Arbitration In Contempt

Preface to the 2nd Edition

Less than six years after the inaugural seminar which led to the founding of the H R Nicholls Society, the stock of the proceedings of that seminar has been exhausted. The first edition of 'Arbitration in Contempt' had been selling as a collector's item for some time. When, at last, Australia discovers the political will to accomplish the institutional reforms in our labour market which will enable us to compete in global markets, unencumbered with leg irons, the significance of that first edition will ensure that its value, as a collector's item, will be maintained.

Demand for 'Arbitration in Contempt' has increased rather than diminished, and in printing a second, expanded paperback edition in A4 size, the Society has seized the opportunity to include two papers given at its launching on 30 September, 1986, in Melbourne, at the Southern Cross Hotel. The papers were given by John Stone, the foundation President of the Society, and Professor Geoffrey Blainey, who launched the book.

The launching of 'Arbitration in Contempt' turned out to be a major political event. Nearly three hundred people attended the dinner, and the then Leader of the Opposition, John Howard, despite strong criticism from within his own ranks, was in attendance, and moved the vote of thanks to Professor Blainey.

In the lead-up to that occasion the book was reviewed and criticised in the media in an unprecedented way. Geoffrey Blainey observed wryly that he wished that his own books had obtained just some of the attention which 'Arbitration in Contempt' had received.

A major reason behind that furore was Robe River and - inseparable from that company---Charles Copeman. Charles Copeman, then Managing Director of Peko-Wallsend, had attended the inaugural seminar of the Society in February 1986 and had been greatly stimulated by the debate and the argument which the participants enjoyed. Shortly before that date his company had become the majority shareholder in Robe River Iron Ore Associates, and therefore had to assume responsibility for the management of the project.

Peko found Robe River to be a loss making operation, operating well below capacity (actual output 14 million tonnes versus 20 million tonnes capacity), and in danger of losing contracts because of poor performance. Robe River had become an important experiment in syndicalism, a political system under which the trade unions are in control either of the country as a sovereign state, or of business enterprises in which the property rights of shareholders are effectively abolished. Prior to the takeover by Peko, Robe River had effectively been run by the unions for the principal benefit of the work-force and, in particular, the officials of the unions.

Syndicalism as a political ideal has been overshadowed historically by Marxian Bolshevism but it has had, nevertheless, a long history of complete economic failure in various parts of the world, notably in Spain, in Yugoslavia, and in Argentina. When, partly as a result of the previous weak management, Robe River fell into syndicalist hands it too moved rapidly towards economic collapse.

Charles Copeman soon came to the view that if Peko was to properly discharge its responsibilities as manager and majority shareholder at Robe River, this syndicalism had to be overthrown, and the proprietary rights of the shareholders to manage (and benefit from) the operation had to be upheld. His first action was to dismiss all but one of his first-line executives. Then, with the loyal support of his remaining managers and a large proportion of his work-force, Charles Copeman succeeded in achieving that aim. Today, output from Robe River is nearly 30 million tonnes, output per employee has increased threefold and time lost through injury (real or claimed) has been reduced to 10% of the 1986 figure.

By challenging syndicalism head-on, Charles Copeman became the centre of a political storm. Some saw the H R Nicholls Society, by association with Charles Copeman, and to some extent John Stone, who had become a Director of Peko-Wallsend in May, 1986, as a sinister cabal. The then Prime Minister, Mr Hawke, described its members as 'political lunatics and economic troglodytes'. The then Minister for Administrative Services, Mr Michael Jerome Young, now a director of Qantas, attacked the Society as a key part of what he catted 'The New Right'. In this way the Society suddenly became a rallying point for many who previously had lost hope for the future of industrial relations in Australia---and thus for the economic future of Australia itself.

Looking back, it is worthwhile pondering why it was that Robe River became such a pivotal issue, and why the H R Nicholls Society was perceived by its opponents to be much more important than, at the time, its founders believed it to be.

With the benefit of hindsight and reflection it is clear that Robe River was misunderstood by key politicians to be a microcosm of Australia as a whole. With the Accord Mark I, the ACTU particularly, and the trade union movement generally, became, in 1983, a partner in government. As time elapsed the ACTU first had a veto power over all government policy, and then assumed the position of senior partner. Australia had, during the eighties, become a syndicalist society and the H R Nicholls Society generally, and Charles Copeman particularly, had challenged the foundations of the entire syndicalist structure.

Robe River, like all syndicalist enterprises, was quickly moving towards bankruptcy. Charles Copeman was able, despite the best (and in many instances, worst!) efforts of government at state and federal level, and the ACTU, to throw off the syndicalist yoke. In doing so he transformed Robe River from a state of imminent bankruptcy into a highly productive, highly profitable, internationally competitive mining operation. If that could happen at Robe River, what would happen if the H R Nicholls agenda was taken up by the whole country? The beneficiaries of syndicalism had good reason to be appalled at such a prospect.

As the nineties progress the inevitable results of syndicalism are increasingly evident throughout Australia:- rising unemployment, declining living standards, declining business investment, more frequent ministerial promises concerning 'job creation', more learned investigations and reports into solutions for this or that manifestation (but never into the underlying causes) of economic decline.

In a democracy, debates which culminate in epochal institutional change require the participation of many people and must take place over a long period of time. There can be no doubt that, during the past six years, there has been a major shift in public thinking about the imperative of labour market reform, and this shift is now evident in statements by political and business leaders, as well as by some more enlightened trade unionists. Equally there can be no doubt that there is still a long way to go if the transformation which took place at Robe River in 1986 is to be replicated in mines, factories, schools and other workplaces, all over Australia.

Members of the H R Nicholls Society are, generally, optimistic about Australia's future, because they believe that in the end, common sense will prevail. Syndicalism at Robe River was an affront not only to that common sense, but also to Australian standards of propriety and decency. Syndicalism in Australia generally will likewise fall when challenged in a sustained, effective and determined way, by dedicated people arguing from principles and prepared to stand up for those principles. This second edition of 'Arbitration in Contempt' contributes to that challenge.

N R Evans


January, 1992