The Legacy of the Hungry Mile
Some Reflections on the Future of the Industrial Relations Commission
I am going to start by taking up some of the points
which Professor Minogue made. I have a very high opinion
of Professor Minogue, but it struck me when he spoke
that he was displaying that typically English attitude
which is summed up in a famous newspaper headline:
'Fog in channel, continent isolated.'
A great problem for Australian or New Zealand expatriates
who have lived in England for many years is that they
have not noticed the enormous change in attitudes and
thinking which has taken place in Australia over the
last 25 years, with respect to England and things English.
Historically our links with England have been close,
but the truth is that we haven't got much to learn
from English institutions and English politics and
particularly not from English industrial relations.
Despite the historic links between our unions and the
British unions, despite the presence in our factories
of a number of Pommy shop stewards and despite all
the other historical and institutional connections,
Australia these days is looking much more towards Asia
and Continental Europe, of which England is merely
a declining offshore island.
Our unions are quite different rom English unions,
not in their formal structure but in the fact that
they are much more intelligently led. This is very
important for the process of social change and industrial
relations changes in Australia. A major reason for
this is simply that we don't have the class and other
obsessions of the English. Working class people here
do not feel that their children are betraying them
by going to university and getting university degrees.
Indeed when you look at our blue collar unions, they
are now likely to be led by people with some university
education and some basic intelligence.
This is significant because it means unions are far
more aware of the pressures of change than they like
to admit. Not like in England where they are like dinosaurs
with their brains in their bottoms. The Australian
unions know that change has taken place; they know
that they are going to have to adapt and they are trying
to get the best deal out of it. Even the Waterside
Workers Federation are prepared to make some concessions
these days, although they think they are going to get
away with making very few.
Somebody suggested to me that I could discuss the
Wapping experience: what happened in Fleet Street when
Rupert Murdoch shifted his printed operations to Wapping
and took on the printing unions. The point is that
if you look at Australian newspapers where they are
actually printed, you will find that Wapping happened
in Australia more than ten years ago, quietly. There
were a couple of longish strikes, there were continual
shenanigans, there are still various types of industrial
guerilla tactics employed, but the old style technology
and staffing practices have been almost totally abandoned.
When the ACTU delegation went off on its junket to
Europe and produced that document 'Australia Reconstructed'
they weren't looking to English history. They visited
Sweden and effectively they started the old social
democratic prattle about the Swedish model and how
perfect it was and how wonderfully that little country
Sweden had handled all those things. They overlooked
the very important fact that Sweden has a relatively
far bigger export and import sector than Australia
and is far more open to the world economy as a whole.
But they said bluntly that we have nothing to learn
from England, and in that they were right. We have
nothing to learn from Mrs Thatcher because we don't
have the same class or union or industrial structure.
We don't have the same kind of incompetent wet English
gentlemen in government, whichever party happens to
be nominally in charge. We are lucky.
We ought to be looking at industrial changes that
are taking place in the United States, in Europe and
in Asia. In Europe particularly, because Australia
is just beginning to realise how important Europe is
going to be in the future. The English don't realise
that yet It is true that the European Commission is
a strange and anachronistic institution; it is true
that there is a Left in the European parliament which
adheres to all the old causes under new labels like
environmentalism. Nevertheless Mrs Thatcher's criticisms
of Europe are usually wide of the mark.
Let me get back to Australia. l was asked to talk
about the terminal decline of the Industrial Relations
Commission. For a number of reasons, I don't think
the IRC is in terminal decline. However, it has encountered
One of those problems derives from the fact that in
the old days of Mr Whitlam and Clyde Cameron, the government
made the mistake of appointing to the Commission one
of their mates, Jim Staples. Jim is an old friend of
mine; one of the things I like about him is that he
is an eccentric. That is, he can't be relied upon to
toe the line. He is sometimes bloody silly, but he
can never be relied upon to be obedient and well behaved.
When the Industrial Relations Commission was instituted
the government thought they could quietly get rid of
the Staples problem by simply not reappointing him.
By doing so they have changed the status of the IRC
in a way which they didn't imagine they would. They
have made it quite clear that every member of that
commission and every member of every other tribunal
which is not fully judicial maintains office only at
the whim of the government in power. A change in the
legislation which changes the name of the tribunal
can be the occasion to not reappoint one or all of
its members. All these people who are supposed to have
tenure until retirement age, subject only to vote by
parliament and dismissal by the Governor General, become
temporary employees for the duration of the goodwill
of the government.
That means that the Industrial Relations Commission
has at one stroke lost an enormous amount of the moral
authority which it has spent eighty years trying to
build up. The whole judicial pretence of the Arbitration
Court, then the Arbitration Commission and now the
Industrial Relations Commission has been destroyed
by the Staples affair. It doesn't matter what the parliamentary
committee inquiring into it says about future Industrial
Relations Commission appointments, it doesn't matter
that they still try to punish people for contempt.
Indeed, the fact that they have prosecuted Norm Gallagher
is evidence of the falling prestige, not the rising
prestige, of the arbitration authorities.
To refer to current events, regardless of the role
of the Industrial Relations Commission, the Accord
is falling apart. It has been fraying at the edges
for some time. It has lasted far longer than I thought
it would, and despite the cogent criticisms of people
like Des Moore I think the Accord delivered some useful
things, particularly in its early years. It did deliver
falling real wages.
It is true that it was able to deliver that because
the Accord came into being as a result of the 1982
recession, and indeed as a result of the wages freeze
initiated by the Fraser Government. An important lesson
from that is that the best time to deal with unions
and with any kind of general wages policy is in the
depths of a recession or the immediate aftermath, because
that's when they are more likely to take notice and
make some concessions. It is part of the intelligence
of the ACTU leadership that the real wage fall of the
period 1983-86 was delivered, allowing employment to
They have forgotten that lesson now. Real wages were
rising, productivity is flat and looks like continuing
that way. We are possibly on the verge of another recession
although it doesn't look like it will be as bad as
It may be the pilot's dispute which precipitates the
collapse of the Accord. The pilots were never signatories
to the Accord or participants in it, they were subjected
to it by the ACTU which they are not a member of, by
the government and by the Industrial Relations Commission.
I cannot for the life of me see why they haven't got
the right to say: 'We were not represented in this
process, we refuse to be bound by it.' And that's what
they are doing. The only way the government can deal
with the situation is to destroy their industrial strength
by attacking their status in the IRC, by attacking
the various protections they enjoy as a union, possibly
by encouraging prosecution of the union for damages,
and by allowing more competition into the airline industry.
These are all very desirable things, but the ACTU
is quaking with fear at the prospect that the pilots
might force the government into such action. Once governments
experience such things, they tend to get a taste for
it. What's more the public gets a taste for it.
The ACTU is proposing a rigid system of relativity
for wage fixing, reviving the old metal trades connection.
It is quite extraordinary that they should wish to
revive the centrality of the metal trades, one of the
least efficient and most protected of all manufacturing
industries. They are talking, as they often do, of
the low paid. They know full well that raising minium
wages tends to create unemployment. They also know,
however, that the major growth area for employment
in Australia is in part-time and in casual work, and
that the fall in real wages has produced that growth.
It is in the non unionised sector that growth has taken
The next step the ACTU wants to take, but is not going
to take in a rush, is to try and move in on the part-time
and casual workers, for which they would be prepared
to concede some reduction in penalty rates. A very
useful step towards preparing such workers for unionisation
is to contribute to increased unemployment in their
ranks; that is what a substantial increase in minimum
wages would do.
(Perhaps they are not quite as Machiavellian in their
thinking as that; there is always a lot of woolly but
sincere stuff about the best way to help the workers
to raise minimum wages.)
The final part of the national wage case package which
was discussed in the decision brought down by the Industrial
Relations Commission last week was the issue of actual
rates of pay as against award rates of pay. This brings
us back to the nature of the IRC. Such institutions
tend to become their own best clients I don't want
to put too much weight on this because there are bureaucrats
who are not subject to these things. One should never
under estimate the influence of sheer professionalism;
these people can be quite dedicated and sincere in
their desire to serve the public good. It is just that
they have a conception of something good which tends
to involve the magnification of their responsibilities.
This is also true of the Industrial Relations Commission;
everything that is wrong with industrial relations
system in Australia, the IRC sees as due to inadequacies
in its own powers or incompleteness of its own scope.
So the way to remedy all these problems is to give
it more power. But the Industrial Relations Commission
has been losing power in recent times. It has slipped
back very badly in the esteem, not just of specialists
who take an active interest in such matters, but the
public generally, because of the increasing importance
of the ACTU in the governmental system. Everybody can
see that deals are being made between the ACTU and
the government, in which the Industrial Relations Commission
plays no role whatsoever until they clear it in the
The ACTU has effectively said that the future existence
of the Industrial Relations Commission depends on its
delivering the deal done under the Accord. Now of course
the Industrial Relations Commission doesn't like that,
particularly as the fact that people who get onto the
Commission tend to have an instant increase in the
size of their heads. They begin to think they are Judges,
that no one can talk to them in that way. That was
what happened in the national wages case; they refused
to deliver to the ACTU part of the Accord deal. They
did it couched in such impenetrable prose that it took
the ACTU and everybody else about three days to work
it out. We are seeing some of the results of that now
in the arguments between the metal trades unions and
Metal Trades Industry Association.
So the Industrial Relations Commission is beginning
to realise that it cannot keep on rubber stamping Accord
decisions. Now it is going to be faced with the pilots'
issue: what can it do there? It can either deregister
the pilots, and you must remember that deregistration
has always been a very long drawn out and painful procedure.
Or it can insert the stand~down clause in the Award
which is another piece of nonsense---the very fact
that you have to have a clause in the Award which says
that people who don't work don't have to be paid is
an absurdity. But ultimately they either have to discipline
the pilots or throw them out.
The pilots know that they have never been in a stronger
position and never will be again, once the two airline
policy is abandoned. I suspect that that is why they
are moving now. (The fact that the National Wage Case
decision was made the week before was probably an accident;
the pilots don't pay much attention to those things.)
We are going to have a very interesting confrontation
between a union which in the past has been extraordinarily
powerful and has a certain amount of public prestige.
It will be an interesting four-cornered contest. The
government's prestige is involved; so is that of the
Industrial Relations Commission. The airlines are involved,
and you must remember that the Australian airline industry
has always essentially been a matter of government
monopoly and licence. The prestige of the ACTU is also
at stake, even though the pilots aren't members of
All of these things will interact. I don't know what
the result will be, but it will be a fascinating episode.
The most interesting thing to watch will be how the
ACTU and IRC come out from it, because I suspect that
is the fundamental power struggle going on in the system.
The ACTU has expected the IRC to continue to act like
a rubber stamp, the IRC has realised that its prestige
is falling and that if it is to survive with any significant
powers whatsoever it will have to start arguing with
the ACTU again. That began in the National Wage Case.
The course of this battle will also be influenced
by what happens in state jurisdictions. The Australian
industrial relations system is bedevilled by the two
jurisdictions. The state jurisdiction is different
from the Federal jurisdiction in that it is not subject
to constitutional limitations. Some state authorities,
particularly in NSW and South Australia, are run by
judges who are appointed with the powers and status
of judges and who have attempted to impose legal criteria
on the system. They are very concerned with their own
dignity and status. This is important in NSW because
the Niland Report has made proposals which should lead
to legislation which will greatly change the nature
of industrial relations in NSW. The changes will allow
movement towards enterprise bargaining, which will
greatly undermine the status of the Industrial Commission.
The Industrial Commission is very unenthusiastic about
this, but other sections of the system are largely
onside. Even the NSW Labour Council is much less rigid
in its opposition that it likes to pretend in public
because it has become intellectualised over the years.
The secretary is no longer a horny handed son of toil
but has actually been to university. The Labor Party
can never officially support such a change because
the older unions will always resist it, but they can
be unconvincing in their opposition. The NSW legislative
council will probably allow the legislation through,
and that will be the beginning of the end of the Federal
system in its present form. Either the awards will
go Federal---that is, much of the NSW system will wither---or the Federal system as it operates in NSW will
begin to wither as people opt for the more efficient
NSW Industrial Relations System. What kind of future,
then, does the Industrial Relations Commission have?
It is wrong to think that it will disappear over night.
That rarely happens to long existing institutions which
have become sacred cows. Much of the power of the Industrial
Relations Commission has come from very clever shifting
of its position as to which side it favours, according
to which way the wind is blowing. That power is eroding.
It is also eroding because of something I call the
OECD dichotomy. This is the relationship identified
by the OECD between the degree of centralisation or
decentralisation of industrial relations structures,
and the performance in terms of inflation and rates
of growth in these countries. There are two kinds of
industrial relations systems which perform pretty well
in terms of economic growth and low inflation. One
is extreme decentralisation, more or less on the American
line; the other is extreme centralisation, where everything
is decided at the top. When you look at the extremely
centralised system, however, not everything is decided
at the top because there always is an area of freedom
in terms of relativity, which the ACTU is trying to
remove from the Australian system.
If the Industrial Relations Commission has a future,
it will be ultimately as the forum for centralised
wage discussions between government and the ACTU, and
even perhaps non unionists, about rates of overall
wage increase within the policy framework; the government
is trying to establish. For example, at present any
rational system would be producing real wage reduction,
because of the balance of payments situation. Outside
that attempt to introduce coordination, there would
be an increasing reliance on enterprise bargaining.
This would not be so much about wages, because wages
are becoming a secondary issue. What people really
care more about is working conditions, the way they
are treated and the atmosphere in which they work,
and indeed better management. (The reason we have so
many lousy unions is that we have such lousy management.)
There may be a role for the Industrial Relations Commission
in the future, but its power is going to bc broken
by a combination of the weakening of the ACTU and its
attempts to become more powerful. If the ACTU disciplines
the IRC as it has effectively promised to do, it will
probably end up with a system even less to its liking
than the present one. But l repeat, the leaders of
the ACTU are intelligent; they are aware of the danger,
and the danger has never been more starkly posed than
by the pilots. It's their run now.