Let's Start All Over Again
The Origins and Influence of the HR Nicholls Society
The Hawke Government was elected on 5 March, 1983. It did
not take it long to initiate the process of paying off the trade
union movement, to which (along with the Fraser Government's
abysmal performance) it owed a considerable debt for its election,
and whose former President, of course, was now Prime Minister.
On 14 July, 1983 the Minister for Employment and Industrial Relations,
Ralph Willis, announced the appointment of a Committee of Review
of Australian Industrial Relations, with wide-ranging terms of
The Committee was chaired by a prominent economist and well-trusted
member of the Industrial Relations Club, Professor Keith Hancock
of Adelaide University. Its two other members, even more prominent
in that Club, were Charlie Fitzgibbon of the Waterside Workers
Federation and George Polites, Director of the Confederation
of Australian Industry and a Bob Hawke 'mate', long since settled
comfortably into the Club's embrace. The Department of Employment
and Industrial Relations, which for many years had also been
central to the workings of the Club, provided the Committee's
The Hancock Report was delivered on 30 April, 1985. Naturally,
a deck so well stacked delivered a set of recommendations wholly
acceptable to those who had appointed it. Its relevance here
is that it was this report that spurred formation of the H.R.
Shortly after its publication, Ray Evans (then Executive Officer
assisting Hugh Morgan of Western Mining Corporation) got in touch
with me in Melbourne. He, I, Barry Purvis (then Director of the
Australian Wool Selling Brokers' Employers' Federation) and Peter
Costello, who had recently come to industrial relations prominence
as Fred Stauder's barrister in the Dollar Sweets Case, met and
decided to form the Society.
Ray Evans and I had never previously met, but it seems that
I had come to his notice in this area because of my 1984 Shann
Memorial Lecture, delivered shortly after my intention to resign
as Secretary to the Treasury had been publicly announced. In
that address I had said, inter alia:
One such lesson [of the 1930s] clearly was
(and is) that full employment is not only or even primarily a
matter of governments manipulating aggregate demand, and that
the labour market itself, and its participants, have a critical
role to play.
When I say 'the labour market itself, and
its participants' I mean, of course, individual employers and
their employees. Contrary to their pretensions in the matter,
the arbitral tribunals have little constructive to contribute.
Only, indeed, by them getting out of the way can we hope to see
the development of those bargaining processes which must properly
proceed between employers and employees in a full understanding
of their mutual interdependence of economic interest. As things
stand, there can be no hope of that....
... now that I am able to do so, I wish to
say publicly that there is no single fact more disgraceful to
the conduct of our national affairs in Australia today than the
manner in which we have permitted ... more than 25 per cent of
15-19 year-olds in the work-force to be unemployed....
... although there is more than one reason
for that very high level of unemployment of young people...,
overwhelmingly the most important reason for it is the barrier
to their employment which is represented by the minimum wage
rates which employers are legally required to pay them....
The truth is that our system of wage determination
today constitutes a crime against society. It is, starkly, a
system of wage determination under which trade union leaders
and people preening themselves as 'Justices' of various Arbitration
benches combine to put young people in particular, but many others
also, out of work.
I have spelled out these quotes not only because they were
what led Ray Evans to contact me, but also because I want to
emphasise that, from the outset, the Society was not solely
aimed at reforming the labour market to increase productivity
and raise average real incomes. It was also motivated---although
this was never acknowledged by our adversaries---by a strong
sense of moral outrage (as reflected in the passages just quoted)
about the effects of trade union power, operating through the
arbitral tribunals, on the lives of the less fortunate in our
society. Equally strong was our sense of outrage (also reflected,
incidentally, elsewhere in the Shann Memorial Lecture) over the
widespread corruption, and even violent crime, to which trade
union privilege had given rise.
In short, we took the view that reform of the labour market
would lead not merely to a more productive and richer society,
but to a better society also.
The Society came formally into being in early 1986. Its inaugural
conference was held in Melbourne on the weekend of 28 February---2
March, 1986 and was attended by, among others, Charles Copeman.
Charles, who was shortly to become Chief Executive Officer of
Peko-Wallsend, has said on the public record that his attendance
at that weekend meeting was for him a transforming experience.
This weekend marks, of course, the 20th anniversary of that
meeting. Its Proceedings, including a fascinating dinner address
by Sir John Kerr, were subsequently published in the volume Arbitration
in Contempt. In my Introduction to that volume (and on its
dust jacket) I said:
... one conclusion from the paper by Mr Gerry
Gutman dealing with [the Hancock] report may be worth noting.
As Mr Gutman points out, the thing which,
above all, has today done more to strip away the quasi-judicial
facade from our arbitral tribunals has been the Accord between
the Australian Labor Party and the Australian Council of Trade
Unions. Now that all manner of industrial relations deals are
arrived at between these two parties, the supposedly tripartite
processes before the Commonwealth Conciliation Commission can
now be even more clearly seen for the irrelevant charade which
they have always been.
For all its faults, the Accord has thus done
us all a public service. More than any other single event, it
has held up to us the mirror in which we can clearly see arbitration
Of course, while the Society was getting under way the forces
of darkness had not been idle. Pamela Williams (later to be known
light-heartedly in the Canberra Press Gallery as 'Bill Kelty's
press secretary') led off in Business Review Weekly with
a tendentious cover story entitled Union Busters. The
then Chief Executive of the Victorian Chamber of Manufactures,
Brian Powell, joined a unity ticket with the Secretary of the
Amalgamated Metal Workers' Union, John Halfpenny (formerly one
of the most prominent and longest-standing members of the Communist
Party of Australia) to describe the Society's founders as industrial
relations 'Fascists'. This proved too much even for the normally
complaisant members of the V.C.M., and Powell was forced to resign.
Subsequently, Halfpenny and The Age also settled out of
court the defamation action brought against them by Peter Costello
and Ray Evans after Halfpenny, in a Calwell Memorial Lecture,
had described the Society as the Klu Klux Klan of industrial
Earlier, the Hon John Dawkins, in a 1986 Australia Day address,
had scarified all manner of people of whose views he disapproved
as 'the false patriots of the New Right'. Max Gillies, always
available to lend a hand to his political brethren, devoted more
than one of his ABC Gillies Republic television programs
to painting the Society as some kind of Australian version of
the white South African racist Broederbond. In these and many
other similar attacks our adversaries were at all times ably
abetted both by the cowardice (or worse) of most large corporate
representatives, and by the complicity and collaboration of almost
the whole of the media, including without exception its industrial
Arbitration in Contempt was launched by Geoffrey Blainey,
himself not long beforehand the victim of a coordinated character
assassination by a group of academic jackals (including not least
the current doyen of Australia's historians, Professor Stuart
Macintyre). The well-attended launching dinner at the Southern
Cross Hotel, Melbourne on 30 September, 1986 saw the then Leader
of the Opposition, the Hon John Howard, deliver the vote of thanks.
Introducing Blainey, I said:
... our Government is currently considering
major legislative changes to the Commonwealth Conciliation and
Arbitration Act, and other associated legislation, ... to give
effect to the shameful conclusions of the Hancock report....
In particular, it is contemplating legislation
which would remove all legal processes relating to trade unions
from the realm of real law, and real courts, and place them in
a Labour Court (or perhaps more accurately, Labor Court) to be
newly created for that purpose.
The so-called 'Justices' of this new kangaroo
Court..., for the rest of the week, would be sitting in the Commission
within which they presently operate....
The H R Nicholls Society has no power to prevent
the Government pursuing this oppressive course. We are after
all a mere discussion society.... We are [however] quite determined
that the Government, and its fellow-conspirators within the trade
union movement, are not going to succeed in further enhancing
the already excessive power of trade unions, and undermining
the rule of law even further, in this way.
I finished on a lighter note. Referring to some years spent
earlier at an Oxford college, a Warden of which had given his
name to the term Spoonerisms, I said that I had been reminded
of this by some then recent remarks by the Hon John Dawkins,
in which (following the first of the Robe River strikes) he had
described Charles Copeman, and members of the H R Nicholls Society
more generally, as being guilty of 'treasonable' behaviour. One
could readily see, I said, 'why in government circles Mr Dawkins
is regarded as a shining wit. Warden Spooner would undoubtedly
For some months following its foundation the Society's achievement
was simply to open the debate. But with the Robe River affair,
the first episode in which occurred shortly before publication
of Arbitration in Contempt, words turned to action.
Although Robe River involved a number of people (including
in a small way myself, as a recently appointed member of Peko-Wallsend's
Board), it was outstandingly the saga of one man, Charles Copeman.
As Ray Evans has said, it was Copeman 'who, at Robe River, changed
the landscape of Australian industrial relations in the face
of passionate opposition by federal and State governments and
union leaders of the day'.
The story of Robe River has been told in detail in the annals
of the Society. However, no account of the Society's history
can be complete without some repeated reference to it.
As the Peko-Wallsend Board approached the 1986-87 financial
year, it was clear that the company's Robe River mining operation
was in very deep trouble. The grip that the local trade union
organisers had gained over the day-to-day decisions of management
had led to abysmal productivity performance and costs spiralling
out of control. Without some breakout from that situation, the
only fiscally responsible course would be to wind down the operation
more or less entirely.
Confronted with this situation, Charles Copeman decided (and
the Board agreed) that the only course realistically open was
to stand and fight. He then embarked upon a course of actions
which, to his fellow Chief Executive Officers in Australia's
corporate world of that day, were virtually unprecedented:
- First and foremost, he handled the matter himself.
- Second, he appealed directly to the Robe River workers, thereby
committing the unforgivable sin (in the eyes of trade union organisers
then and since) of treating his employees as adults.
- Third, he made it clear (to the point that his work-force
believed him) that he would not back off, or back down, and that
those who followed him would not subsequently be sacrificed to
- Fourth, he convinced his opponents (including WA's Burke/Dowding
governments) that the battle would be fought to a conclusion,
and that there would be no 'deals' of the kind to which the arbitration
system was so corruptly habituated.
- Last, and vitally, he took the almost unheard of step of
reverting, when necessary, to the real courts---in this case,
the Supreme Court of Western Australia, where judges still cleaved
to their oaths to 'do right according to law'.
The July, 1986 strike failed to achieve its objectives. Production
at the mine, and profitability, suffered considerably; but the
mine kept working, ore-trains kept running, ships kept on being
loaded and productivity per man-hour rose significantly.
From the viewpoint of the trade unions and their Labor Party
collaborators these were dangerous developments, which needed
to be put down with a firm hand. A concerted push to crush the
Society ensued. The late Mick Young, then Special Minister for
State (not to mention, through his control of the Electoral Act,
Minister for Getting the Government Re-elected), spent some time
on a Channel 9 Sunday program assailing us as 'the New
Right', and more generally seeking to tar us with his left-wing
McCarthyist brush. At about the same time Prime Minister Hawke
was referring to us as 'economic troglodytes and political lunatics',
and predicting that Australians would never accept the 'radical
ideas' we were then advancing.
(I note in passing that, in my last conversation with Mr Hawke
before leaving the Treasury in 1984---and after my Shann Memorial
Lecture---he strongly questioned my remarks on industrial relations
in that lecture. I told him that, just as Labor was clearly beginning
to see the light in the area of traded goods protection after
almost 20 years of public debate, so the time would come when
it would also be forced to do so in the industrial relations
area. Not surprisingly given his background, he pooh-poohed that
idea and we agreed to differ. In the event, even prior to his
departure from office, and even more clearly thereafter, the
industrial relations edifice had begun to topple.)
To return to my theme, the second, more serious Robe River
strike began in late January, 1987 and lasted for some weeks.
It was marked by some actual violence, and many more threats
of violence, including against the wives and children of those
workers still operating the mine. In the end, however, this thuggery
was defeated. Within 12 months productivity had doubled, and
Copeman's craven counterparts at BHP were beginning, softly softly,
to emulate his performance at their own Pilbara mines.
When Peko-Wallsend was taken over by Norths not long thereafter,
Copeman himself was shown the door by the cowardly Melbourne
corporate club acquirers. As a consequence, his own personal
sacrifice was great. But beyond any shadow of doubt he had, by
his principled leadership, changed the face of Australian industrial
relations. Things would never be the same again (including for
that same corporate club).
It is not possible, in a paper of this length, to give a blow-by-blow
account of every development over the years in the Society's
progress. The battle of ideas proceeds in many ways. By way of
illustration, I remind you of the airline pilots' dispute in
August-September, 1989. In that dispute, we saw a Prime Minister
- Use of 'the troops' (RAAF) to help defeat the walkout by
a key body of airline employees;
- The bringing of common law actions for breach of contract
against individual pilots to the same end;
- Use of Sections 45D and 45E of the Trade Practices Act for
the same purpose;
- The import of foreign pilots to take the place of Australian
pilots who had withdrawn their labour;
- The import of charter aircraft (and associated foreign crews)
to supply services being withheld by the Australian pilots; and
- The provision of some kind of financial assistance designed
to assist a major employer (Ansett Airlines) and thus help 'keep
it in the field' until the Australian Federation of Air Pilots
had been crushed.
Mr Hawke's zeal in all these matters thus went even further
than our own. The H.R. Nicholls Society had never argued that
a body of employees should not have the right to be represented
by a union (or Association) of their own free choosing---a basic
right which Mr Hawke and Sir Peter Abels were determined to deny
to the pilots.
Such incidents notwithstanding, it would have been easy during
the latter years of the 1980s to become despondent about prospects
for our views prevailing. Labor was still in full command of
the Treasury benches; the Opposition was in more or less perpetual
disarray (and in any case had an industrial relations policy
which left much to be desired); the ACTU leadership (particularly
its then Secretary, Bill Kelty) had its collective feet firmly
planted under the Cabinet table; and so on.
As against that, there were other, more encouraging signs
and portents. In 1989 a passage in an important book (then still
in draft, published in 1991) by Michael Costa and Paul Duffy
spoke of the H.R. Nicholls Society 'having won the intellectual
and the political debate'---a passage that I then had much pleasure
in quoting in the Senate. Costa, now Treasurer in the NSW government,
was then an Executive Officer in the NSW Labour Council, where
Duffy too was then employed (although shortly to be sacked for
having expressed these treasonable opinions). Their book is described
on its dust-jacket as 'arguing that compulsory arbitration and
centralised bargaining are stultifying growth ... and inexorably
driving Australia into poverty'. Instead, it says, 'they reach
back to an alternate labour tradition of political independence,
free collective bargaining and free trade'.
The Costa/Duffy episode illustrates that, while it was easy
at that time to be discouraged, by 1989 the industrial relations
edifice was already under strain. Quite apart from any direct
effects of the work of the Society, other factors were at work
indirectly. Chief among them was the major deregulation of the
financial markets, and particularly the exchange rate, in 1983-84.
Even before the Society's formation I had drawn attention to
that linkage in a speech, Deregulate or Perish, to the
Western Australian branch of the Australian Small Business Association
in May, 1985, in which I pointed to the longer-term incompatibility
between freely operating markets in foreign currency and international
capital, on the one hand, and a labour market still mired in
regulation, on the other. In the same way, the gradual winding
down of the protection of traded goods, although then still in
its infancy, was also beginning to apply pressures on its 'Deakinite
Important though these indirect forces were in the gradual
evolution of public (and hence political) opinion in the late
'80s, it is hard to recall now any major events, such as Robe
River had been, to move the debate forward during the next three
or four years. Ray Evans (who became the Society's President
when, in September, 1989 I felt that I should resign that role)
thus shouldered the unenviable task of keeping alight the torch
we had lit three years earlier. I go out of my way not only to
note that he is still doing so, but also to express my own gratitude---and,
I am sure, the gratitude of all our members---for the extraordinary
job which, over the past 16 years, he has done in that regard.
One important 'event' during those quiescent years occurred
not in Australia, but across the Tasman. New Zealand's National
Party government, elected in late 1990, enacted in 1991 its Employment
Contracts Act, which brought about a massive change to an
industrial relations system previously not dissimilar to Australia's.
Given the existence in New Zealand of many Australian enterprises
whose executives soon began to experience the benefits of a labour
market based not on arbitral fiat but, essentially, on the law
of contract, this was a significant event in the evolutionary
process. Given also the trans-Tasman interchange of ideas, it
certainly did not go unremarked in Australia.
At much the same time as the New Zealand government was enacting
its Employment Contracts Act, Prime Minister Hawke issued
an extremely important White Paper laying out a path of diminishing
protection for traded goods. As noted earlier, one effect of
this was to place further pressure on our still highly regulated
market for labour.
On 21 April, 1993, shortly after Dr Hewson had lost 'the unloseable
election', Prime Minister Paul Keating delivered a remarkable
speech in Melbourne to the Victorian branch of the Australian
Institute of Company Directors. So far as the rhetoric was concerned,
that speech remains to this day, in my opinion, among the most
forward-looking utterances in the field of industrial relations
by any politician from either side of politics.
To this day the precise origins of that speech are not entirely
clear to me. The best source we have on the topic is John Edwards's
biography, Keating: The Inside Story, where (p.510)
Over the year  we had found industrial
relations to be one of our weakest policy areas. We had moved
away from central national wage decisions and arbitrated settlements,
but we had failed to create the means of reaching enterprise
bargains for most of the work-force covered by federal awards....
It was now easier to reach bargains, but employees had to be
represented by unions. This veto power allowed some unions to
resist the spread of enterprise bargaining.... We knew that if
we wanted to press ahead with a transition to direct bargaining
at the enterprise level we would have to amend the legislation
to allow employers to deal directly with their employees.
Later, Edwards says (p.513):
The industrial relations system needed to
be reformed, ... but as long as Australia was to have a system
of collective bargaining underpinned by minimum awards, rather
than the alternative of individual contracts, the reform
Keating proposed was as far as he wished to go ... or would be
allowed by his colleagues to go. (Emphasis added)
It is true that the specific proposals in the Keating speech
did not wholly match the rhetoric. It is also true that the subsequent
dogfight between the Minister for Industrial Relations, the Hon
Laurie Brereton and the ACTU resulted both in the public humiliation
of the Minister at the ACTU's 1993 annual congress and some backing
down from even those specific proposals. Nevertheless, Brereton's
1993 legislation marked a significant forward movement in the
deregulation of the labour market and the downgrading of the
role of the Industrial Relations Commission.
In March, 1996 the Keating Government was swept from office
in a landslide exceeding even that in which Gough Whitlam had
been dismissed in 1975. Hopes ran high that, strengthened by
this outstanding electoral victory, the new government would
proceed to a major reform of the Australian industrial relations
system. Our hopes were encouraged by two facts. First, one of
the Society's founders was now Deputy Leader of the parliamentary
Liberal Party; and second, the new Minister for Workplace Relations,
the Hon Peter Reith, was undoubtedly one of the most able Ministers
in the government.
Both then and since, however, some of those calling for reform,
not only in the industrial relations field but elsewhere, have
paid too little attention to the fact that, although we have
had Coalition governments since March, 1996, it is only since
July last year that those governments have commanded a majority
in the Senate (and as events have shown, a somewhat fragile majority
even then). In these circumstances it is unrealistic to demand
that a government should go to the barricades in pursuit of the
Holy Grail, when it can be confidently predicted that not only
will it fail to gain it, but will also be left with a large quantity
of political egg on its face in the process. In other words,
governments can be persuaded to spend their political capital
if, at the end of the day, they have some political dividends
to show for having done so, but not otherwise.
In 1996 the so-called Reith/Kernot Workplace Relations Act
was, in its outcome, very much a product of these circumstances.
The government's original proposals, framed with an eye to Senate
realities, were much less bold than this Society wanted; and
the final outcome was, of course, even less of an advance than
the original. At the time, if I recall correctly, the Society
was strongly critical of Peter Reith and what it saw as his failure
to push harder for much greater reforms. I did not agree with
those views at the time, and I think it is only fair to say that
the Minister's judgement---that it was better to achieve the
good, than to fail while seeking to achieve the best---proved,
over the following nine years, to have been correct.
In Peter Reith, however, we did at least have a Minister for
Workplace Relations who believed in the cause and who was never
afraid to espouse it publicly. By contrast, our other initial
hope in this area, the Hon Peter Costello, never so much as ran
onto the field. Blessed as he is with some of the same thespian
talents as the politician with whom he is most often compared
(Paul Keating), during the past ten years he has conspicuously
failed to deploy those talents in the cause which he helped to
initiate ten years earlier. In that, as in so many other ways,
he has proved to be a major disappointment.
In 1998, by contrast, it was Peter Reith who presided over
what I may call the second defining moment (along with Robe River)
in the long struggle for reform of our industrial relations system.
As Ray Evans has since said, 'during that confrontation, in which
violence and the threat of violence was an everyday event, Peter
Reith displayed outstanding qualities of composure, steadfastness
and resilience under great pressure'.
In Mrs Thatcher's Britain the great 1980s coal strike marked
a watershed in that country's industrial relations. In our case
the 1998 dispute with the Maritime Union of Australia marked
a similar watershed. Although it was, of course, another Copeman-like
figure, Chris Corrigan, who led that struggle, it was Peter Reith
who decided to give Corrigan his backing, and that of the government,
in pursuing it. Today I can best comment on that battle by quoting
from my remarks when presenting the Charles Copeman medal to
Peter Reith in 2002, namely:
In the teeth of a bitterly hostile media led,
as usual, by 'our own' ABC; of a trade union movement which rightly
saw the waterfront dispute as a potential turning point in its
national power and influence; of a Federal Court whose judges
persistently took it upon themselves to thwart the national interest;
and not least, in the face of a Victorian police force which
largely failed to maintain law and order at a number of critical
moments ... in the face of all these obstacles, the Maritime
Union of Australia was ultimately forced to sue for peace. And
the rest ... is history: container lifting rates now achieved
which had been declared unattainable; an Australian waterfront
which is no longer seen around the world as a kind of thieves'
kitchen of industrial relations extortionists; costs to our major
export industries greatly reduced; and so on.
In that epic struggle Peter Reith had at all times the unswerving
support of his Prime Minister. With one minor exception, at no
time did he receive the public support of his colleague the Treasurer.
Such are the ways of Canberra!
As in the late 1980s, it was easy in the late 1990s (the 1998
waterfront dispute apart) and in the next four years to feel
despondent about our cause. This was despite the fact that, as
indicated earlier, beneath the apparently unruffled millpond
of the system much progress was actually being made. However,
after the Howard Government's remarkable election victory in
October, 2004 hopes were again raised that, once the new Senate
came into being in July, 2005, genuinely path-breaking legislation
could be enacted to deregulate our markets for labour. In the
WorkChoice legislation finally enacted late last year it can
only be said, however, that our hopes have once again been dashed.
This is not the place, and in any case I do not have the time,
to comment in detail on the new legislation. In terms of its
sheer magnitude and complexity it is bidding fair to outdo the
Tax Act (and with hundreds more pages of detailed regulations
apparently still to come). Clearly, however, any suggestion of
a move to the law of contract has been largely put aside; the
dysfunctional and socially reprehensible system of minimum wages
is to continue in being, under the aegis of a new quango, the
Fair Pay Commission; unfair dismissal provisions will still apply
to companies having more than 100 employees (a strange exercise
in logic if ever there was one); and our workplace relations
laws generally will remain in a fearful mess.
Not the least of my own concerns, I may add---although I recognize
that this view may not be universally shared within our Society---is
the means by which even these unsatisfactory ends purport
to be achieved, namely by the prostitution of the corporations
power (s. 51(xx) of the Constitution).
That said, it must also be acknowledged that (subject to my
doubts about the constitutional validity of the whole exercise)
the new legislation does achieve some improvements. Whittling
down the unfair dismissals blackmail racket, even though confined
to firms with less than 100 employees, still represents an advance,
and one which, we might not unreasonably hope, will lead to its
logical extension to larger firms. The power and status of the
Industrial Relations Commission has undoubtedly been downgraded,
which is all to the good. The minimum wage system, while remaining
an abomination, is unlikely to be worse, and could perhaps prove
somewhat better, than the one it is replacing.
Importantly, too, the government has promised separate legislation
to put the status of independent contractors, that most vibrant
sector of our work-force, beyond the jealously destructive reach
of trade unions and arbitral tribunals both State and federal.
While this promise results from the work of the Independent Contractors'
Association, it is relevant that one of the most active members
of that Association, Mr Bob Day, has been a member of the Society's
Board of Management almost from the outset. I do not think he
will contradict me if I say that he has taken the ethos of the
Society into the work of the Association. While there is many
a slip 'twixt the cup and the lip, that promised legislation
should mark a major advance.
I have no wish to play Polyanna. The grounds for current disappointment,
even disgust, are well-founded. Yet, however slowly, the cause
of reform continues to move forward. In the years ahead, the
Society's role in advancing that cause with the community, and
through that with ever-timid politicians, will remain as vital
as it has been in our first 20 years.
Why HR Nicholls?