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 principles.

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 Wage increases.
  • 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 encouraged.
  • 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 enforced.
  • 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 be enacted.
  • 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 factors included:

  • 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 world; and
  • 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 of that.

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 10.293.

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 operation.

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 is clear.

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 political life.

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 be!