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 considerable problems.
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 grow.
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 1982.
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 place.
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 Court.
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 the ACTU.
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.