Light on the Hill: Industrial Relations Reform in Australia
The Opposition's Industrial Relations Reform in Australia
Senator Fred Chaney
The relevance of this Conference has been dramatically
altered by the fact that we are only 5 weeks from an
election. In this changed context the Conference is
now a focus for a vital and urgent political debate.
Critical decisions on the future of the industrial
relations system will be made over the coming months.
If the Liberals and Nationals return to government,
the system will be moved toward greater accountability.
If Labor are returned they will, in conjunction with
the Democrats, proceed further to weaken the rule of
law in the work places of Australia.
In attempting to introduce more flexibility and reality
into the system, we welcome appropriate contributions
to the debate, whether they come from the H R Nicholls
Society or from Charles Fitzgibbon.
Given the vehemence with which your Society has been
attacked by the Labor Party and the trade union movement,
it is important to place on record my own support for
any effort to maintain the rule of law in Australia
and to resist oppression and abuse of power from whatever
source. It is also important to confirm the Opposition's
total commitment to those principles and the practical
effectiveness of our policy proposals in securing those
It should also be noted that John Howard gave an early
lead in establishing mechanisms which brought some
oppressive trade union conduct within the purview of
the Courts when he introduced section 45D of the Trade
Practices Act in 1977. Although it took some time for
employers to see the potential for this clause, it
is now well established as an effective counter to
some secondary boycotts. Our proposals for industrial
relations reform in Australia should by now be well
known to you. They are of course proposals adopted
by the Liberal and National Parties in Coalition at
the Federal level and they still command the support
of the Federal Parliamentary National Party.
It would more than use my available time to detail
the policy; let me merely emphasise some key points:
- The National Wage Case will continue to play a large
part in determining wages, and hence will have a substantial
influence on the national economy.
- In determining wages and conditions of employment
in National Wages Cases, the principal criteria should
be the capacity of industry to pay and the effect that
decisions of the Arbitration Commission will have on
employment, inflation and the international competitiveness
of the Australian economy.
- We will argue in the Commission against automatic
or prima facie wage indexation.
- It will continue to be open to individual industries
to argue their incapacity to pay proposed National
- We will argue against the use of comparative wage
justice as a principle of wage fixation.
- The system of determining wages and conditions of
employment will be liberalised and made more flexible.
- Where employers and their employees agree, they will
be free to have wages and conditions of employment
determined by mutual agreement instead of by an Award.
- The making of voluntary agreements will be actively
- Agreements of this sort should be used as a means
of increasing efficiency, introducing new technology
and management methods, removing archaic work practices
which limit the productivity and profitability of firms,
improving employer-employee relations and introducing
more flexible work practices.
- We will ensure that trade unions, employers, and
others involved in industrial matters are equal before
the law; that the law applies to all; and that it is
- In particular, we will encourage the use of the Common
Law in the civil Courts in appropriate cases as a means
of obtaining redress for unjustified industrial action.
- The law will be amended to give to those who suffer
loss or damage from breaches of the Act, breaches of
Awards or serious industrial action without reasonable
cause, the right to sue those responsible for causing
the loss and damage suffered.
- Trade union membership will be made voluntary. The
right of an individual to join, not join, or resign
from a trade union will be protected.
- Unions will not be permitted to take or encourage
industrial action to obtain or maintain a closed shop.
- The Arbitration Commission will not have the power
to grant preference clauses favouring members of a
trade union over employees who are not union members.
- We will at all times encourage and preserve the rights
of independent contractors, partners and self-employed
persons. In particular, the jurisdiction of the Arbitration
Commission will be strictly confined to relations between
employers and employees.
- The effectiveness of the secondary boycott provisions
of the Trade Practices Act will be maintained and strengthened.
- Commonwealth Essential Services legislation will
- Employee share-acquisition schemes will be encouraged.
In light of the fact that the policy will represent
the action plan which I will have to Administer on
return to Government, it might be useful to give some
indication of the personal perspective I bring to bear
in this matter.
When appointing me to this task, John Howard publicly
asked me to emphasise the positive aspects of the policy.
That fits in with my own inclinations but, I hasten
to add, such emphasis is not new. If you look at the
printed version of the policy produced in May last
year, you will see what was highlighted on the cover:
'Prosperity through productivity...more jobs, industrial
harmony, work place flexibility, reduced union power'.
These words express the balance in the policy and
the views of the Opposition generally. They also reflect
my own views, which have been confirmed by my two-and-a-half
years as Opposition Industry spokesman. I come to the
job fresh from continuous dialogue with those in Australia
who are trying to compete in an ever more competitive
market for manufactured goods. The struggle is a fierce
one. Those who are succeeding are doing so on the basis
of continuously improving product design, product quality
and productivity. It is the same in the mining industry.
We chase a moving target of competition from overseas.
We must do more than make a quantum leap in design
and quality and a single reduction in product cost.
We have to face a world in which continuous improvement
is the norm. To do less is to fail.
The broader implications of that are well understood
in this gathering and are becoming widely understood
in the community. Massive international debt, new and
higher taxes, interest rates which cripple rural producers
and small business, and declining living standards
in suburban Australia, are among the teaching aids
which are educating us in reality.
Talking with Australian manufacturers has taught me
a great deal about the obstacles placed in the way
of competitive practices. Just In Time manufacturing
(JIT), for example, is predicated on regularity of
supply---and hence the absence of frequent stoppages---which at least one trade union leader has identified
as being out of touch with Australian industrial relations
practices. But the key message delivered by industry
here about the need for co-operative endeavour was
confirmed when I was in the United States in December
and January last.
In that country I visited manufacturing plants which
were selected on the basis of having achieved significant
jumps in productivity. In all plants visited, the common
- management deeply involved with the task of getting
the best out of the labour force;
- emphasis on communication;
- emphasis on the capacity of the workforce to improve
the productive process;
- a high degree of shared knowledge and understanding
about the economics of the operation and the reality
of the competitive position;
- clear understanding throughout the enterprise that
survival required being as good as the best of the
- a resultant sense of common purpose on the part of
management and labour.
When there is acceptance of those points in an industrial
economy the size of that of the United States, it is
clear that in our relatively small economy the requirements
on us are even greater. The burden of responsibility
on management in this regard is very considerable.
I have found in the best of Australian management and
in the best of the trade union movement a clear understanding
The relevance of this to our approach to industrial
relations is, I hope, apparent.
Given our objectives for Australian industry, it is
clear that the present system is not satisfactory and
must be reshaped if we are to succeed.
We are not out to create confrontation---quite the
reverse. We are out to remove from the present system
those elements preventing or inhibiting Australia having
a modern, competitive economy based on co-operative
endeavour. Not least, we are determined to substitute
the fairness and equality of the rule of law for the
law of the jungle as represented by the craven sentiments
of the Hancock Report in its now notorious paragraph
Laws, that paragraph suggests, can be enforced only
against the weak. Trade unions are too strong to be
treated like everyone else.
The betrayal of principle represented by that notion
is clear. Imagine the howls of protest were this Society
to make similar claims for BHP or any other commercial
Since the enactment of section 45D in 1977 and its
selective and careful use over recent years, it has
been demonstrated that unions are not too strong to
be subject to the law. The Hawke Government's attempt
to repeal the section in 1984 which, with the help
of the Democrats led by Don Chipp, we repulsed in the
Senate, proved that while the Labor Government knows
that unions can be made subject to the law, it does
not want them to be. Its attempt to destroy the effectiveness
of 45D and the Common Law injunction by the legislation
it brought into the Parliament a few weeks ago---which
is supported this time by the Haines-led Democrats---is proof again.
The need for effective industrial relations sanctions
in an economy based on the need for co-operative endeavour
All the co-operation in the world within an enterprise
will not solve the problems imposed from the outside
by the Norm Gallaghers of the trade union movement.
Over recent weeks, John Hallpenny's calls for industrial
action against metal trades employers in Victoria have
been directed toward thwarting the efforts of a majority
of his own union to carry on negotiations, by taking
strike action. Employers and the majority of workers
who want to co-operate are being wilfully undermined.
Such actions cry out for penalties.
At the same time, all the penalties and sanctions
in the world will be of no practical assistance to
employers if the force of circumstances renders them
a dead letter. We hear much of industrial relations
'realities': one of the neglected realities is that
employers are only rarely in a position to seek real
justice. They need---and we will give them---encouragement
and practical assistance; they need to know that the
letter of the law will be observed.
By now, two major themes have emerged in my address
as twin priorities in our approach to industrial relations
in government: the resurrection of the rule of law
in industrial relations; and the importance of co-operative
endeavour in getting Australia back on its feet again.
The two in fact go together. Having employer and employee
working together on workplace agreements, putting appropriate
employee incentives in place, cultivating the ethos
of co-operative endeavour, are the first steps down
a new and different road for industrial relations policy.
It will be a long road; but clearly we have reached
the point where industrial relations in Australia needs
a new basis.
In our Policies for Business document, we have identified
problems arising from outdated, destructive and divisive
notions of 'class conflict'. It is those notions lying
at the heart of industrial relations in Australia today
which still cripple our best efforts to succeed. Clearly
that has to change. But there is more to it than that.
An obvious problem with industrial relations in Australia
is that the range of apparently legitimate areas of
concern to labour is almost infinite. If we think of
some recent examples---from uranium mining, to the
power of veto at the Tax Summit, to the facto foreign-policy-making
over Fiji---we begin to get some idea of the range.
Over and above this, the labour movement in Australia
is, by virtue of the Accord and other less formal compacts,
effectively a coalition partner with the government
proper. It is a sign of our carelessness in maintaining
a proper regard for truly democratic values that this
phenomenon passes almost unremarked. Public choice
theorists have taught us something of the power of
vested interests: labour is the biggest single vested
interest in Australia. No properly representative government
can take as a partner in government an unrepresentative
faction of society, be it the army, big business or
organised labour. The time must come when unions must
return to the democratically acceptable role in our
There are many practices of organised labour in Australia
which are fundamentally repugnant to our basic Western
liberal traditions. Injustices and infringements of
basic rights abound: the closed shop, to name only
one. The signs on building sites around Australian
cities, saying 'No ticket, no start are an affront
to human rights of the most fundamental kind. I am
glad to see that John Hyde's Australian Institute of
Public Policy has raised a number of these questions
of human rights in its recent critique of the Willis
legislation. The whole area is one which should be
brought closer to the forefront of the industrial relations
debate. The sheer hypocrisy of the Hawke Government,
which manufactures concern for rights in one area and
tramples on them in another, needs to be exposed. In
many cases, the ALP now has no official policy. The
relationship between the platform and practice is now
obscure: the Government often seems simply to be fling
by the seat of Keating's pants. But in industrial relations,
it is all mapped out for us in the Willis legislation.
Those Bills have merely been postponed. But there can
be no serious doubt that, if re-elected, the Hawke
Government will push them through---with the help,
if necessary, of what remains of the Democrats. That
presents us with the unusual situation of a totally
clear choice between two quite explicit policies.
The test, in measuring them, is a simple one. Which
policy gives us the industrial relations system which
best matches the economy Australia needs to prosper
in the late 20th century? The Hawke/Willis alternative
refines the existing system almost as far as it can
go. It carries tinkering at the edges to a fine art.
It suffers the basic handicap that it points the system
in precisely the wrong direction. It explicitly rejects
the open, flexible and competitive approach Australia
needs. It flies in the face of the reality symbolised
by the floating dollar.
Our own approach is based on the understanding that,
while much remains to be done across the whole of the
economy by way of extensive deregulation and opening
up, the labour market is the biggest single barrier
to achieving the sort of economy we need. This could
be the biggest issue of this election. We hope it will