From Industrial Relations to Personal Relations:
The Coercion of Society
Keynote Address: Worse Might be Better?
Professor Judith Sloan
Thank you very much for the invitation to open proceedings
at this conference. I am looking forward to a vigorous
discussion at the conclusion of my remarks so that
I can learn something from the debate and perhaps even
write a column as a result!
I was on an early morning flight last Wednesday and
watching the news commentary on the aircraft TV monitor.
As I watched this program I began to feel distinctly
uneasy and concerned about my mental condition. I
even began to admonish myself, "Judith---this is it,
your time is up---you have been on too many interstate
trips, you have taken on too many activities and you
have just dreamt that Warne took all those wickets."
I was therefore very relieved when the plane was coming
into land and the air hostess actually apologised for
showing us yesterday's news.
The reason why I tell you that story is that it seems
to me that in industrial relations, if we do close
our eyes and blot out the visual evidence of the reality
of the nineties, we find ourselves back in the 1970s.
I have always believed that the H R Nicholls Society
was looking forward to the day when its vision would
be accomplished; that one day public opinion would
force the legislative changes necessary to put behind
us all the burdens of trade union privilege and debilitating
labour market regulation; and that there would come
a time when we could all go off and have a really good
celebratory drink, and close the Society down.
It seems to me that, unfortunately, that hoped-for
celebration is quite a long way off. In fact when
I close my eyes and think we are back in the 1970s,
in some ways I wish that was true. I believe things
today are actually getting worse and not getting better.
For example there is a great deal of official rhetoric
about moving to enterprise bargaining. But the reality
is that we still have a system of compulsory arbitration.
Not only do we have the traditional Australian practice
of that arbitration system but, in addition, we see
a disturbing new development which is really about
greater regulatory intrusion into management practice
and decision making and indeed into enterprise strategy
and policy making at quite a broad level.
So despite the Federal Government's rhetoric about
moving away from compulsory arbitration, about "lowering
the centre of gravity", about "embracing enterprise
bargaining", my interpretation is that these words
are hollow, and the reality is, in fact, quite the
When we look at the Commonwealth Industrial Relations
Reform Act 1993, [the Brereton Act] we see the word
"reform" as an unfunny joke. I suppose it is reformist
in the sense that it is reactionary reform, but if
there was ever a misnomer that is one.
The members of this Society no doubt saw that Act
as an extraordinarily retrograde piece of law. What
1994 has shown us is that what was, on paper, a considerable
worry has in practice been more than a worry. It has
turned out in practice to be quite terrifying and so
what I will do is go through some of the key developments
of 1994, the burgeoning of Australian regulatory intrusion
into people's working lives, as the implications of
the Brereton Act have unfolded. Despite this melancholy
story I will finish---since Christmas will soon be
upon us---on a slightly good news note.
I will begin by telling a few jokes. I have a comparative
advantage in telling jokes because I can get away with
jokes that the blokes no longer dare to tell. One
joke which I told to a workshop of union delegates
to which I was surprisingly invited is as follows:
- Q. "What is the difference between the IRA and the
- A. "You can negotiate with the IRA".
- Q. "What is the difference between the ACTU and Jurassic
- A. "One is about a group of dinosaurs hanging around
waiting to get extinct. The other is a film".
The Commonwealth Industrial Relations Reform Act,
1993, is a very bad piece of legislation. Even the
people who would embrace its objectives would nevertheless
regard it as an extremely bad bit of drafting. For
those of you who are interested in the behind the scenes
story of it, it probably was not properly drafted by
parliamentary draftsmen. It is believed to have been
drafted by Iain Ross during weekends and I think it
shows. I know from personal friendships with people
in the Industrial Relations Commission---well intentioned
people in the Commission---that it is largely an impossible
statute for them to work under. So even if one were
prepared to embrace the objectives of the Act and I
suspect there is no-one here that would be, it is an
extremely defective statute.
It is a curious mish mash of essentially a continuation
of the Australian compulsory arbitration tradition
with selected bits and pieces of provisions out of
collective bargaining jurisdictions, the US jurisdiction
particularly. So they have taken things such as "bargaining
in good faith", the "right to strike", bargaining periods
of limited duration, etc, and they have added these
selections from US practice to long-standing Australian
legislation where compulsory arbitration still remains
as the centre piece.
Trying to append bits and pieces from a collective
bargaining jurisdiction onto a highly regulated, centralised,
compulsory arbitration system can only produce an incoherent
and unworkable system.
So my first piece of bad news is the continuation
of awards. Enterprise bargaining which---although
still collective bargaining in the usual sense of those
words---nevertheless was collective bargaining at a
level where people could reach decisions about their
own working lives in a meaningful and realistic way
and was essentially a break from the past. The official
rhetoric was that, allowing for some transition mechanisms,
we were heading in the direction of genuine enterprise
bargaining and awards would fade into the background.
But we don't have that. The centralised award system
remains at centre stage. For a while people like me
were getting quietly excited because we had the safety
net case where the majority of submissions to the Commission
were arguing that these awards should be stripped back
to their bare minimum conditions and that enterprise
bargaining should fill in the rest of the picture.
Now admittedly that was going to be the second best
outcome but if the awards became minimalist documents
setting out some basic minimum conditions, then I think
there may have been progress.
If we think about awards, we find we can usually recognise
three separate parts within them. The first part is
a statement of basic conditions such as hourly rates
of pay, working days per week, working weeks per year,
shift obligations, for example. These are the sorts
of things which will carry over into any contract between
employer and employee, whether enterprise based or
The second part comprises various prescriptive clauses
about all sorts of details of daily working life; about
starting and finishing times; the time and duration
of tea breaks; about ratios with part-timers to full-timers;
about the details of shift arrangements; and so on.
These are very prescriptive details that one would
normally expect to be left to the discretion of management
or handled at a very decentralised level of enterprise
The third element in the award package is the most
insidious of all. It is those clauses which underpin
and promote great mistrust amongst employees of management
and management systems. Such clauses often, for example,
insist on promotion by rigid seniority; require consultative
committees and the like. These sorts of clauses, within
awards, constitute attempts by the arbitrators, in
effect, to impose external management systems via the
award system because of their deep distrust of the
market economy and the way in which such an economy
rewards co-operation in the work-place. It is the
old "them and us" fundamentally Marxian framework of
class war in contemporary guise.
It is those two latter aspects of award conditions
which are extremely destructive and which we were all
getting very excited at the possibility of a return
to an award system where only the first element, the
basic safety net items, were set down by the tribunals.
But alas it was not to be. I suspect we might have
been subject to some sort of group think mentality
where we thought it must happen. Of course when we
look back we realise it was never likely to happen.
When you have the President of the Industrial Relations
Commission saying that she saw the role of her Commission
to inject social justice into work places, it was pretty
unlikely that she was about to strip back award conditions
to their bare bones. Nevertheless one always lives
in hope, doesn't one.
One of the most outrageous and extraordinary examples
of detailed management control through the award system
is the recent decision covering the Victorian Education
Department. This department is nominally the responsibility
of a Minister of the Crown who is answerable to the
Parliament of Victoria for the administration of that
department. As far as two distinguished members of
the Australian Industrial Relations Commission are
concerned, such theories of responsible government
are old hat. These arbitrators are Senior Deputy President
Joe Riordan, formerly Federal Secretary of the Federated
Clerks Union and Minister in the Whitlam Government,
and his protege, Commissioner Frawley. Their view is
that they should, through their award-making powers,
restructure the Victorian Education Department according
to their image.
I recommend that any of you who might think I am an
alarmist to read Commissioner Frawley's decision on
the selection of principals, and of staff by principals,
within the Victorian Education Department, because
you won't think me an alarmist any more. Included
in the award are things such as there must be prior
consultation about the proposed round of selection
appointments; the establishment of selection panels
with union representation and gender balance are prescribed;
and it goes on to include the level of detail concerning
the reimbursement of accommodation and travel expenses
incurred by those persons who serve on the selection
panel. So for those of us who thought awards were
going to fade away, this decision is, I think, an extraordinarily
worrying one. If two appointed Commonwealth arbitrators
can prescribe in this degree of detail, how a Department
of State, responsible to an elected Minister of the
Crown, is to be managed, then the textbooks on constitutional
theory and parliamentary practice will have to be rewritten.
In his opening remarks your President raised the recent
family care leave decision. I tend to agree with him
about that. It was depicted in the press as essentially
a victory for the employers because the Commission
refrained from granting the ACTU claim for an additional
five days paid family care leave. I think if you read
the decision carefully and interpret it carefully,
we have a development which I think is of considerable
concern. One point of concern is that the Commission
has chosen to be quite restrictive about this. It
said that sick leave now must extend to carer leave
and we are going to define carer leave to include this
broad definition of the family. That is a very top
down kind of decision.
The other sting in the tail in the decision, one that
didn't seem to be picked up by the commentators, was
that in 12 months time the compassionate leave entitlements,
which are in most awards, and which comprises three
days paid leave in the event of a death of a relative,
will now be rolled into sick leave provisions. So under
these new deemed flexible arrangements those additional
three days will be available for carer leave as well.
I think the view that this was some enormous triumph
for the employers is a misreading of that decision.
In 12 months time, therefore, we will be going from
the normal 10 days paid sick leave to 13 days paid
sick leave and with a broader ambit of what sick leave
can be taken for.
This decision undoubtedly increases the price of labour
for all award employees. I wouldn't seek to minimise
the economic costs of that decision in the way that
the press seems to have done.
The other point I would make about awards is that
this is a "watch this space" area. At the moment there
is an uncoupling of what is happening in the agreement
field, and what is happening in the award area. Award
rates of pay, currently, are only being adjusted at
the margin to take into account safety net decisions.
Now the Industrial Relations Reform Act is an extraordinarily
pro union document and the unions are not going to
put up with this minimal revision of award rates of
pay for long. They use the awards as their test for
"no disadvantage" in any enterprise bargaining, in
which they have a guaranteed place, and so if award
rates of pay, and agreement rates significantly diverge
over time, then the awards will not form a good basis
for judging "no disadvantage". During the next two
years, I believe, we will see a major revision of award
rates of pay and, again, given the likely state of
the business cycle at that time, the economic consequences
of that may be quite horrendous.
A retail worker, of course, must earn 92% of a fitter's
rate because that is what we determined in the end
of the 1980s through the Minimum Rates Adjustment process.
So once we have adjustment of some of the major awards,
the dominoes will begin to fall and we will get a revision
of all the minimum rates established in the awards.
So the idea that somehow we have moved away from the
good old days of centralised, across-the-board regulation,
and we are heading off in the direction of enterprise
bargaining is, I think, the kind of rhetoric about
which members of this Society are very sceptical.
But I worry that out there in the broader community
there is some acceptance of it and there tends to be
a soothing denial of both the current trends and the
future trends. I feel lonely, sometimes, when writing
So it is very bad news on the award scene. I think
it is also very bad news on the agreements scene.
The bad news is the over regulation of the way in which
agreements can be certified. My preferred model would
not actually be to have a certification procedure in
respect to agreements. You might have some registration
arrangements where from time to time there is the sort
of audit to make sure that they comply with minimalist
regulation. But today we have the most extraordinary
degree of over-regulation of the processes by which
agreements are made, and that is particularly true
for the non-union route of the enterprise flexibility
agreement route. There are 21 steps that have to
be ticked off in going through that process. So it
is not surprising that there have only been 12 such
agreements concluded and I am not sure that we are
ever going to get near 100 at the rate we are going.
There are some really weird arrangements in respect
to consultation. If you haven't consulted the women
and the migrants and the like, you may get your agreement
knocked out. Of course we had the anomalous situation
of the Chase Manhattan Bank with its 1,500 employees,
but unbeknown to the Bank there was one union member
and, because it hadn't notified the union of its intention
to negotiate, because of that one union member, it
was blocked by the Commission. The agreement had been
voted on and agreed to by 95% of the workers. But
to no avail.
This situation may lead to unions offering life memberships
on a scatter gun principle to a large number of people
selected at random. This would compel enterprises
to notify the union of their intention to bargain,
on the grounds that there was a statistical possibility
that a union member might exist within their company.
Some of my colleagues, when the Brereton Bill became
law, said to me that the public interest test in the
EFA provisions won't matter. But the public interest
test in the EFA provisions has proved to be more important
than people thought. We had the case recently with
the ambulance drivers out at Knox Municipality where
IRC Vice President Iain Ross decided that he didn't
like the look of those 24 hour shifts on public interest
grounds and therefore knocked back their agreement.
We had Deputy President Ian Watson several months
ago knock back an EFA in respect to the ROH wheel making
plant in Adelaide, on public interest grounds, because
he didn't like the look of the longer shifts.
Thus I think we should feel very despondent concerning
the over-regulation of the processes governing the
making of agreements. The Brereton Act seems to have
been designed to make reaching enterprise agreements
as difficult as possible, particularly in firms where
there are no union members.
It is funny how the Commission seems to sit on cases
which it obviously regards as hard. It has been sitting
for quite a long time on the Bell Bay case. (This
decision was brought down on 8 December 1994. Ed.)
It is also sitting on a very important case which
involves bargaining in good faith. Some of you may
know that the AFMEU (the giant metal union) has issued
bargaining in good faith orders on non-union workshops
in the metal industry---1,300 of them in N.S.W. It
is very encouraging to see that the unfortunate small
businesses who got pulled into the test case have fought
it to the hilt. They have obtained affidavits from
their workers saying that the workers did not want
the unions to represent them. Commissioner Hodder
ruled in the Asahi case that the company did have to
negotiate with the union "in good faith", even though
there were no union members at the plant, and the workers,
openly and explicitly, did not want the union to represent
them. (This decision was subsequently overturned by
the full bench of the IRC. Ed.)
Nevertheless there is the very real possibility that
an order will be placed on those non-union workshops
to bargain in good faith with the unions. This matter
concerns workers who have chosen not to belong to a
union; they are telling the world at large that they
do not want the union to act as a bargaining agent
for them; yet the Australian Industrial Relations Commission
may insist that the union acts as their bargaining
agent, and compel these workers, against their strongly
held wishes, to accept that decision.
Now if that should happen then I think that is something
about which people should really be very, very concerned;
to the point where marching in the streets becomes
an appropriate response. Again it points to the quite
anomalous situation of trying to pick up bits and pieces
from collective bargaining jurisdictions and popping
it into our legislation. If you take the United States---where there are bargaining in good faith provisions---they have, as the backdrop to such provisions, union
certification elections, where the workers actually
do have the right to say which union they want to represent
them, or indeed if they want to be represented by unions
at all. Now with that backdrop, it seems to me bargaining
in good faith may have some logic. The US law then
says , the workers have thus voted, therefore you,
as an employer, must bargain in good faith with the
duly nominated bargaining agent.
In the Brereton Act we forgot that precursor. We
don't worry about that bit of the story. We just take
the idea of bargaining in good faith provisions and
try and graft it onto our system, and do so in a way
which ensures that workers have no rights at all.
It is, I think, really just another example of how
pro-union and anti-worker the Brereton legislation
Having discussed the US labour market system, I would
not want it inferred that I am an advocate for the
wholesale transplanting of it to Australia. It has
led to extraordinarily litigious outcomes. It is clearly
not deeply entrenched in the hearts and minds of American
workers. But nevertheless there are democratic safeguards
in the US labour market regime which are sadly lacking
So we have, still, the award system; we have the regulation
and tight control of the bargaining process (wherever
that might happen) but even more worrying is the unprecedented
intrusion of regulation into the over-award area.
Apologists for the system, Deputy-President Keith Hancock
for example, would say---"yes we have a highly regulated
system; we have a system that imposes minimum standards,
but there is flexibility because there is the over-award
area which is free of regulation". I suppose there
was an element of truth in that argument but what we
have seen during the course of 1994 is an ACTU-IRC
thrust into the regulation of the over-award area.
The CRA case at Bell Bay is a case in point. Essentially
the ACTU argument is that the company has no right
to be offering what are, in effect, over-award contracts
with their workers. The ACTU holds that the Act requires
the Commission to become involved, and to require that
the Union become a respondent to this matter. We still
haven't had a decision on that case. (The decision
was handed down on 8 December 1994 and upheld in totality,
the ACTU's claims. Ed)
We have also had another example of regulation of
the over-award area with the safety net decision; the
$8 plus $8, the second and third adjustments. Now
traditionally in Australian arbitration systems that
kind of National Wage increase would be allowed to
be absorbed by employers into over-award payments.
So if the over-award payments were over $8, then that
$8 could be absorbed. It seems that the Commission
is not happy with that and not withstanding some ambiguity
in their decision, it looks as though they are wanting
to now increase the safety net in both award and agreement
areas. So they are not prepared to countenance absorption.
I think that places some employers in a very difficult
and uncertain position.
We should note also that the Act was drawn up to rely
not just on the Conciliation and Arbitration heads
of powers in the constitution, but also the External
Affairs and the Corporations Power. I think a lot
of people saw that, and quite rightly so, as an attempt
to gut the States' industrial relations jurisdictions
and, of course, to be more specific, to stomp hard
on Victoria's December 1992 IR Reform Act. There is
no doubt, in my mind, that that is true but I think
that an even more worrying implication of using those
two additional constitutional heads of power is that
the power of the Commonwealth IR Commission is now
no longer confined to matters concerned with conciliation
and arbitration. They can do a lot of things directly
because of these other heads of power. They can, for
example, regulate the over-award area using those powers.
Their anti-discrimination provisions are another area
which rely on these additional heads of power.
Several months ago I heard a speech by Sue Walpole
who is, I think, somebody important in the Sex Discrimination
Commission. She was bragging about her increased role
in the industrial relations arena and how she had every
intention to use her powers to ensure that anti-discrimination
prevailed in the work place. She made the point, for
example, that the Federal Sex Discrimination Act, which
relies on the External Affairs Power, has hitherto
been confined to regulating work place outcomes only
at the point of recruitment and at the point of termination.
So she was very excited about the Industrial Relations
Reform Act 1993 because, if she read it correctly,
then her powers will now extend right through the employment
contract. They will not be confined to the beginning
and the end of an employment contract.
She referred, for example, to the various aspects
of promotion procedures, the specifying of qualifications
for jobs, merit pay, different treatment of part-time
and full-time workers and over-award pay differences,
which she saw as all subject to remedy under the Industrial
Relations Reform Act because they do not comply with
its Anti-Discrimination Provisions.
After she had discussed these matters I then, perhaps
stupidly, tried to engage her in a debate about over-award
pay differences. It is true that males earn higher
over-award pay than females but if you go off and do
the careful research, the answer is something like
this. Males are much more likely to be employed in
industries and occupations where over-award pay exists,
partly because of the predominance of females in the
public sector, and partly because over-award payments
are quasi-service payments. Employers will use over-award
payments to reward service and because females have
lower tenure than males on average then there is a
higher incidence of over-award payments amongst male
workers. I thought I was being rather smart about
that. She didn't because she doesn't care about the
research. She only cares about what are the gross
differences and she will use her power under the Act
to try to remove those gross differences. I came away
feeling extremely depressed and I think 1995, unfortunately,
will see quite a lot of action in that anti-discrimination
At the beginning of this year there was a hospital
in Canberra which tried to change the shift arrangements.
However, a number of the women put up their hands
and said that this was discriminatory because they
had organised their child care arrangements in respect
to previous roster arrangements and therefore to change
the roster arrangements was discriminatory. Commissioner
Smith agreed with them and found in their favour.
Now in one sense it is easy to see the employee's
point of view. But you can also see where that ends.
I know from my friends in the resource industries
that they are very interested in the efficiency gains
associated with 12 hour shifts, for example. Will
they be barred from pressing on with 12 hour shifts
because they will be held to be discriminatory against
women. I understand from the resources industry that
many workers like 12 hour shifts because it effectively
gives them four days off a week.
The penultimate piece of bad news I wish to discuss
is one that was much discussed when the Bill was first
proclaimed and which soon forced the minister to bring
in amending legislation. These were the provisions
relating to unfair dismissal. Certainly the amendments
to the Act brought an end to the media stories of actions
seeking hundreds of thousands of dollars as compensation
for unfair dismissal. However, I don't see this as
being an area where the story is concluded---at all.
There is still an enormously large number of claims
flowing to the Federal Tribunal particularly from Victoria.
I think there is a view that "oh well---you know the
compensation being considered is $30-$60,000".
If you run a small business $30-$60,000 is enough
to put you out on the street and that, of course, doesn't
take into account the legal costs, so I think the idea
that unfair dismissals is something we can forget about
is wide of the mark. As I understand it, most of these
cases are not being settled by conciliation---they
are actually having to go to the Court. There is an
enormous backlog, and the cost associated with that,
and I think that really does remain a very bad part
of the overall story.
The final piece of bad news is the loss of Sections
45D & E of the Trade Practices Act. This change
is important in a way that people never realised.
There were only ever a handful of cases that reached
the courts but these were the provisions that employers
used all the time as a credible response to trade union
intimidation. It was really good law. After all if
you can threaten to use a law and people then immediately
desist from the lawlessness proscribed by the law,
then we have really good law.
The unions knew it was real law, administered by real
courts. There was immediate injunctive relief and
the damages were real. With the loss of that weapon
against lawlessness the damage to the employers' position
in the labour market has been immeasurable. It is
a very important aspect of the story in respect to
the Transport Workers' Union's current claim. There
is no doubt in my mind that Sections 45D & E would
be being used now if they were still available. The
Transport Workers' Union gets into secondary boycotts
all the time and the big transport companies would
be threatening them with 45D & E injunctions at
this moment. But of course those laws have been repealed
and there is no recourse to them. I think the loss
of those sections cannot be under-estimated and the
biggest story is that unless you have real laws with
real teeth to back it up, then nothing else matters.
That was the importance of 45D & E. I know that
industrial relations club supporters don't like that
story. However, I have lots of contacts with real
business people and I know that they feel that loss
This speech has been a litany of gloom. Let me therefore
finish on a positive note. I think we can compare the
Industrial Relations Reform Act 1993 to Surfers Paradise.
It is so bad it's good. I am trying to make a serious
point with this analogy. If the legislation had been
only half bad, I think it would have seduced enough
companies, enough employers to try to work along with
it. But because there are many companies, some big
companies, particularly, who are looking at this legislation
and saying "this Act offers us nothing---absolutely
nothing. Every bit of this legislation is negative
from our point of view". So these companies are now
asking themselves "what can our strategy be? We must
pull away from this system."
So if the Act had not been so bad they might have
taken a different view, and sought an accommodation
within it. They no longer see that as a realistic
So we see continuing attempts to shift to individual
contracts. Comalco may lose at Bell Bay. But such
a defeat will be seen as a lost battle in an on-going
drawn-out war. In all events, companies like CRA will
press on with developing close relations with their
workers, with creating a high-trust environment in
the work-place. The ACTU has sought to portray CRA
as the bogey-man. But CRA is not the only one. We
have seen Woodside Petroleum get up individual contracts.
Robe River, of course, was the first.
Some companies are beginning to look a bit flat-footed
as their competitors move forward in this direction.
But, as always, market forces and competitive pressures
will spur the laggards into doing likewise. This
is the real fear for the union movement.
There are of course, still plenty of wimpy employers
and wimpy employer associations. But there is a sufficient
number of companies who have reached the end of the
road with the "system" and have committed themselves
to reaching individual agreements with their employees,
to driving wedges between the unions and the rank and
file they purport to represent, to ensure that the
union's role in the work place becomes peripheral,
if not irrelevant.
Because the present regime, as defined by the Brereton
Act, is so perverse, things must change. To quote
from the well known shampoo advertisement featuring
- "It won't happen overnight...but it will happen".