For The Labourer is Worthy of His Hire

Tasmanian Problems and Opportunities

Forbes Ireland

In my judgement, the time is right for the Liberal Government in Tasmania to review and overhaul the existing industrial legislation. There is a growing expectation throughout the business community that the new Government will ring changes to accelerate workplace reform in order to speed up the process of economic recovery.

As at 31 December 1990, Tasmania's preliminary estimated resident population was 458,600, 2.7 percent of the Australian total of 17,210,800.

Tasmania is divided into three distinct Regions; viz Southern, Northern and North Western. These regions are geographically different, and over the years parochial regional cultures have developed. These parochial attitudes are the constant source of bickering and promote an intrastate rivalry that extends well beyond the sporting fields. Phrases like:...'did you shut the gate behind you when you passed through Oatlands?' directed by Northerners to Southeners are a constant reminder that parochialism is alive and well in Tassy.

The purpose of highlighting this apparent cultural division is deliberate. Why? The answer rests in the opportunity available for the rest of Australia to benefit by the microcosms of the Australian community contained in each of the Regions so easily discernible in Tasmania. The population size and distribution makes it an ideal social laboratory to trial new projects and systems.

The problems of 'tyranny of distance' which bedevil larger States is simply not an issue in Tasmania.


Labour Market Regulation---an Historical Perspective

"This Authority has clearly stated it will have regard for, but will not be bound by, the Wage Fixing Principles previously enunciated by the Australian Conciliation and Arbitration Commission for the reason that it believes this would constitute an abrogation of responsibility. "
J. W. Miley1

The history of industrial regulation in Tasmania demonstrates the independent path that has been the hallmark of the local industrial relations scene for many years.

The system has gone through three fundamental changes as evidenced by the following diagram:



The Tasmanian Wages Board System

Victoria and Tasmania were the only States in which State regulation of wages, working conditions and other industrial matters operated through a system of Wages Boards. The Boards were instituted in Tasmania in 1910, some fifteen years after they were introduced in Victoria.

The first Act (Wages Board Act 1910) established Boards for individual crafts. The Wages Boards Act 1920 provided for Boards on an industry basis, i.e. a trade or group of trades.

Each Board consisted of an equal number of representatives of employers and of employees, selected and appointed by the Member (the Chief Secretary) for a period of three years and a Chairman appointed by the Government.

Until 1970 the powers of the Boards were limited to determining minimum wage rates, ordinary hours of work, margins for skill, penalty rates, recreational leave and several other matters.

Whilst blowing the dust off some old files during my research I came across an address by the State Industrial Registrar to the Economic Society of Tasmania in 1942 in which he made some interesting observations of the Wages Board System.

"... another lack in the State Wages Board System causing it to be used as the last resort for convenience by certain workers, is the fact that officials of their organisations unless bona fide employees in the industry are forbidden from participating in the deliberation except if called as witnesses."

The report went on to identify some good features of the Act.

"... a good point in connection with the Wages Board System is the fact that the machinery can be made to function within a few days of the necessity arising."2

In 1970 the Act was amended by extending the jurisdiction of the system by binding the Crown and enlarging the powers of the Boards by increasing the range of matters they dealt with. The Boards were authorised to, 'determine any industrial matter' in relation to the trade in respect of which they were appointed, except for matters dealing with - trading hours, superannuation, bonus payments and the engagement, dismissal or reinstatement of employees.

The main functions of the Board System were to regulate industrial matters not otherwise subject to specific legislation and to deal with industrial disputes.

A feature of the Wages Board System was the authority vested in the Chairman to make a common rule decision on matters concerning a basic or minimum wage, hours of work or paid leave of absence.

The public or the press were excluded from Board Meetings and the reasons for decisions (determinations) were not published.

Meetings of Boards were convened by the Minister as required. The Chairman had a casting vote on which to decide matters on which the two sides fail to agree.


The Industrial Relations Act 1975

The legislation provided for a new authority referred to as the 'Office of the Chairman of Industrial Boards and previous determinations of Wages Boards became Awards of Industrial Boards'.

Major changes brought about by the new Act included:

Meetings convened by the Chairman of Industrial Boards and not the Minister; dispute hearings and common rule hearings were still required to be convened by the Minister;
Organisations with no direct representation on Industrial Boards could now attend meetings that involved matters affecting those organisations subject to the approval of the Chairman;
Provision for Industrial Agreements to cover single employers in multi employer industries subject to certification by the Chairman;
Provision was made for Boards to determine the date from which an award will have effect;
An Industrial Appeals Tribunal was provided for under the new Act, its function being to provide an avenue of appeal for affected parties against Awards of Industrial Boards; and
Provision for a general 'Right of Entry' for officials representing employees in an industry covered by an award.


Establishment and Constitution of Industrial Boards

Boards are established by order of the Government for particular industries. The Constitutional Nexus of a Board is the industry of the employer not the common occupation of the employees as is the case under other Authorities.

At the promulgation of the Act there were about 70 Boards in existence, consisting of an equal number of employer and employee representatives and a Chairman.

Board Members are appointed by the responsible Minister.


Compulsory Conferences

The Act provided for the Minister to call Compulsory Conferences for the purpose of settling or preventing an industrial dispute. The Compulsory Conference is presided over by a person appointed by the Minister; in practice this person is usually a Chairman or Deputy Chairman of Industrial Boards.


The Tasmanian Industrial Commission

The Industrial Relations Act 1984 provided for the establishment of a Tasmanian Industrial Commission with jurisdiction in both the public and private sectors of employment. The power of the Commission includes:

  • the making of industrial awards;
  • the conducting of hearings;
  • the convening of compulsory conferences for the purpose of settling disputes;
  • the certification of industrial agreements;
  • and the registration of employer and employee associations.

There are five Commissioners, including the President and Deputy President, who are empowered to make and amend awards relating to industrial matters affecting permanent, temporary, full-time part-time and casual employees.

An 'industrial matter' means any matter pertaining to the relations of employers and employees, but does not include:

  • trading hours;
  • long service leave entitlement and payments;
  • workers compensation;
  • bonus payments;
  • insurance; and
  • appointments or promotions.

The Commission is constituted as follows:

President

Deputy President

Commissioners (three)

Registrar

The Act also provides for the reference of industrial matters to the Australian Industrial Relations Commission for determination, as well as providing for joint sittings.

The President of the Tasmanian Industrial Commission also holds the office of Deputy President in the Australian Industrial Relations Commission.

Registration under the Act as an Employer or Employee Association entitles the organisation to:

  • Make applications;
  • Be notified of hearings;
  • Appear before the Commission;
  • Lodge Appeals;
  • Intervene; and
  • Enter into industrial agreements.

Appeals may be made to Full Benches against an award made by a Commissioner sitting alone, interpretation of awards made by the President, determinations made by a Commissioner on award interest by a registered Employer or Employee Association and refusal of the Registrar to grant application for registration of Employer or Employee Associations.


Award Coverage

There is a total workforce of 190,000 in Tasmania. Approximately 80,000 of the workforce is covered by ninety five State Awards.


The Labour Government Reforms

On the last day of sittings of the House of Assembly the Labour Government brought on for debate three Bills affecting the Tasmanian workforce. The Bills were the:

  • Industrial Relations Amendment Bill 1991;
  • Workplace Protection Bill 1991; and
  • Occupational Health and Safety (Miscellaneous Amendments) Bill 1991.

This eleventh hour action by the Labour Government had the effect of limiting debate in the Lower House and putting the Legislative Council in the position of either accepting them without alterations or killing them.

The Hobart Chamber of Commerce not having been involved in the consultative process vociferously raised its concern at the Government action in pushing the Bills through without allowing a wider community debate.

The Government reluctantly withdrew the Workforce Protection Bill and the Occupational Health and Safety Bill to be brought on at a later date. However, they refused to adjourn debate on the Industrial Relations Amendment Bill.

The upshot was a tense and awkward period of behind the scenes manouvering between the Employer Associations, which eventually led to the Legislative Council adjourning debate on the Bill.

The February Election ushered in a Liberal Government and hopefully we are looking at a totally new ball game.

The major concern of the Chamber of Commerce and other Employer Associations with the Amendment Bill was in the following areas:

  • Compensation for Unfair Dismissals - the Bill made specific reference to the capacity of the Commissioner to award monetary compensation in cases of unfair dismissals (where reinstatement was not appropriate) and in cases of redundancy.
  • The Chamber was fearful that this clarification of the power of the Commission would encourage unions to seek arbitration ahead of consultation. The majority of unfair dismissal cases traditionally have been settled 'out of court'. Small business felt particularly threatened by this proposed change.
  • The Tasmanian Confederation of Industries, which had agreed to the passage of the Bill, stridently argued the major benefit of the change for employers resided in an appeal provision being inserted to enable parties to a dispute to challenge the ruling of a Commissioner sitting alone on dispute hearings dealing with alleged unfair dismissals.
  • Award Enforcement---a major reform contained in the Bill was provision for the Commission to hear and determine matters involving alleged underpayment of wages or any other alleged breach of an award with a right of appeal to a Full Bench. Currently such matters are technically beyond the jurisdiction of the Commission and are dealt with in the Magistrates Court.
  • From the Chamber of Commerce's point of view the Bill in providing for the Secretary of Labour or a union to apply for a hearing increased the power and influence of the union movement, thus allowing the union to assume a 'policeman' role.
  • A further concern from small business was the apparent centralisation of power with the Commission. The role of the Commission is often misunderstood by small business, many of whom do not belong to Employer Associations.

However, the main point of issue with regard to the Amendment Bill was the lack of proper consultation across the business community. The Bill was the outcome of consultations between the Government, the Tasmanian Confederation of Industries and the Tasmanian Trades and Labour Council.


Current Industrial Issues

The Liberal Government's short honeymoon in office has rapidly come to an end with industrial relations issues beginning to occupy the front page of the papers.

At the time of writing this paper the APPM ultimatum to its workforce had not expired. APPM had instructed its employees that after the 2 April all overaward arrangements will cease and employees will be paid strictly in accordance with the Federal Award. The action has prompted one union official in a letter to the editor of The Mercury to write, "...the waters of Robe River have begun to trickle on to the Tasmanian landscape".

The Government appears headed for a major confrontation with the public sector unions following the Premier's announcement to lodge an incapacity to pay agreement with the Tasmanian Industrial Commission to head off pay rises, which will cost an estimated minimum payout of $43 million.

About 14,000 public sector workers are expected to get pay rises during the course of this year under a landmark award restructuring decision handed down by the Tasmanian Industrial Commission last November.

Special wage cases for teachers and police have been underway in the Commission for some time and could add to the bill.

If the hearing before the Commission is unsuccessful the Government could be forced to resort to compulsory redundancies.

The public sector restructuring decision sent shockwaves through the private sector. The Commission's decision to eliminate junior rates established on the basis of age is of particular concern. The precedent set in the public sector creates the potential for flow on into private sector awards, particularly in the clerical areas.

It is noted that the Full Bench in its reasons for the decision stated that, 'we are mindful of the cost of a restructuring of this magnitude, but we have no doubt that to continue with the existing awards will, in the long term prove counter-productive to the employer and to the community generally' --- time will tell!


The Tasmanian Picture

"Industrial relations is like watching cricket - you either love it a lot or detest it immensely."
Unknown

In the relatively small Tasmanian community it is difficult to avoid exposure to industrial relations. Like the recent saturation cricket coverage during our best forgotten World Cup fiasco you cannot escape from the ever present coverage of industrial relations, which seem to dominate our local media outlets.

The Tasmanian population is more dispersed than any other State population: some 40% of Tasmania's population resides in the Capital City, Hobart, compared with 73% of South and Western Australia's residing in Adelaide and Perth; or the 70% of Victorians residing in Melbourne. One of the consequences of this population dispersement is that local industries supplying local markets operate on a small sales base. The preponderance of small business throughout the State to some extent can be explained by the size of the local markets.

In July 1989 Tasmania had 19,500 small business establishments employing fewer than 20 people. With the exception of mining and manufacturing industries, over 95% of all establishments employ fewer than 20 people. The total numbers employed in small business in July 1989 were, 48,000, representing approximately 40% of private sector employment.

It is often stated that Tasmania's private sector is in essence a branch economy. Management functions are centralised in the company's mainland head offices leaving operative functions in the branches. More than half the organisations controlling the local Mining, Manufacturing, Transport, Communication and Finance Sectors of the Tasmanian economy have their head offices registered outside the State. Thus more than 60% of Tasmania's private sector employment is controlled by firm's with head offices outside the State.

I raise this point to indicate that small business is a major stakeholder in the Tasmanian Industrial System. Its voice must be heard despite the oft quoted difficulties in coming to grips with the problems of small business.

Of the major companies operating in Tasmania the majority are covered under the Federal Industrial Jurisdiction. The likes of Australian Pulp and Paper Manufacturers, Australian Newsprint Mills and Comalco are covered by Federal Awards or Agreements.

The one exception is Pasminco Metals-EZ Company. All of its operations in Tasmania are covered under the State System.

The performance of the labour market is closely linked to the performance of the economy overall.

Tasmania enjoys a relatively stable industrial relations record as illustrated in the chart below. The lower level of militancy of the Tasmanian workforce is probably attributed to the small size of the Tasmanian community. This enables a closer and more frequent contact between the participants in the system than elsewhere in Australia. The character of the Tasmanian community is generally regarded as fairly conservative as are the individual characteristics of the leading personalities in the system.

However, there is an independent spirit in Tasmania which surfaces in the application of industrial relations.

A recent example of this independence was evident in the negotiations that took place in 1991 on the development of a tri-partite Tasmanian Wages Accord, following the rejection of Accord Mark VI by the Australian Industrial Commission.

The parties to the Tasmanian Accord---The Tasmanian Government, Private Sector Employers and the Tasmanian Trades and Labour Council had regard to the following factors:

  • The unique nature of the Tasmanian economy, particularly its sensitivity because of the export oriented nature of its productivity base;
  • The depth and length of the current recession on the Tasmanian economy;
  • An unacceptable high level of unemployment, particularly in the area of youth unemployment.


The parties were also promoting a continuing high level of co-operation between employers and employees to provide benefits to all sections of the Tasmanian community.

The Tasmanian Accord died in the ditch due to a number of major hurdles that could not be quickly and easily overcome, such as the Federal Award Coverage of Tasmanian Workers.

Tasmania like other States has a relatively low level of unionisation in small business enterprises. It is apparent that those who work in small business enterprises, both employers and employees, are more removed from the mainstream of the industrial relations system than their larger counterparts. Consequently they do not participate to the same extent in decision making nor are they as a general rule consulted by Government or the major parties.

I support the conclusion of Richard Sappey that the position of small business enterprises in the industrial relations system has not been fully explored to date. Further research is required into a number of aspects, such as---the attitudes of employees; the extent of membership and influence within employer associations; the impact of tribunal decisions and the difference between industries.


Labour Market Reform - Expectations and Opportunities

As I stated at the outset of this paper, in my judgement the time is right for the Ray Groom, Liberal Government, to review and overhaul the existing industrial legislation.

"There is no magic source of productivity outside the workplace. Accords, national union amalgamation and efficiency principles are no substitute for the reorganisation of work at the front line by the people in the enterprise."
Fred Hilmer

The heart of industrial relations is at the workplace so we are being constantly told by the Federal Government and the proponents of award restructuring.

The expectation from the private sector has been built up with the focus of 'Enterprise Bargaining' heralding a shift away from the centralist system of Federal and State Industrial Tribunals. Unfortunately in Tasmania the gloss of Enterprise Bargaining is beginning to dull as disillusionment begins to surface throughout the community.

In Tasmania the opportunities for workplace reform are being shifted by the need to process Enterprise Agreements through registered employer organisations and the unions.

For small business, the experience of award restructuring has been a painful experience. The productivity trade offs negotiated between the parties to an award in most cases do not filter through to smaller enterprises.

Labour market reform in Tasmania is essential in the eyes of the private sector. There are a number of issues that have been earmarked by the private sector for change. They include:

  • Enterprise bargaining---Without oversimplifying the problem a dramatic shift is required away from the existing requirement of processing agreements through registered employer organisations and unions. The freedom of choice should be available to the employers and the employees to negotiate an agreement with minimum reference to the tribunal.
  • An opportunity should also be made available for small business to collectively negotiate industry or group agreements in a similar manner to an Enterprise Agreement. This would allow small business operators to achieve some direct and realisable productivity benefits.
  • Right of Entry of Union Officials - The current unfettered right of unions to enter an employer's premises to inspect employment records at best should be scrapped altogether, or at worst be restricted to inspection of records only of those employees who are members of the union. The existing legislation is a constant source of criticism and concern by employers in Tasmania.
  • Occupational Superannuation - The industrial legislation to be varied to preclude the Tasmanian Industrial Commission from nominating specific funds in awards. Such decisions by the Commission represent a strong case of restraint of trade.
  • The long term interests of employees is surely best served by a free and competitive environment where success will depend upon the performance and merit rather than a position of privilege.
  • Penalty Rates and Leave Loading---A recent survey of Tasmanian businesses carried out for the Tasmanian Chamber of Commerce in 1991 revealed penalty rates and leave loading as the most important industrial relations issue affecting employment. The recreation and personal services sector reacted particularly strongly, followed by the wholesale and retail sector.
  • Both these issues have been recognised as 'no go' areas in the past. However, the oft quoted 'one man's wage rise means another man's job' could well be translated nowadays into, 'the payment of penalty rates is preventing the employment of additional employees.'
  • A review of the role of the Tasmanian Industrial Commission Ä I do not support the total abolition of the Commission. Nor do I support the State Tribunal being an arm of the Australian Industrial Relations Commission.

The feedback I pick up from the private sector on this vexatious issue is generally directed toward deregulating the system to recognise the shift toward the workplace and away from a centralist industrial relations system.

  • Education---The advent of award restructuring, coupled with the push to deregulate the industrial relations system places demands on management, many of whom in this State do not have the skills to handle the added responsibility of Workplace Reform Programmes. Negotiations are giving way to communication, consultation and common understanding, built on mutually shared goals.

The Government and Employer Associations need to grasp the nettle and embark upon programmes to lift managerial skill in workplace relations.

  • The Term 'Industrial Relations'---As I move throughout the business community in Tasmania I am continually confronted with a negative reaction to the term 'Industrial Relations'. It smacks of the I.R. Club; it is a constant reminder of the 'them and us' confrontationalist approach to employee relations.

The opportunity exists for the Government to turn over a new leaf and adopt a new term to describe workplace relations.


Conclusion

Tasmania has exhibited an independent attitude to labour market regulation since Federation. Whilst there has been a progressive shift toward a system that lines up with mainland standards there has been a dominant theme of 'we will do it our way'.

Tasmania is an ideal situation to embark upon a significant labour market reform programme. The size of the community and the regional make up of the State provides a good opportunity for the rest of Australia to assess and monitor the impact of change. The moment should not be lost by the State Government to embark upon a complete review of labour market regulations.

There are always plenty of good reasons for putting reform programmes on hold. It requires a commitment from the Government to act now before it is too late.

The key imperatives for change have been addressed in this paper. I am certain there are others.

I would like to conclude with the following quote:

"The most prominent place in hell is reserved for those who take a neutral stand on the great issues of life.
Billy Graham


Endnotes:

1. Miley, J.W., Chairman of Industrial Boards., State National Wage Decision 12th January 1929.

2. Ogilvie, E.J., State Industrial Registrar, Address to the Economic Society of Tasmania, 22nd September 1942.


Why HR Nicholls?

More...