Arbitration In Contempt

Reflections on the Northern Territory Cattle Station Industry Award Case of 1965 and the O'Shea case of 1969

Sir John Kerr

You have been kind enough to ask me to talk to you about two cases in the field of industrial relations - The Northern Territory Cattle Industry Case of 1965-66 and the O'Shea Case of 1969.

I should make it clear that my part in your programme has to do with historical matters going back to the sixties. This will not take me very far, if at all, into the area of what should be done about contemporary and future industrial problems. During the past twenty years I have not kept up to date in detail with the cut and thrust in the world of industrial affairs. I have been doing other things. During the first six of the last twenty years part of my judicial work was as a member of the Commonwealth Industrial Court and I dealt with and decided the O'Shea Case in that court in 1969.

Tonight I come first to the Northern Territory Cattle Industry Case of 1965. This, though important in considering the general debate going on in the country about aboriginal affairs, does not loom as large on the general industrial scene as did the O'Shea case. However Mr Justice Kirby, who presided in the Cattle Industry Case (113 CAR 651) told his biographer Blanche d'Alpuget that he believed that case would 'be seen as the greatest contribution he and other members of the Commission made to Australian society' (page 179 of d'Alpuget's Biography of Sir Richard Kirby, Mediator, published by Melbourne University Press). In fact it gave the Northern Territory aborigines in the cattle industry only a pyrrhic victory. The long term result was a disaster for the cattle industry aboriginal communities, involving 'disemployment' and removal of many to settlements and life on welfare payments.

The Northern Australian Workers' Union was the applicant in the attempt to have aboriginal station workers paid the same as white workers. Mr Justice Kirby also told d'Alpuget:

    'The union wanted to cast on to the commission the responsibility of making a declaration of equality without producing to the bench evidence to support such a declaration. And the union did this in the face of a magnificently well presented case from the opposing side. The NAWU's sporadic, bit-run presentation meant that we on the bench had to do a lot of thinking for the union.' (d'Alpuget, page 180)

d'Alpuget went on to say:

    'Kerr's case was ingenious and ominous. On the one hand, it neatly avoided the charge of racism through the presentation of a huge amount of anthropological and ethnopsychiatric data attesting to the incapacity of Aborigines to work as white people work---therefore demonstrating that they ought not to be paid the same rate as whites. On the other, Kerr and his numerous witnesses warned that if equal pay were awarded the pastoralists would sack Aborigines and hire whites in their place. North Australia had just suffered the worst drought in living memory, with cattle population reduced to one third of the numbers of 1960; cattlemen could not afford inefficient, highly-paid staff; a white man was worth two or three times a black, property manager attested'. (d'AIpuget, page 180)

The Commonwealth was represented in the case by counsel and its most useful contribution, according to d'Alpuget, was a defeatist one: if numbers of aborigines were thrown out of work by the award of equal pay they would be given aid (i.e.'welfare') on government settlements. (page 181)

The case was about full blood Northern Territory aborigines on the cattle stations, and not about part blood aborigines.

One of the central arguments of the pastoralists was to stress that the full blood aborigines on the cattle stations were very different indeed from the fringe dwellers, mainly half caste, living near some country towns in the south. The pastoralists argued that the full blood aborigines on the cattle stations, who were illiterate, uneducated, semi-tribal aborigines, should not be converted by unemployment into fringe dwellers of the kind to be seen in Darwin, Alice Springs, Katherine and other places. They should be helped to continue to live 'in their own country', with employment in the cattle industry, with gradually improving education, experience and efficiency and enjoying growing economic reward.

They should not be cast into unemployment and made into pensioners in settlements as a step towards becoming fringe dwellers.

I shall quote a number of passages from the Commission's judgment to give the feeling and flavour of the case. The Commission inter alia said:

    Work Performance

    'It was put to us that these aborigines (on the cattle stations) are unable to work as well as whites because of cultural and tribal factors. In the first place they are, in the employer's submission, semi-tribalised and even in the unions submission they are not fully part of the white community. It was put to us by witness after witness that there are a number of factors which prevent most aborigines from working in the same way as white men ... In the first place, these aborigines do not understand the meaning of work in our sense. This is because before their contact with whites they were a hunting race ('hunting' should be read as extending to fishing and food-gathering) who lived on the land and did not work in any way understood by us. They had no agricultural skills and no domesticated pastoral animals and the discipline and understanding of work which agriculture and pastoral activities involve were foreign to them. When whites began to set up these cattle stations in the Northern Territory the aborigines remained on their lands now taken over by the stations and instead of hunting as a means of obtaining food, they substituted the obtaining of rations from the station owner in return for doing a little work. The effort which the aborigine used to put into hunting food was now put into working for food and just as the hunter did no more than was necessary to obtain sufficient food so also did the aboriginal employee on the station do no more than was necessary to obtain sufficient rations. Linked with this is the fact that aboriginal society was not competitive in an economic sense. Moreover, it was not an individualistic society in which the individual had ambitions and worked for himself. Within certain tribal patterns the aborigine shared the fruits of his hunting. Accordingly the idea of working for oneself with ambition to achieve some economic goal was foreign to aboriginal society.

    'The reason why aborigines in their tribal state had no real concept of work is due to a number of factors. In tribal society the idea of cause and effect was not known. Time, in the Western sense, and the significance of time were also unknown. They had no idea of forward planning, of working out a long term enterprise based on predictions of future planned occurrences. The notions of number, precise distance, and mathematical accuracy were unknown. Their culture excluded the idea of disciplined, reliable and responsible endeavour under a contract of employment.

    'In our view the criticism of the evidence produced by the pastoralists is no more than minimal.Generally speaking, we accept the uncontradicted evidence given by pastoralists as to the work ability of the aborigines, supported as it was by what we saw ourselves and by the anthropological and other material.

    'As aborigines come more and more into contact with white men the old tribal influences are likely to change, especially the old tribal attitude to work and money. We do not think, however, that the change at this time is as significant with these aborigines as the union or the Commonwealth Government would have us think. From the overwhelming evidence given to us tribal influences are still quite active in aborigines on cattle stations.

    'Although the idea of incentive through money rewards seems to be having some effect on aborigines, we cannot agree that the introduction immediately of award wages could either at once or speedily break down all the other influences at work in the aborigines. In some cases additional money would act as an incentive to better work, but in most cases we have grave doubts whether the work effort would be appreciably different for some time to come.

    From the wealth of material presented to us by pastoralists, both in oral and written evidence, we conclude that at least a significant proportion of the aborigines employed on cattle stations in the Northern Territory is retarded by tribal and cultural reasons from appreciating in full the concept of work. The great majority are unable to work in a way which employers would expect of white employees'.


    'There is a consensus of opinion that one of the great problems of the Northern Territory is the fact that the aborigines who are now adults were not educated as children ...

    'It was suggested to us by a number of witnesses ... that it was virtually impossible to educate adult aborigines who have no ability to read or write and, it many cases, no ability to count ... The employers have established to our satisfaction that lack of education is a problem, particularly when it is linked with tribal attitudes towards work. It is our view that both the union and the Commonwealth Government took a somewhat unreal view of the problems which pastoralists face when dealing with stockmen who can neither read, write, nor count'.


    'The pastoralists argued that the application of award rates to aborigines on cattle stations will cause massive disemployment. They submitted that for economic reasons they could not afford to employ aborigines on award rates. The employers concede that some aborigines are almost as good as whites and that aborigines enjoy working on cattle stations because it is closely related to their earlier nomadic life and it keeps them living in their own country. But if aborigines are to be paid the same as whites, then employers would prefer to employ whites because they could employ far fewer with the same results... We accept the employers' evidence that as at present advised many of them expect to change over to white labour if aborigines are to be paid at award rates'.


    'We agree with the pastoralists that there are many aborigines on cattle stations who for cultural reasons and through lack of education are unable to perform work in a way normally required in our economic society. We agree that the problem of assimilating or integrating these aborigines into our society is a difficult one with many facets. Our task, however, is a limited one. The guiding principle must be to apply to aborigines the standards which the Commission applies to all others unless there are overwhelming reasons why this should not be done. The pastoralists have openly and sincerely explained their problems and future intentions. However they have not discharged the heavy burden of persuading us that we should depart from standards and principles which have been part of the Australian arbitration system since its inception. We do not flinch from the results of this decision which we consider is the only proper one to be made at this point in Australia's history. There must be one industrial law, similarly applied to all Australians aboriginal or not.

    'If any problems of native welfare whether of employees or their dependants, arise as a result of this decision, the Commonwealth Government has made clear its intention to deal with them. This is not why we have come to our conclusion but it means we know that any welfare problems which arise will be dealt with by those most competent to deal with them.

It is impossible to summarise the great amount of evidence that was given and l shall not attempt to do so. There was, inter alia, a mass of evidence to show that the Northern Territory aborigines' attitude to work, their lack of education and inability to read, write and count, and their cultural background affected their capacity to work in other callings in addition to those in the pastoral industry. For example, much effort had been put in to getting aborigines to work as waterside workers on the Darwin waterfront, workers in abattoirs, as workers of QANTAS and in other occupations in the Northern Territory including mining. As to mining, there was evidence of inability of employers to use aborigines at award wages. Rum Jungle employed aborigines though the advantages of being able to do so had they been capable and responsible were apparent. At the Peko mine at Tennant Creek only two were employed out of 300. No aborigines were employed at Mount Isa. The question had to be asked why the mining industry of the Northern Territory had, by and large, not been willing to employ at award wages local aboriginal workers. The answer on the evidence undoubtedly was that as responsible, disciplined and competent labour aborigines did not in general reach the standards to warrant payment of full award wages.

Attempts to get employment even on a minimal scale for aborigines in industry generally or to get aborigines to take and maintain employment in industry had over the years failed. The pastoral industry was the only industry which had been able to make a balanced relationship with aborigines who lived on the cattle stations but whose work was in general not as valuable as white workers. The result of the Cattle Industry Award Case was to cause them to become unemployed in large numbers and to have to go on to 'welfare' in missions and settlements.

There was no attempt by the union or the government to answer the evidence called by the pastoralists as to the employment and quality of the work of aborigines in the cattle industry and in other industries.

The Commission granted the application to allow the award to cover aborigines but decided to postpone the change to equal pay until 1 December 1968. The judgment was given on 7 March, 1966.

Gerard Henderson has attacked the decision in his article 'How to create unemployment: The Arbitration Commission and the Aborigines' (published in Wages Wasteland, edited by Hyde and Nurick, 1985) saying it was 'staggeringly irresponsible'' (page 106). I would not myself use those actual words. I would use different words. I would simply say that it was in my opinion wrong. The Commission in weighing the difficulties involved made a serious mistake. The pastoralists' case was in my view not only unanswerable but no attempt was made to answer it. I summed it up in our final submission towards the end of my address when I said:

    'It seems to the pastoralists to be nonsense to say that men are better off, unemployed in thousands, but maintained in settlements in growing degrees of comfort when they could work in the real world with growing degrees of efficiency and growing economic reward.'

Henderson examined material arising following the judgment which showed that 'almost from the date of the Commission's decision there was a dramatic decline in Aboriginal employment on cattle stations in the Northern Territory and Western Australia---with devastating social consequences for the former employees and their dependants'. (pages 108-109)

Many aborigines, having been disemployed, moved into government settlements. Skilled aboriginal workers often wished to stay with those in their tribal group who became unemployed as a result of the decision. They decided to leave the cattle properties with the disemployed members of the tribe and go to settlements. This was predicted in evidence.

In 1970 the Gorton government appointed a committee under Professor C. A. Gibb to enquire into the situation of aborigines on pastoral properties in the Northern Territory. It included Dr H. C. Coombs. The Committee said: 'In the course of our inspection and discussion it became clear that the adoption of the Award has adversely affected the employment of Aborigines'. (Henderson, page 109)

Henderson said that the first report of the Aboriginal Land Rights Commission 1973 quoted with approval from the Gibb Report and generally endorsed its findings.

Henderson concluded: 'By the mid-1970s, then, there was overwhelming evidence that the Arbitration Commission's decision to give Aborigines 'industrial justice' had dramatically increased Aboriginal unemployment in the pastoral industry'. (page 110)

There is another point. Henderson raises the question whether aboriginal station hands working on cattle stations being managed for aboriginal owners, as some nowadays are, are receiving the full award rates under the 1966 decision. He apparently believes many are not. If the award is enforced there will, he thinks, be another round of aboriginal disemployment---this time from aboriginal-owned stations.

Henderson pointed out that Dr Coombs, a distinguished supporter of the aborigines, had said: 'It is hard to imagine another society whose values were as inappropriate to the demands of an industrial economy'. (page 111) We cannot get rid of our industrial economy and the aborigines will have by education and experience gradually to accommodate to it or become permanent pensioners.

There is I believe little chance that the Commission will reverse its decision without a strong case being presented. Obviously in 1966 the Commonwealth was worried about international opinion on alleged discrimination against aborigines and also about opinion inside Australia. Having persuaded the Commission to act as it did to ensure'one industrial law for black and white' and having had rejected the 'slow worker' approach, to classes of aborigines disabled culturally, it is hard to imagine that the Commonwealth would support reconsideration of and an overturning of the 1966 decision. I suppose the pastoralists themselves, having adopted new technologies and brought in white workers would be reluctant to go back to earlier practices, though doubtless they would continue to employ, if available, individual skilled aboriginal workers who could actually do the work at the standard of white workers. The Commission itself would probably be resistant to overturning the 1966 decision. It is not easy to see where the initiative would come from to overturn that decision. It is twenty years since it was made and the disemployment it caused has doubtless resulted in loss of or failure to acquire pastoral skills by those aborigines who left the Northern Territory cattle properties and their children. The Northern Territory cattle industry and the Northern Territory aborigines lost a great opportunity to develop, as other countries have done, a pool of local indigenous skilled workers on the basis of past practices, growing experience and education, with those workers living in their traditional 'home' country. It would of course be very good if the clock could, after twenty years, be turned back and the decision overturned. Doubtless many of the full blood aborigines involved would like this to happen. There is said to be a desire to go back. All concerned should certainly try to see what can be done to get full bloods back to pastoral work in their tribal areas. It would be a great help if the Commonwealth would change its attitude and seek to achieve this.

I shall now come to the O'Shea Case.

There had been a Metal Trades Work Value Inquiry in which the decision of the Arbitration Commission was delivered on 11 December 1967. The decision resulted in massive union disobedience of the Commission. The majority judgment in the Commission, given by Wright and Gallagher JJs and Commissioner Winter, increased the margin of the fitter by $7.40 and directed that over-award pay could be absorbed in this amount. Moore J was the only dissenter. He awarded only $5.20 and did not direct the employers as to absorption.

This case infuriated the unions who refused to accept absorption. The employers decided to adopt a united front on the 'absorption issue' and the great Absorption Battle began in early January 1968. In January and February there were hundreds of strikes in the metal industry including a 24 hour national strike by metal workers. Great numbers of contempt charges were laid against the unions in the Industrial Court. The employers showed determination in fighting back against the unions in the Industrial Court. Fines imposed by the court mounted up enormously. Some employers wanted to let the strikes continue to bring about a shut-down of industry. Polites, an employers' leader, had lost faith in the penalty system and apparently would have sought confrontation. However, that system was in fact heavily relied on by the employers.

On 8 February 1968 the employers got from the Industrial Court a blanket no-strike order of indefinite duration against the Metal Trades Union.

d'AIpuget described the Absorption Battle as 'one which would in time affect the whole economy; law and order versus pragmatism'--- that is, paying what the unions asked in order to have industrial peace'. (pages 223-224)

In this stage of high crisis the Arbitration Commission held another hearing about the big new dispute. After the spate of strikes, Kirby thought that the Commission really had to come to a pragmatic and acceptable solution of the impasse, and his view prevailed.

Commissioner Winter joined Kirby, Moore and Commissioner Taylor to alter the original decision, directing that $5.20 of the increase of $7.40 be paid retrospectively and that the balance, $2.20, be paid in August 1968. The bench recognized that there were 'changed circumstances' and that absorption was impracticable.

As to the penalties system, d'Alpuget says:

    'In Kirby's view the argument for penalties, which was logical (they applied to employers also for breaching awards), worked only in theory. In practice, he believed the penal powers caused more trouble than they were worth. Whenever governments asked my view I strongly advised against. penal powers': he says. 'As long as the employers were discriminating in recourse to penalties it didn't matter too much one way or the other if the powers were there, though from an industrial relations viewpoint, it was more desirable that they were not there'. It was the employers' widespread recourse to sanctions that had made the Absorption Battle such a potentially inflammable issue for the future'. (page 232)

There were many other cases of fines imposed on unions for contempt of court apart from those arising from the Absorption Battle. The Tramways Union had been fined for other contempts and in the early part of 1969 a decision was made by the Commonwealth to force the Tramways Union to pay to the Crown fines imposed on the union. The Industrial Registrar, a senior Commonwealth public servant, took out a summons, as the moving party, calling upon the Secretary of the Tramways Union, Clarence O'Shea, to produce the union's books showing details of its assets and to answer questions about those assets and where they were. The fines previously referred to were still, in large part, unpaid.

O'Shea appeared on the appointed day, 15 May 1969, and there was a large crowd of men outside the court loudly demonstrating. O'Shea was asked to go into the witness-box which he did. He refused to answer questions and to produce the union's books. He was charged with contempt of court for this refusal.

In his address to the court O'Shea answered questions from me:

    'His Honour: You are not seriously trying to argue that you have not committed a contempt?

    Mr O'Shea: No, I am not trying to argue that the way the law stands at the moment.

    His Honour: You are not, I gather, willing to purge your contempt?

    Mr O'Shea: No, I am not . . .

    His Honour: ... if you were to answer the questions, you would, if you answered truthfully, have to disclose what the funds are and where they are?

    Mr O'Shea: That is right . . .

    His Honour: You are not prepared to do that, and hence you are defying the court.

    Mr O'Shea: That is the position, Your Honour.'

It was quite dear that O'Shea was more than willing to admit he would not produce books and answer questions and further that this amounted to contempt of court. It was impossible for me to deal with the case on any other basis. I therefore ordered that O'Shea be detained in prison.

On 21 May counsel for the Industrial Registrar (instructed by the Commonwealth Crown Solicitor) appeared and submitted that the fines on the union had now been paid and that the original order directing O'Shea to answer questions and to bring books should therefore be discharged. I did this. There was then no basis for O'Shea to be asked further questions or to bring books. There could be no new contempt after the order discharged and the only outstanding question was what should be done about the already committed contempt. I decided that in all the circumstances he had already been punished enough for that and I ordered his release from gaol on that day.

I treated O'Shea as an ordinary citizen would be treated for refusing to answer questions which he was properly directed to answer in legal proceedings. The powers I exercised are powers of the kind which exist in many jurisdictions to underpin the operation of the judicial system.

Ron Fry, the chief executive of the Metal Trades told d'Alpuget:

    'When O'Shea was gaoled the Federal government was faced with a situation of industrial disobedience with which it could not cope . . . We decided 'Why let our businesses go to the wall? We will be trying to fight the community's battle against rising costs and there appeared to be no government or community support for us'. (page 234)

Having quoted Fry, d'Alpuget went on to say:

    'The O'Shea case clinched the debate in employer ranks about law and order versus pragmatism which had remained unresolved after the Absorption Battle, but with the disciples of law and order still in command. The government backdown on the collection of fines (thereby taking much of the pain out of strikes for unions) converted former law and order men to pragmatism'. (page 234)

d'Alpuget added:

    'By April 1970, Fry was convinced that 'law and order' would no longer work and that the interests of those he represented were being so damaged by strikes that it was preferable to pay unionists' demands and keep the shops working . . . The change in policy occurred with the public virtually unaware that anything had happened or that, in future, it was they, as consumers, who would pay for the industrial peace so created'. (page 235)

d'Alpuget also said:

    'Employers' representatives who had constantly talked about 'law and order' now talked about 'pragmatism'. They took over the most important employers' group, the metal trades, and a new era described by Polites as 'going to bed with the unions' began. 'They decided to pay up and get the difference from the customers ', an ousted official of the employers' metal trades group said. Sweetheart agreements and large over-award payments, the very thing that the Metal Trades Work Value Inquiry had attempted to contain, were among the end results of these adventures'. (page 219)

I have quoted several passages from d'Alpuget because she was able to give information of importance about the opinions of Kirby and of others, especially employers' leaders, and her own comments and opinions give a good indication of and reflect Kirby's attitudes and philosophy which were dominant in those post-O'Shea days.

Mr P. P. McGuinness, the Editor-in-Chief of the Australian Financial Review, in recent publications has said that the unions forced the Industrial Court, the Arbitration Commission and the Government to back down in the O'Shea case and that my action in that case was ill-advised because 'it concentrated the matter on the issue of imprisonment for contempt, rather than on more general questions of the application of the law to trade unions'. The unions certainly did not force the Industrial Court to back down in the O'Shea Case. The court did not in fact back down to union pressure in that case. The changed circumstance of the payment of the fines by an outsider, or well-wisher, produced O'Shea's discharge.

Furthermore, the O'Shea Case was precisely an occasion when the application of the law to trade unions on penalties and contempt of court did in truth occur. The law of contempt of court is a general branch of the law applicable in many fields. The law of contempt of court applies, amongst other occasions, when a person defies or refuses to act in accordance with a court order. The industrial field is only one area of law where defiance of court orders has led to charges of contempt of court.

The Industrial Registrar had set out to apply the law by bringing the proceedings in the Industrial Court. He was represented by counsel instructed by the Commonwealth Crown Solicitor. When O'Shea refused to answer questions as directed a second step in the application of the law to trade unions took place. I directed that O'Shea be charged with contempt of court. The Counsel for the Industrial Registrar was again instructed by the Commonwealth Crown Solicitor. O'Shea was convicted and sent to gaol for his contempt. This was applying the law to unions. What else or what more could have been done to apply the law than this? A charge of contempt of court is the precise way in which the application of the law to unions or to anyone else in society who defies a court order can be achieved. There was no other way to ensure the application of the law to this union and its secretary than to resort to the law of contempt.

As O'Shea came to court knowing he was going to refuse to answer questions about the union's assets and refuse to produce its books it was crystal-clear to all, including me, that he intended to commit contempt of court and to get himself punished for this by imprisonment. No other punishment than imprisonment would have been appropriate, fining being obviously useless in the existing circumstances. There was a penalty system; the employers had widely used that system to have unions fined, and attempts were made to collect fines---by garnishee, and other means. Such a penalty system, similar to what happened in other jurisdictions can, as it did in the O'Shea Case, produce imprisonment for defiance of the court. Resorting to it is, of course, applying or attempting to apply the law to unions as to others.

After O'Shea was let out of gaol it is said that the union decided to pay no more fines and the employers apparently concluded that the Commonwealth would not henceforth seek to recover fines. The employers as a result of their beliefs along these lines introduced a changed policy of no longer seeking to have fines imposed. This was the policy of meeting the unions' demands pragmatically and passing the cost on to the consumer. If the government, after the O'Shea Case, decided not to try in future to recover already outstanding fines (and I do not know whether there was a specific decision to that effect), this later inactivity was quite different from earlier positive action of the government in the O'Shea Case itself. If what happened post-O'Shea proves that the law cannot be applied to unions the Parliament and the government will have to decide what to do about this.

Your programme at this seminar invites debate on the Hancock Report. I have not studied the Report of the Hancock Committee but have read its recommendations in the press. In the Australian on Tuesday 21 May, 1985 it was stated that 'the committee took a 'consensus' view on conflict, with the assumption that while management and unions did not have a commonalty of purpose, they had areas of common interest in the preservation of the organisation and its jobs. Generally this common interest set limits to the actions on both sides'.

Recommendation R135 in the Hancock Report is as follows:

    'That the legislation contain no provisions which would have the effect of making it an offence punishable by fines, money penalty and/or imprisonment for persons or organisations to engage in strikes, lockouts, or other forms of direct industrial action'.

This recommendation to the government is amongst many in the Hancock Report being considered by it and you are to talk about it here.

I hope you have a stimulating discussion of all the controversial industrial questions listed in your programme. Having limited myself here to two historical issues, I shall look forward to reading the papers delivered here and to watching in particular what happens as to the employment of aborigines in the Northern Territory and as to what, if anything, happens on penalties and sanctions against trade unions and/or employers. I shall be relaxed in doing so because my personal involvement in industrial matters ended a long time ago.