of the forces at work in wage determination all combine to suggest that the Australian relative wage structure would not be very different under collective bargaining in times of either full employment or high unemployment.  The widely held view of the compulsory arbitration system being more egalitarian than collective bargaining is contradicted. ⁽⁷⁶⁾

What is less clear is whether the similar wage structures occur because of similar social forces (such as a desire for comparative wage justice) or because of the underlying pervading influence of market forces regardless of the system, or both.  The evidence suggests similar relative (not absolute) wage structures in countries with widely divergent systems of wage determination and levels of unionism.

If the need is for wage restraint, as was argued earlier in this part of the paper, then Corden has raised the possibility that if the Australian system was more egalitarian, the effect would be adverse:

If the Arbitration Commission and the various state tribunals played no role at all, so that we had a new-model collective bargaining system, comparative wage justice principles would still affect the final wage structure outcome to some extent.  This is clear from the examples of other countries like the United States and Britain where collective bargaining prevails. ...  But it seems highly likely that the centralised system is relatively more committed to comparative wage justice.  As long as the Arbitration Commission and the state tribunals play their part and yet are unable to discipline the strong unions, the competition between the two principles (bargaining power principle and comparative wage justice) will be worse than if they stayed right out.  The "flow-on" will be more rapid, the general wage push therefore greater, and thus unemployment and inflation more severe. ⁽⁷⁷⁾

Note here that the view of comparative wage justice being more central to Australia's system is a feeling, not a supported fact.  However, it does raise the question of the speed at which "flow-on" takes place.

The speed of "flow-on"

While the relative wage structure in Australia might be related to the existence of the Arbitration Commission, several commentators in addition to Corden have raised the possibility that wage rises granted in one area may flow more quickly to other areas under the arbitration system. ⁽⁷⁸⁾  There are reasons why both employers and unions would wish to use the system to ensure a speedy "flow-on" both across a particular industry and into other industries.  The advantages to the union movement of being able to file a claim, have a case heard and for the result to flow automatically to all employees under that award is obvious.  In general wage cases, the advantages are even more apparent.  There is no doubt that if each claim had to be served and dealt with individually with each employer (or even each group of employers), the speed with which the wage round would take place within an industry would be much slower.  Similarly, by using notions such as "nexus" and "comparative wage justice", it is likely that unions under the centralised compulsory arbitration system are able to flow-on increases granted in one industry area to other industries or areas more quickly than would be the case under collective bargaining.  Particular employers, having either negotiated or arbitrated a new arrangement, will also like to see the system ensure that the wage increases "flow-on" as quickly as possible so as not to be at a competitive disadvantage.

(Deviating slightly from the topic, it is also interesting to note that for contractual reasons [rise and fall] particular employers are keen to have negotiated settlements recognised by the existing system.  The ultimate effect of this, however, can be to speed up the "flow-on".)

Given that a relative wage gain by one section of the workforce may be more rapidly eradicated under the Australian system, there may be some force to Corden's comment that the wage push will be greater as pressure for a new wage round builds up.  The authors would note, however, that this is modified by the underlying market forces.  In this regard, it is interesting to tie the comment in this section to the comments made earlier about the effect that the degree of market power in the product market can have on the level of wages.  It is interesting to note that the pace-setters in the private sector -- building trades, metal trades, transport, storemen and packers and the waterfront -- either do not compete on the international market or have significant tariff protection.  This fact, combined with the speedier "flow-on", and the ability to "pool" your competitors, could well mean that the absolute level of wages is higher in Australia than would be the case in the absence of the Arbitration Commission.

Prices and incomes policy?

Reference was made earlier to the belief that because of union monopoly power, there would always be pressure for wage rises above the level consistent with full employment.  Further, some people believe that while the market (through high unemployment) might eventually cause unions to moderate their claims, the social and economic cost of this unemployment is too high, and an alternative must be found.  On the other hand, there is support for the existing system by some commentators who believe that the solution to this problem is an "effective" prices and incomes policy, and that the Arbitration Commission provides the vehicle to achieve that policy.

Leaving aside both the question of the effectiveness of market forces (discussed earlier) and the question of whether or not a prices and incomes policy would work, despite the chequered career of such policies both here and overseas (a topic for another paper), there are two points that can be made.  First, several reasons have already been given why the absolute (but not relative) level of wages may be higher under the centralised compulsory arbitration system than under collective bargaining.  Second, if the ACTU, because it recognises economic reality, can give a specific undertaking to moderate wages under a prices and incomes policy -- as it did at the National Economic Summit Conference, although as time passes the meaning of that undertaking is becoming broader -- then why can't it use that same supposed influence to moderate wages under a system of collective bargaining?  If it can deliver the goods under one system, why not under the other?

While there are, admittedly, trade-offs involved under a prices and incomes proposal, there is also a reason why the "ability to deliver" may be greater under a collective bargaining system.  A central theme running through this chapter has been the need to make people responsible for their own actions, to decentralise decision-making about wages and conditions to the people most directly affected by the result.  As explained earlier, this will achieve a better appreciation of the effect of a particular wage claim.  This could act to modify the expectations union members have of their elected representatives, and make it easier for those elected representatives to explain the need for wage restraint to ensure that employees are not priced out of jobs.

CONCLUSION

The author believes that there is a strong case to be made for the gradual evolution of Australia's centralised compulsory arbitration system into one of decentralised collective bargaining.  This argument is based in part on economic grounds, but mainly on strong industrial relations grounds.  Although collective bargaining might not, in the short term, lead to significant changes in wage structures or employment, changes would take place over time.  There are few if any economic arguments against the change to collective bargaining.  In any event, in the author's view, change could be justified solely by industrial relations considerations.

That the system has survived for so long is not due to the inherent advantages it offers but rather to the myths that have been built up around the system by those with a vested interest in its survival.  There are no legal or technical barriers to a move from compulsory arbitration to collective bargaining.  The barriers are more related to the myths.  If the myths can be exposed for what they are, the barriers to change may disappear.  Although the centralised system seems certain to endure for some time to come, the author does not believe that it provides the most appropriate wage fixing system for the future.  I hope that this chapter has not only exposed some of the myths about the present system but also will help to increase the debate in the community about the most appropriate industrial relations system for Australia.

---

ENDNOTES

1.  J.E. Isaac, "Compulsory arbitration and collective bargaining reconsidered", Journal of Industrial Relations, Vol 16 (1974), p 1.

2.  J.J. Macken, Australian industrial laws -- the constitutional basis, Sydney, Law Book Co., 1981, p 280.

3.  H.B. Higgins, "A new province for law and order" Harvard Law Review, January 1919, pp 205 and 190-191.

4.  13.5 million man days were lost through strikes between 1913 and 1919, and in each of two years, 1917 and 1919, over 4 million man days were lost.  At that time the Australian workforce was less than one quarter its 1982 numbers.

See Labour Report No 55 (Commonwealth Bureau of Census and Statistics) and Industrial Disputes, March quarter 1973.

Elements of mythology and institutional faith pervade the works of latter day spokesmen also:

"There does remain the problem of 'flow on' of the decisions of one tribunal to the awards of another. ...  Even here the problem is not of major proportions because those in charge of the administration of both systems are highly responsible men and women.  Where a claim is conceded by a tribunal there is a very good reason for the claim being granted. ..."  (Macken, op. cit. p 209).

"... I think that we have fewer strikes and stoppages than we would have had without the system.  I must admit, however, that the opinion is intuitive rather than calculated.  I think it is common ground among all critics that the Australian public supports the system and, although it is claimed that this has become merely a matter of habit, I myself feel that there is more to it than this.  Although it does not prove anything statistically, I feel pretty confident that one of the reasons for the public support of the system is a belief that there are fewer strikes and lock-outs because of it. ..."  (R. Kirby, "Some comparisons between compulsory arbitration and collective bargaining", Journal of Industrial Relations, Vol 7, No 1 (March 1965) p 10).

5.  Quick and Garran, Commentaries on the Constitution (quoted in Macken, op. cit. p 12).

6.  Proposals were defeated 25 to 12 in 1891 and 22 to 12 in 1897.  See J.R. Niland, "Industrial relations reform", Address to Australian Institute of Political Science Summer School, January 1983 p 3.

7.  Macken, op. cit. p 12.

8.  Ibid.

9.  Ibid, p 13.

10.  Higgins's full purpose was revealed in the first session of the first federal Parliament when he moved "... to the effect that the power to regulate industrial relations throughout the Commonwealth should belong exclusively to the Federal Parliament". (E.I. Sykes and H.J. Glasbeek, Labour law in Australia, Sydney, Butterworths, 1972, p 381).

11.  Niland, op. cit. p 23.

12.  B. Dabscheck, The Australian system of industrial relations -- an analytical model, Sydney, University of NSW, 1979, p 21.

13.  Niland, op. cit. p 9.

14.  Sykes and Glasbeek, op. cit. p 458.

15.  C.J. Morris, The role of interest arbitration in a collective bargaining system, New York, American Arbitration Association, 1976, pp 231-232.

16.  See comments of J.E. Isaac quoted in Morris, op. cit. p 213.

17.  Western Australian Industrial Gazette, Vol 46 p 823 at 825 -- Commission in Court Session -- Appeal Decision 4 July 1966.

18.  Ibid.

19.  Western Australian Industrial Gazette, Vol 45 p 254.

20.  Western Australian Industrial Gazette, Vol 60 pp 1141-1152, and C. No 5809 of 1980, M D Print E3213 in the Australian Conciliation and Arbitration Commission.

21.  See for example Australian Bulletin of Labour, June 1975, p 25 and Western Australian Industrial Gazette, Vol 55 p 803 at 804:  "... However, though we respect the reasons of the Australian Commission for deferring a decision on the introduction of indexation ... we do not think we should follow a similar course. ..."  (The WA Commission provided for automatic quarterly indexation for four quarters.)

22.  Australian Bulletin of Labour, loc. cit., and Western Australian Industrial Gazette, Vol 55 p 804.

23.  Industrial Arbitration Amendment Act (No 2) 1982 (W.A.)

24.  Australian Conciliation and Arbitration Commission M D Print E8647.  The National Building Trades Construction Award 1975, and the Building Construction Employees' and Builders' Labourers' Federation Award 1978.

25.  Ibid, p 8.

26.  Ibid, pp 9-10.

27.  E.O. Shann, An economic history of Australia, Melbourne, Georgian House, 1963, p 385.

28.  Ibid.

29.  Ibid, p 377.

30.  Volume 61 Western Australian Industrial Gazette, Vol 61 (July 1981) p 1043.

31.  "That employees doing the same work for different employers or in different industries should by and large receive the same amount of pay irrespective of the capacity of their employer or industry is well embedded in Australian industrial thought. ..." (Engineering oil industry Case 1970), 134 CAR 165.

32.  National Wage Decision M D Print F1600 -- 23 December 1982.

33.  M.R. Fisher, "The industrial malaise -- what is the cure", Employer Federation of NSW, 26th Annual Industrial Relations Conference, September 1982, p 7.

34.  D. Horne, The lucky country, Ringwood, Penguin Books, 1966, p 160.

35.  See for example:  Involving employees in the enterprise -- a guide for employers, Canberra, Confederation of Australian Industry, 1978.

36.  Budget Paper No 1 (1982-83 Budget Statements) p 53.

37.  Conciliation and Arbitration Act 1904 section 7(5) (a).

38.  Ibid, section 7(1).

39.  Rev. Holmes (1971) 126 CLR 566.

40.  Ibid.

41.  High Court of Australia 23 June 1981 -- In the matter of an application for a writ of prohibition against Mr Justice Marks and the FIA by the BLF.  See also Australian Industrial Law Review, Vol 23 No 13, p 217.

42.  EPT Group Holdings Limited (Sydney).

43.  See for example C No 3848 of 1981 in the Australian Conciliation and Arbitration Commission involving the AWU and the BLF.

44.  Australian Industrial Law Review, Vol 24 No 26 (December 1982), p 469.

45.  Weekend Australian 9 October 1982.

46.  Australian Financial Review 11 October 1982.

47.  Industrial Relations Bureau, Fifth Annual Report, Canberra, AGPS, 1982, p 11.

48.  M. Somare, "The Australian model -- a big public service, restrictive bureaucracy and heavy regulation -- is not appropriate for Papua New Guinea", West Australian, 4 January 1983, p 53.

49.  Australian Industrial Law Review, Vol 23 No 9 (May 1981), Item F190, p 141.

50.  G. Polites, "The economy, industrial relations and the 38-hour week", Industrial Review -- Confederation of Australian Industry, No 3, August 1982, pp 6-14.

51.  West Australian, 20 January 1983:  "... Builders have recently found that they are getting more satisfactory responses from the less conciliatory civil courts than the Arbitration Commission which has limited powers in some disputes. ..."

52.  Some comments over the years:

"[The Commission's] prime unstated imperative at all times has been its own survival and hegemony in the Australian industrial relations scene."  (Australian Financial Review, 16 December 1982.)

"The functioning of the Commission is highly dependent on the preparedness of unions to make use of it."  (B. Dabscheck -- University of New South Wales, 1979.)

"Understandably the Commission has not been willing to go into voluntary liquidation."  (J.E. Isaac in Australian Compulsory Arbitration and Income Policies, 1975.)

"[T]here are no experts in industrial relations -- only survivors."  (Mr Justice Ludecke in Industrial Aggression, 1978.)

"[T]he skill with which the Full Bench has come back off the ropes and reasserted its pre-eminence in the wages field ... is in keeping with its finest traditions."  (Australian Bulletin of Labour.)

53.  Australian Conciliation and Arbitration Commission Mis 339/82 M D Print F0484 -- ABCE and BLF v Raymond Engineers.

54.  B. Dabscheck, loc. cit. (note 12 above).

55.  For example:  "[T]he principal participant [employer] ... does not understand the industrial law or industrial practices of this country."  (Decision 5911 and 59180F of 1980, and 5733 of 1981, February 1981.)

"[T]his to me makes [this company] not to be the good industrial citizen it so often seeks to be. ..."  (Decision C No 5809 of 1980, 20 June 1980.)

"[I]t is a deliberate mistruth for [the employer] to say that industrial relations had been very good prior to my decision. ..."  (Statement accompanying decision, Perth, January 1981, in the Australian Conciliation and Arbitration Commission.)

"Apart from the overall poor site conditions I have never observed such poor housekeeping on any site. ..." (Decision No 5849 of 1982, Melbourne, 30 August 1982.)

56.  Dabscheck, op. cit. p 23.

57.  Constitution section 51(xxxv) and Conciliation and Arbitration Act 1904, section 4.

58.  C.P. Mills and G.H. Sorrell, Federal industrial laws, fourth edition of "Nolan and Cohen", Sydney, Butterworths, 1968, p 80.

59.  R.R. Garran, Prosper the Commonwealth, Sydney, Angus and Robertson, 1958, p 175.

60.  Professor Kenneth Boulding, 1949, cited in A.M. Cartter, Theory of Wages and Employment, Homewood (Illinois), Irwin, 1959, pp 1-2.

61.  The following quotation from Higgins is cited in J.E. Isaac, "Economics and industrial relations", Journal of Industrial Relations, Vol 24 No 4 (December 1982), p 497:

"In these days, the problems of industry must be approached, not through the dicta of the political economists of the nineteenth century, but by thoughtful and well-directed experiment. ...  They told us that a law for minimum wages was absurd, that the wage fund was fixed by irreversible economic laws, that the laws so-called of demand and supply were inexorable, that industrial tribunals were impracticable, and they were wrong.  We all make mistakes, and we have to learn by our mistakes. ...  Industrial tribunals are doing their best for human life, the only wealth.  It is the noblest objective.  We work and learn."

62.  K.J. Hancock, "The first half-century of Australian wage policy -- Part II", Journal of Industrial Relations, Vol 21 No 2 (June 1979), pp 129 and 152-3.

63.  J.E. Isaac, "Industrial relations and economic growth", an address to the 13th Annual National Agricultural Outlook Conference, 1983, published in the Quarterly Review of the Rural Economy, Vol 5 No 1 (March 1983), p 16.

64.  That Isaac does acknowledge the importance of economics is confirmed in the Shann Memorial Lecture published in the Journal of Industrial Relations, referred to above.  See pp 500-1.

65.  Ibid, pp 510-511.

66.  R.J. Blandy "Does the Arbitration Commission matter", Economic Papers, No 68, October 1981, p 37.

67.  K.J. Hancock, "The Australian tribunals and the labour market", National Institute of Labour Studies Conference, Flinders University, 1982, cited in M. Keating, "Australian wage determination", Economic Papers, Vol 1 No 3 (November 1982).  Keating also gives a similar view, p 71.

68.  J.E. Isaac, cited in B. Hughes, "Wages of the strong and the weak", Journal of Industrial Relations, March 1973, p 1.

69.  W.A. Howard, "Australian trade unions in the context of union theory", Journal of Industrial Relations, Vol 19 No 3, pp 255-273.

70.  p 92, p 94.

71.  W. Brown, J. Hayles, B. Hughes and L. Rowe, "Product and labour markets in wage determination:  some Australian evidence", British Journal of Industrial Relations, March 1984, p 169.

72.  Ibid, p 13.

73.  p 84.

74.  Cited in Hancock, op. cit. 1979, p 130.

75.  B. Dabscheck and J. Niland, Industrial relations in Australia, Sydney, Allen & Unwin, 1981, p 332.  For further discussion on this see:  Report on the British Economic Mission, Commonwealth Parliamentary Papers 1929, Vol II (extracts were published in The Industrial News, WA Employers' Federation, January 1929);  J.B. Bridge, "The Australian tariff and the standard of living", Economic Record, Vol 1, 1925;  and P. McCarthy, "Employers, the Tariff, and Legal Wage Determination in Australia -- 1890-1910", Journal of Industrial Relations, Vol 12, 1970.

76.  L.G. Rowe, "Reason, force or compromise:  egalitarian wage structures under bargaining and arbitration", Journal of Industrial Relations, Vol 24 No 2 (June 1982), pp 245-265.  See also:  Hughes, op. cit. (note 68 above);  W. Brown, J. Hayles, B. Hughes and L. Rowe, "Occupational pay structures under different wage fixing arrangements:  a comparison of intra-occupational pay dispersion in Australia, Great Britain and the United States", British Journal of Industrial Relations, XVIII, July 1980;  K. Norris, "Compulsory arbitration and the wage structure in Australia", Journal of Industrial Relations, Vol 22, September 1980;  Keating, op. cit. (note 67 above);  and Isaac, op. cit. 1982 (note 68 above) pp 502-504.

77.  W.M. Corden, "The wage push and macroeconomic policy:  the dilemmas ahead", Economic Record, Vol 58, June 1982, p 116.

78.  See for example:  Hughes, op. cit. (note 68 above) and Isaac, op. cit. 1982 (note 62 above).