For The Labourer is Worthy of His Hire

Tasmania's Window of Opportunity

Eric Abetz

Mr Chairman and delegates, thank you for the invitation to address you this morning. Having bought a book some ten years ago entitled "One More Nail" and accepting the treatise it contained as compelling, I have been delighted to meet its author and our chairman for this session. It is also an honour to address this group of "political troglodytes and economic lunatics". That description was employed by the then Prime Minister, Bob Hawke, to describe the H R Nicholls Society some six years ago. However, that description no longer seems appropriate. So instead, let me congratulate the H R Nicholls Society on its input, contribution to the intellectual debate, and re-arranging the industrial relations agenda in this country. Many young Australians will be thankful for the employment opportunities that will flow as a result of your initiatives. Michael Porter's analysis in "Arbitration in Contempt" explores this area and has explored the reforms required, especially for young Australians.1

My friend, Forbes Ireland, has given you a detailed analysis of the nuts and bolts of the Tasmanian system and I intend, with your indulgence, to spend my time dealing with some of the broader philosophical questions and the window of opportunity for reform that now exists in my home State of Tasmania.

John Hyde has previously delivered a paper entitled "The Political Barriers to Changing Centralised Industrial Relations".2 I intend to discuss this topic from the Tasmanian perspective.

On February the 1st, 1992, the people of Tasmania elected a Liberal Government with an over-whelming majority. It replaced the Green/Labor Accord and its attendant instability.

It was an election which very properly concentrated on the issue of jobs and the stagnation present in the Tasmanian economy. The Liberal Party adopted the theme "Jobs. Security. Solutions". It was a basic campaign with no electronic advertising. Neither political party was endowed with substantial resources. The campaign was low-key and grass roots oriented. The strategy was to create a media opportunity each day for a 30 to 60 second grab on the television evening news. Hardly the sort of campaign which allowed considered and detailed debate.

The Liberals return to power in Tasmania was seen by many as the "proper thing" and the two and a half years of Labor/Green rule as "an aberration". That mentality is an interesting reflection on the metamorphosis that has occurred in the Tasmanian political landscape.

Prior to 1969, Tasmania had never had the opportunity of experiencing a Liberal government. In 1969 the Liberal Party formed government in coalition with one Kevin Lyons. That government had many of the weaknesses experienced by the Green/Labor accord other than the leadership of Sir Angus Bethune far exceeded Michael Field's in every way.

That government lasted some two and a half years and Labor was returned to its "rightful role" of government. It took the Liberals in excess of another decade before winning office again, and this time in their own right, under Robin Gray, a leader of strength and determination. A leader who very capably was able to build on the federal electoral successes of 1975, 1977 and 1980.

Prior to 1972, the Liberal Party only held one federal House of Representatives seat. In 1972 it held not a single seat. 1975 reversed that scenario completely and we won every House of Representatives seat. The solid Labor electorates of Braddon, Lyons, Bass and Franklin, fell under the Liberal onslaught.

Today the one seat that used to be Liberal, Denison, is now the only Labor seat.

The electorate of Braddon, where the ALP won 5 seats to the Liberals 2 in 1972, returned the compliment against Labor in 1992, with the Liberals winning 5 seats, Labor 1 and the Greens 1.3 To achieve 5 seats requires in excess of 60% of the vote.

From a professional Opposition with minimal success to becoming the dominant party, a very real and fundamental metamorphosis took place. From the losing caterpillar, the Liberal Party turned into a winning butterfly. The Party was no longer restricted by the cocoon of Opposition. Through its transformation, it flew from its cocoon into the larger world, which included victory and government.

There had been a restrictive mentality within the Party which did not enable us to break out and explore the requirements for government. Under Mr Gray the Liberal Party obtained a leader who wanted to grow wings. And grow wings he did and flew into government with a vigour and vitality not before witnessed in Tasmania.

The victory was largely achieved by thousands of former Labor-voting blue collar workers turning to vote for the Liberal Party. Mr Gray had a rapport with the miners, forest workers, factory and process workers. Mr. Gray's continuing personal popularity in his electorate is based on that empathy.

During the Gray era there was a sense of achievement, growth and stability. Achieved by new projects and unashamed support for development. Jobs were secure. The Liberal Party achieved its victory largely due to the employed Tasmanian deserting Labor and embracing the Liberal Party. The Trade Union movement, of course, did not abandon Labor. However, the Liberal Party considered it owed a lot to the employed Tasmanians who had changed their traditional voting patterns and no-one would argue with that. Unfortunately though, the trade union movement was able to exert an influence on the government because of its reliance on the vote of the people who were allegedly represented by the trade union movement. The fact that the call of the trade union movement to vote Labor had been ignored by the bulk of its membership, did not convince the government that it should similarly ignore the trade union movement. Instead, some would suggest that the government listened too closely to it. I don't wish to comment on that criticism.

During the Liberal Party's time in opposition between 1989 and 1992 the issues of the day were stability, the Royal Commission and then a period of leadership instability. Within a fortnight of obtaining the leadership, Ray Groom was fighting an election campaign. The topic of industrial relations did not rate highly as an issue. During the campaign, the Liberals, quite properly, from a political stance, took the approach of promising as little as possible other than emphasizing the need for jobs, security and solutions. Industrial relations was not an election issue. Indeed, it did not rate a mention in the media. The Tasmanian Trades and Labour Council (TTLC) tried desperately to make it an issue but failed.

In the booklet entitled "1992 State Election--- Liberal Party Policy Statements" the Liberals summarised all commitments made by its leader, Ray Groom, and its spokespeople. The booklet contains 180 pages. Two and a half pages are devoted to industrial relations and the heading of the section is most telling. It is entitled "Industrial Relations---Policy Statement" and sub-titled "Answers to TTLC Questionnaire".4 So, the Party went into the campaign without an industrial relations policy and only addressed the issue when requested to do so by the TTLC. The intellectual giants of the TTLC (undoubtedly on overtime) were able to develop a comprehensive and in-depth questionnaire. It contained three questions. The question with which we ought concern ourselves is Question 3. The question was:

Question 3---"Will you give a commitment not to introduce industrial relations legislation in any way similar to the recent New Zealand and New South Wales Acts and as proposed by the federal Liberal Party?"

Answer:---"There is no present intention of a State Liberal Government implementing any special new form of industrial legislation. Any need for change that emerges would be subject to full consultation with you at all stages.

The Maritime Council formed by the former Liberal government worked well and similar industrial relations methods will be adopted again.

The enterprise bargaining principle adopted by the TTLC is supported and your executive can be assured a formal arrangement of consultation with the TTLC will be implemented."

The answer was brilliant "political speak" leaving the door open in the event that "a need for change emerges".

On February the 1st, 1992 the people of Tasmania swept Ray Groom into the Premiership and the Liberals into power.

The background I have provided is designed to give you an understanding of how the Liberal Party in Tasmania shed its professional Opposition status to become the dominant political force. It relied heavily on Tasmanians shedding their Labor allegiance Ä an allegiance which had often been in the family from the foundation of the Labor Party. The trade unions were perceived as being potentially capable of undermining the electoral success of the Liberal Government. Undoubtedly, the Industrial Relations Club also advised the government not to rock the boat. Industrial relations was not a major issue. No noteworthy reforms were introduced during the two terms of Liberal government other than the Worker's Compensation Act which many believe was heavily influenced by the trade union movement and our friends in the Industrial Relations Club.

In short, the Liberal Party was not keen to take on the trade union movement, or expose rorts other than the 17% leave loading with which I will deal later.

Well, the Liberals are in power again. And the questions I pose are, "What are the opportunities for the Liberal Party on having been returned to government to reform the Tasmanian industrial relations system? What windows of opportunity exist?"

As an introduction to that segment, I would assert that four fundamentals for change exist:

1. The government has a stable, workable majority.
2. The Upper House (the Legislative Council) consisting of 17 Independents, 1 ALP and 1 Liberal, would be receptive to well considered reforms.
3. Most importantly, the people of Tasmania are crying out for employment opportunities, so there is a reservoir of goodwill amongst the people to take whatever action may be necessary to increase employment levels. The people of Tasmania may well indicate to the government that a "need for change" has "emerged".
4. The emerging need for change being found in the contempt with which the arbitration system is currently held and the realisation it is responsible for a number of our economic woes and ills including the high level of unemployment. But this point needs further public airing as John Hyde said in his treatise, "The first requirement of good industrial relations is a public understanding of the nature of the problem".5 The discussion during the last State election campaign, concentrating as it did on jobs, security and solutions, really did not address the significant underlying issue of industrial relations, of industrial policy and the suffocating effect of those policies on the Tasmanian economy. Just as one aside, the cost of coastal shipping is absolutely crippling to the State's agricultural and other export industries. Clearly, more work needs to be done to highlight, air, expose and educate the public about these problems. Forums such as this are a good start in providing greater public awareness of the very real negative impact that the industrial relations system has had on our economy and therefore on the job opportunities that are available to our fellow citizens.

So what changes are needed? In answering that question, I seek to serve up a smorgasbord of issues which need to be addressed as part of the solution. I do not suggest in any way that the solutions proposed would be a complete cure-all like the Carbolic Smoke Ball6 was said to have been some 100 or so years ago.

The areas of reform required are as follows:

A---Voluntary Unionism

This issue is central if real reform is to be achieved. The need for unity to ensure that a labourer is paid an amount "worthy of his hire" has been overtaken by unity for political and power-grabbing reasons. We have trade unions with Jack Mundey imposing green bans. As Jack Mundey said "It is far more noble for a union to take action aimed at protecting the environment than to go for another $10". We have unions seeking to determine environment policies.

We have unions banning exports from BHP to Indonesia in solidarity with the people of East Timor. We have unions seeking to determine our foreign policy. The list goes on. The Trade Union Movement's roots have grown into a tree that seeks to cast a shadow over every aspect of our lives. In a free liberal democratic society, the parliament ought be determining policies. Individual groups ought be free to have their say and seek to persuade governments and influence them. But to allow them to use their industrial muscle for purely political reasons is unacceptable and should not be tolerated. The only reason trade unions can embark on these frolics is because they realise that their members can't resign in protest because to do so would be to discard themselves and their families on the excess labour waste heap we have in this country.

The freedom to associate also by sheer force of logic must include the freedom not to associate. And there is no freedom if the exercise of that freedom assigns one to the unproductive sector of one's country. If unions had to justify their existence to their membership they surely would concentrate on a more restricted and more appropriate range of activities.

The genesis of the Trade Union Movement in Australia is found in the 1800s in a world socially, economically and technologically completely different than we experience today some 100 years later. Education, health, transport and communications to name a few areas of human activity have developed beyond the expectation of any of the founding fathers of the Trade Union Movement. I am sure that when the Trade Union Movement was founded, the founding fathers never had within their vision for the Australian populace an Astor T.V., cast iron lawn mowers, or Hills Hoists. Yet the prevailing mentality of the 1800s appears to have been retained by the Trade Union Movement in a completely different social and economic environment.

The need for voluntary trade unionism is essential if fundamental freedoms are to be restored in this country.

B---Voluntary Student Unionism

As an aside and as a trip down memory lane, allow me to further recommend the abolition of compulsory student unionism. In the Tasmania University Act the Administration of the University has the power to levy such fees as it deems appropriate. A compulsory student union fee has been declared such a fee. The sanctions for non-payment can only be imposed by the Administration. So the vice-chancellors of this country are in effect the shop stewards of the student union movement.

As students, people like Michael Kroger, Michael Yabsley and myself, campaigned actively for its removal. I hope that I will live to see voluntary student unionism implemented Australia wide. The thought of compulsory unionism at tertiary institutions---allegedly the breeding ground for individualism and free speech Ä is intolerable. Yet the Administrations and other weak-kneed elements of the universities persist with this anachronism. Compulsory student unionism is particularly offensive and damaging because it trains tomorrows leaders into a mind set for compulsory membership as "appropriate". It is something they learn to live with and accept as being part of the appropriate social fabric. Any thought of rebellion is quickly quashed with the reality of results being withheld as has been threatened and practised by some Administrations.

To achieve a new mind set amongst our future leaders we will require action. Liberal parties have been notorious for introducing legislation to combat this evil whilst in opposition and conveniently never getting around to it when they are in government. This area needs reform as well.

C---The Industrial Relations Club

The government needs to address this dinosaur and place it with the other dinosaurs---on the extinct list. For too long a cosy little network has systematically destroyed this country's economic fabric and manufacturing and export capacities.

The Trade Unions have always had their act together. They have always been aggressive, determined, unified and proactive. On the other hand, the employer groups, usually the relevant chamber of industry, have sold out the economy and the viability of their industry. Like true reactionaries they have allowed the agenda to be set by the Trade Union Movement, reacting to it and then chuckling in foolish delight when they settle a union claim for half of what was originally demanded. Theirs has been a vision chronically affected by the double disability of short-sightedness and astigmatism.

And the third partner---government---has rarely had the courage or determination to involve itself other than to administer a "quick fix". The patron of this club is undoubtedly the Industrial Relations Commission which allows the sweetheart deals of preference clauses and favoured treatment of certain superannuation policies, to identify two, to persist. Put simply, preference clauses ought be outlawed.

The favouring of a certain superannuation scheme in an award is indicative of the unashamed manner in which the Industrial Relations Club stitches up business for itself. The Tasplan Superannuation Scheme is one such example, being a joint venture of the TTLC and TCI and blessed by the then Liberal government. Surprisingly, this plan is the award plan in many awards. Access to other superannuation schemes which may well prove to be more productive to the employee have simply been for all intents and purposes disallowed. This area needs urgent attention.

Another example of the Industrial Relations Club's engineering was the Industrial Relations Amendment Bill of 1991. Forbes Ireland has discussed certain of its aspects in detail and I will not further comment on its provisions. All that I would wish to say is that it was concocted between the government, TTLC and TCI. No consultation with the Chambers of Commerce, no public discussion. Just another deal. A deal that was short-sighted and had the purpose of strengthening the moribund Industrial Relations Commission's system. I am pleased to hear that it is not on the government's agenda.

D---The Right to Individual Representation Before the Commission

The right to individual representation before the commission has to be implemented. The right to justice and the right to a fair hearing should not depend upon membership of one or the other players in the industrial relations club.

E---17% Leave Loading

The former Liberal government was courageous and visionary in tackling this problem and obtained a waiver for a period of twelve months from the need to provide this outrageous, illogical and economically debilitating payment. Business support for this move was minimal, if not totally non-existent. It is interesting to note that Clyde Cameron has even disowned it and condemned its continued existence. Yet it remains in force. And the powers that be seem impotent to deal with it. As a cost to business, it is considerable. As a disincentive to employment, it is monstrous. Yet it continues. Why?

Hopefully, this matter will be addressed by all because on a very rough calculation, employment could be increased by approximately 1% if it were to be abolished without extra costs. Surely, it is worthy of consideration. If not for the sake of business, at least for the sake of our fellow Australians who are without a job. In a Tasmanian context, it would mean another 300 Tasmanian public servants could remain in employment.

In Tasmania we are in the farcical situation of borrowing money to sack public servants. The abolition of the 17% leave loading could well obviate the need for the redundancies and the further borrowings.

The leave loading issue would enable the government to take the moral high ground, would be a minor issue and one which would ultimately be achievable. But I should add, that if this is to become a reality, the business community will need to be more supportive and in a proactive public way, not like its shameful silence in the past.

F---Penalty Rates

In a tourist state like Tasmania, the existence of penalty rates has seriously affected the viability of small ventures and denied many students and others seeking part-time work or casual work from obtaining employment.

I still recall as a student working as a farm hand on a poultry farm. The farmer needed seasonal work undertaken and I as a poor student needed an influx of funds. On the Australia Day long weekend I indicated a desire to work on the Monday. I needed the money. There was work to be done. But excessive and irrelevant penalty rates applied making it commercially nonsensical for the farmer to employ me on that day.

My offer to work for the normal rate of pay was rejected for fear of a possible prosecution by the Department of Labour & Industry or a union blackban. The result was that the poor student was kept poor and the farm which needed the input of labour was denied that input. In short, everyone lost out. Rationality and common-sense need to be returned.

Conclusion-Enterprise Bargaining

Mr Chairman and delegates, voluntary unionism, both industrial and at tertiary institutions, abolition of leave loading, a realistic approach to penalty rates, the exposure of the Industrial Relations Club as the wrecker of our economy, are all individually major areas of reform, all of which need to be addressed. But they need to be addressed in a unified manner Australia wide so that the temptation to switch to federal awards is removed. Enterprise bargaining with its attendant freedom for sound, sensible and rational negotiation would be the key to achieving most of those results.

The possibility for reform is virtually endless.

The need for reform is urgent.

But is the will for reform present?

The answer will determine the future viability of Tasmania's economy and the possibility of truly establishing jobs and security through workable and lasting solutions.


1. 'Arbitration in Contempt'-Proceedings of the H R Nicholls Society Chapter 9.

2. Ibid Chapter 7.

3. Tasmania's electoral system is based on the boundaries of the federal electorates with each electorate returning seven members. It is a proportional representation system known as the Hare Clark System. There are 35 members in the House of Assembly. The Liberals hold 19 seats, the ALP II and the Greens 5.

4. See "Annexure "A".

5. 'Arbitration in Contempt'-Proceedings of the H R Nicholls Society Page 173.

6. Carlill v. Carbolic Smoke Ball Company [1892] 2Q.B.484 In this case the Defendants were the proprietors of a medical preparation called "The Carbolic Smoke Ball". They advertised to the effect that the Carbolic Smoke Ball was virtually a "cure all". They were successfully sued when the Carbolic Smoke BalI failed.

Annexure 'A'


Answers to TTLC Questionnaire

Question 1:

What immediate, practical steps will your party take to put people currently unemployed back to work and what is your program of action for the next four years to create and maintain employment?

A. I agree with your question. The real issue is for immediate jobs. We have placed emphasis on that in our policy releases.
  • Our Jobs in Forestry policy outlined $2 billion of investment and several thousand jobs.
  • The important aspect was immediate action on the Southern Forests proposal, immediate action on pursuing the pulp mill, and support for a lift in woodchip operations.
  • Our Jobs in Mining policy was directed at providing an additional prospective area for the mining industry for the same reasons.
  • Our Tas Jobs for Youth policy creates over 1000 jobs over the next three years---400 in the first year alone---for young people with subsidies of up to $4000 a year.
  • Other policies as outlined in our releases have similar targeting with jobs and youth employment as a priority.
  • Most important of all, we know, as well as you do, that we are not going to attract the investment we want to create genuine jobs in the construction, and then operational phases, unless we have a majority stable government. Worse than that, investment will decline and jobs will actually be lost if a hung Parliament results. The Greens won't provide that prospect and they wish to reduce power to industry and take other anti-employment measures.

    There is no immediacy in the Labor plans for jobs:

  • Jobs from any gas field are at least 7 years away.
  • A start on the pulp mill has been deferred at least two years as a minimum.
  • Tamar Valley and Triabunna woodchip plants would be closed, according to Field's speech.
  • Any new jobs in the Huon---the proposed 1000---would be subject to a Green veto.
  • Careful tax relief to assist small business to employ more people has been rejected outright.
  • Your Executive must therefore look at employment and job creation in a broad, apolitical context, to identify that stability is the only way to secure and attract investment and jobs.

    Question 2:

    Do you intend further cuts in public sector jobs or services or the sale of public assets? Please provide a detailed specific list of your proposed actions.

    A. A Liberal Government will stop the public sector redundancy scheme and introduce a selective natural attrition programme. Redundancy arrangements currently in progress will proceed to completion. The natural attrition policy will recognise specialist and urgent need positions.
    A minimum extra 350 junior positions will be established in the public sector in each year of office.
    There is considerable concern at the Government's cost estimate of up to $60 million for the recently ratified public sector award restructure. Mr Greg Vines, TPSA, has indicated this figure is grossly exaggerated and Mr Barker has accepted his offer of a brief on Mr Vines return from leave early in February.
    In the event there is considerable effect on the State budgetary position, public sector expenditure would have to be reduced to compensate, with the possible solution of a reduction in employee numbers. Increased taxation is not a preferred option.
    As far as the sale of Government assets is concerned, a Liberal Government will not be implementing a wholesale privatisation policy. Reports of sales up to $400 million are fanciful.
    On winning Government a detailed assessment of the State's financial position will be undertaken. There are no immediate plans for privatisation except the MAIB/TGIO proposal. This will not occur for at least three years. The matter will first be subject to a White Paper examination and full consultation.
    I guarantee that full consultation with TTLC and TPSA representatives will be undertaken before any privatisation affecting public sector employees is implemented.
    The PSA have been informed that regular quarterly meetings with Government will be conducted.

    Question 3:

    Will you give a commitment not to introduce Industrial Relations Legislation in any way similar to the recent New Zealand and New South Wales Acts and as proposed by the Federal Liberal Party?

    A. There is no present intention of a State Liberal Government implementing any special new form of industrial legislation. Any need for change that emerges would be subject to full consultation with you at all stages.
    The Maritime Council formed by the former Liberal Government worked well and similar industrial relations methods will be adopted again.
    The enterprise bargaining principle adopted by the TTLC is supported and your Executive can be assured a formal arrangement of consultation with the TTLC will be implemented.

    Ray Groom