The Legacy of the Hungry Mile

Waterfront Reform at the Watershed:
An Assessment of Recent Government Waterfront Policy Initiatives

Peter Barnard

On Tuesday 24 July 1989, Ford Australia unveiled its long awaited new locally built sports car, the Capri. Company officials predicted that this car alone could add $400 million to our export earnings. Coming hard on the heels of our $17 billion current account deficit for the year 1988-89, this was pleasant news indeed.

There was a proviso, however, attached to the $400 million export earning prediction. The company's President, Mr Bill Dix, warned that the Capri's future depended on it being a quality product delivered on time to international markets. 'Customers will not wait patiently while we suffer unnecessary industrial disputes,' Mr Dix said. He could have been speaking for any one of Australia's export producers.

On the very day these words were uttered, the Melbourne wharves, the wharves these cars must cross to gain access to international markets, were embroiled in an industrial dispute. This time the union out on strike was not the WWF, but one of the other 23 unions involved in the Australian Waterfront, the AWU.

The main characteristics of this strike will be distressingly familiar to those acquainted with the waterfront. Military strategists of the 1950s were misguided in applying the domino effect to the fall of Asian Governments, but the principle certainly applies to industrial relations on the Australian waterfront. The Port of Melbourne stopped for four days, holding up eight international ships at a cost of more than $1 million because of a bit of a dust-up between two waterfront employees.

The million dollar dispute began from nothing more than a seaman's clumsiness in the docking of a vessel. The seamen's task was to throw a heaving line to the linesman in preparation to tying up the vessel. Heaving lines are small pieces of rope, about half an inch in diameter with a quoit on one end---the sort of thing you and I would throw to one another in a swimming pool. They are used to guide the heavy ropes with which the vessel is tied up.

Unfortunately, the seaman's aim in throwing the heaving line was awry and it hit the linesman on the head. The linesman, I believe, reacted by yelling abuse at the seaman. Words led to words, and an argument ensued. Meanwhile, docking of the vessel was completed. Once the vessel had docked, the gangplank was swung over the side and the seaman went to disembark. This seaman has been described to me as something approaching Popeye incarnate. The sight of this burly chap walking down the gangplank understandably filled the PMA linesman with trepidation. Apparently, acting on the policy that attack is the best form of defence, the linesman grabbed an aluminium baseball bat that just happened to be lying nearby and set to the seaman in no uncertain manner, breaking his arm in four places. Disciplinary action, invoked by the PMA on the linesman, resulted in a strike by the AWU. This strike caused the Port of Melbourne to grind to a complete halt. This is despite the fact the AWU cover linesmen's duties at only some of the Melbourne wharves, where they are involved in such significant tasks as lowering the ramps on Roro vessels. With the AWU out on strike would anyone else complete these tasks? No, the territorial instincts of our unionists are strong.

Ironically, there was one exception to the cessation of work in the Port of Melbourne. Tasmanian vessels were eventually exempted from the strike. It's hard to believe; it was from actions on a Tasmanian vessel that the strike arose. One would imagine international vessels would be exempted and Tasmanian vessels singled out. But logic is a scarce commodity on the Australian waterfront.

The WWF have been quoting figures demonstrating the decline in the number of waterfront industrial disputes. This decline was almost inevitable. In a country which has a level of industrial disputation twenty times higher than Japan, fifty times higher than West Germany, two and a half times higher than the UK, and twice as high as the US, the Australian stevedoring industry has the worst industrial record of any Australian industry, except coal. When you are astride Mount Everest, there is only one possible direction to walk: downwards. What the Melbourne example and the Day of Outrage strike in NSW show, however, is that strikes over trivial issues are still occurring. Often these strikes are of a wild-cat nature, which adds to the unpredictability of Australian shipments. Like an 'all in' brawl on a football field, there is also a tendency for unions not directly involved in a dispute to strike in sympathy.

Some people appointed to high and responsible positions of waterfront administration speak in reverend terms, with something approaching religious awe, of the 'culture of the Australian Waterfront'. What the Melbourne example starkly points out, is the need to entirely overturn this culture. It is a culture characterised by rampant industrial disputation, inflated wage levels, overmanning, ridiculously restrictive work practices and appallingly low levels of productivity.

One waterside worker said recently on the television program '60 Minutes' that getting a job on the wharves was like winning Tattslotto It is not hard to fathom why. Last year, unskilled waterside workers at permanent ports earned on average just on $40,000 per annum. Their average working week was a fraction more than thirty hours. At some ports waterside workers on special agreement awards, take home more than $60,000 a year. Waterside worker wages have increased more than 650% in real terms since 1965.

The WWF empire was built on the ethos of the downtrodden Australian worker. In the case of waterside workers, that ethos is now a myth. Amongst employed Australians, wharfies are aristocrats. Once safe Labor dockside seats, such as the Port of Melbourne, are now becoming marginal. This is, in part, because the worries of the 1980s waterside workers are the worries of upper middle class Australians---high mortgage rates, sales tax on luxury items, high marginal tax rates and so on.

Contrast this with the plight of farmers, the generators of nearly 50% of this country's export earnings and major users of our ports. They struggle on average pretax incomes of $20,000 a year. The prices of all farm products have decreased in real terms since 1965. The prices of lamb and wheat have gone up only by about half the rate of inflation. Real farm incomes have halved over this period. These figures tell a story. Our agriculture industries, unlike our transport industries, must compete on international markets. The decline in agricultural prosperity mirrors the worsening state of the Australian economy.

Yet the gravity of our economic situation has not made a significant impression on the waterfront industry. Still we are shackled with such overmanning that stevedoring employers say that four out of ten waterside workers are not needed. Still we are shackled with work practices that produce astonishingly low levels of productivity, so low in fact that an independent study by the ISC estimated that a 60% improvement was possible.

The stevedoring unions are not the only ones to blame. Stevedoring management played a large part in permitting unproductive work practices to develop. They showed little concern as work practices were introduced. As the Minister for Transport stated recently, rather than have their ships tied up, these foreign-owned stevedoring companies caved in to every whim of unionised labour. Explicit instructions to this effect were issued at the advent of containerisation, and have implicitly continued ever since.

Stevedoring management, in their defence, have received little help from the Arbitration and Conciliation Commission in controlling the excesses of union power. The ISC has said that decisions of the Arbitration Commission in some areas of the waterfront have been unsatisfactory. On countless occasions the Arbitration Commission has opted to maintain short term industrial peace at the expense of waterfront productivity.

A blind eye has been turned on illegal demarcation practices and workers involved in dismissal offences. Workers found drunk on the job, for instance, have been reinstated by the Commission upon threat of strike action. Absenteeism is at very high levels but is ignored.

Such practices discriminate against the good worker. Good workers are disadvantaged because they are asked to perform work that others should have done. This is damaging to morale and motivation. But I don't want to dwell on the negative. It is now time to redress the years of inefficiency, to prescribe remedies, to set down solutions to our problems.

When it comes to positive solutions, a good place to start is the recent ISC Report into the waterfront. This report was the culmination of a two and a half year inquiry into the waterfront. I happened to be one of the small band of ISC supporters.

Correctly, the ISC chose not to directly address waterfront work practices, nor the high level of industrial disputes. Rather these were viewed as mere symptoms of underlying structural problems, namely the concentrated industry structures in the maritime, towage and stevedoring areas and a monopsonistic supplier of waterfront labour, the WWF.

If these basic structural deficiencies were not enough, stevedoring employers and waterfront unions have over the years implemented industry-wide arrangements that have engendered a cost plus environment and reduced their exposure to risk. The various forms of labour pooling found in our ports in particular, have reduced pressure to contain costs and limited incentive to keep down workforce numbers.

I will not attempt to describe labour pooling arrangements in detail. As great a body as the IAC, bristling with highly trained, university educated staff, observed: 'It is virtually impossible to convey a digestible and accurate picture of the precise arrangements under which stevedoring labour is employed.'

One feature of these arrangements, however, is that the cost of idle waterfront labour time is spread across all employers in the port. This results in a tendency for each company to keep the workforce at higher than required levels. Management of sick leave is also less effective because, again, the cost is spread industry wide.

These arrangements, which weaken competition provide little incentive for efficiency, were a key target of the ISC inquiry. Their complete abolition was recommended, with labour pooling being replaced by enterprise employment.

The ISC was quite clear about what enterprise employment entailed. Under enterprise employment, individual employers would have the right and responsibility to recruit, train, develop, deploy and discipline their employees. The ISC called for an end to port pools and inter-company transfers, an end to the quarterly reallocation of labour, an end to industry wide levies that more than double wage costs, an end to panel amalgams of WWF and AEWL representatives controlling industry recruitment and an end to similarly structured industry disciplinary committees.

But the ISC didn't stop with just a recommendation to introduce enterprise employment. It also recognised that a large part of the waterfront problems was caused by irresponsible use of monopoly union power. On page 133, the commissioners noted:

    'Union monopolies weaken competition within the labour market. For example under present arrangements all waterside workers must be members of the Waterside Workers Federation. In recent years this monopoly has been used to maintain high wages by preventing entry into the market of any labour that might be prepared to accept conditions different to those enjoyed by the WWF. The frontiers of this monopoly have been extended by enrolling clerks and maintenance workers on the waterfront.'

On page 125 they wrote:

    'Abuses of monopoly union power should be dealt with in a manner similar to abuses of corporate power.'

They went on to decry:

    'Counterbalances to union monopoly power available through legislation are weak. For example the Trade Practices Act 1974 excludes the jurisdiction of the Trade Practices Commission from a substantial area of activity relating to remuneration, conditions of employment, hours of work or working conditions of employees ... bans clauses inserted in awards under the Conciliation and Arbitration Act of 1904 have not been very effective'.

Rather than attempt to overturn eighty years of increasingly constricting Australian industrial law---the warranted course of action in our view, but one which would have entailed an overstepping of their terms of reference the ISC chose instead to limit waterfront union power through other mechanisms. There is more than one way to skin a cat. On page 127 the ISC stated: 'The Commission has focussed its attention on developing an industry plan that reduces the extent of monopoly power and encourages the responsible exercise of power.

The ISC recommended removal of WWF coverage in small ports, inland container depots and bulk terminals. They recommended increased use of certified agreements, noting that terms included therein could be inconsistent with general national wage principles. They recommended the stripping back of industry awards. They recommended that appropriate stand down clauses be inserted in waterfront awards and advocated that the legislated industry-wide involvement of the WWF in dispute settlement be removed.

One set of ISC recommendations of least importance is the much vaunted workforce rejuvenation proposals. Under the ISC's plan 3,000 aging, disabled waterside workers would be retired and 1,000 new waterside workers, under age 30, recruited.

What a retirement these 3,000 waterside workers will enjoy! A golden road to the grave, to be envied by all but the most senior of Australia's executives. For instance, a 55 year old waterside worker with 30 years experience will receive 247 weeks pay, plus superannuation, plus long service leave, plus unused sick leave. Compare this to a similarly placed worker in a wide range of industries covered by the Arbitration Commission's TCR arrangements, who would receive 13 weeks pay. The wharfie would receive 1,900% more than the normal Australian worker!

The strategy of the ISC in bringing about waterfront reform is clear. It was to provide extraordinarily large redundancy payments to wharfies, in return for their agreement on fundamental restructuring of the industry. It was a bribe. The WWF was being paid to forego some areas of coverage, to give up some degree of power, in the interest of a more efficiently operating Australian waterfront.

This careful balancing of interests was destroyed by the Ministerial Statement of 1 June. Wharfies are still to receive enormous, government and shipper funded, redundancy payments. Some will walk from the docks with more than $200,000. But the government failed to sanction key ISC recommendations aimed at controlling union power. It withdrew significantly from the ISC's recommendations in a number of important areas including:

1. Bulk Terminal Coverage:

    The ISC recommended that the WWF should relinquish its coverage of bulk loading and un-loading operations within three years. The Ministerial Statement failed to endorse this clear recommendation. Quite the opposite in fact. The statement sanctioned continued WWF involvement in these areas, with the meek rider that this involvement should be 'in accordance with efficient operational requirements'. The ISC recommendation was aimed squarely at the grains industry, the only major bulk operation still using significant numbers of stevedoring workers.

2. Container Depot Coverage:

    The ISC recommended that the WWF retain coverage of the waterfront depots, with inland depots to be covered on an enterprise basis by either the National Union of Workers (NUW) or the Transport Workers Union (TWU). It recommended that there should be no restriction on competition between depots. The Minister for Transport, while endorsing the second of these recommendations, referred the coverage matter to the ACTU. Since when, might we ask, has the ACTU superseded the ISC and the Department of Industrial Relations as the official source of Government advice on industrial relations? The edict of the ACTU might be to provide coverage of all depots to the WWF.

3. Small Ports:

    The ISC recommended that existing cross-subsidisation of smaller ports be removed, but labour arrangements be made more efficient, either through increased use of casual labour or through the establishment of integrated port workforces, with workers covered under Port Authority Awards. The Minister endorsed the elimination of crosssubsidies to smaller ports, but failed to clearly approve the swift implementation of more flexible labour arrangements. Coverage matters were again referred to the ACTU. Cross-subsidies of stevedoring labour in small ports can amount to more than $50.00 per hour. Small ports are net exporters and are, therefore, extremely important to the Australian economy. Agriculture is a particularly heavy user of stevedoring labour in these ports. To eliminate cross-subsidies without, at the same time, introducing efficient and flexible labour arrangements, will hurt agricultural producers.

4. Dispute Settlement:

    The ISC recommended that the current industry-wide arrangements involving the Federal Ports Coordinating Committee, The Port Coordinating Committees and Port Conciliators be abolished. Under the ISC recommendations, dispute settlement in the stevedoring industry would follow the same path as other industries. The ISC also recommended that stand down clauses, that could be put into effect within 24 hours, be inserted into Waterfront Awards. The Minister failed to endorse any of these recommendations.

5. Enterprise Employment:

    The ISC recommended the introduction of enterprise employment in the five major ports (Brisbane, Sydney, Melbourne, Adelaide and Fremantle) within two years, and all ports within three years. The Ministerial statement only required the introduction of enterprise employment in the four major ports (Brisbane, Sydney, Melbourne and Fremantle) within three years with a 'commitment' to enterprise employment in the intermediate and smaller ports, but no time frame. The ISC viewed the complete introduction of enterprise employment as absolutely critical to waterfront reform.

These are examples of the Minister for Transport withdrawing from the ISC's recommendations. In other instances the Minister replaced clear directions from the ISC with foggy, hesitant statements. Where this has occurred, we can expect a further whittling away of the ISC's package during the negotiation of the in-principle agreement. There was one significant area where the Government added to the ISC Report. The Minister said that provided a satisfactory in-principle agreement is reached, the industry's portion of the redundancy payments would be funded by a statutory levy. That is, 50% of these redundancy payments will be directly met by waterfront users---the importers and exporters of Australia. No doubt, a portion of these $200,000 payments will be made from the pockets of those 25% of Australian farmers with an income less than $3,000.

For their pain, shippers received scant recognition in the Minister's statement. One might imagine that since shippers are coughing up the cash, they would at the very least be given right of veto over the in-principle agreement. But no, shippers have received no guernsey in the process. Instead, the Government has assigned to the architects and custodians of our waterfront problems the sole responsibility for fixing them up. A laudable example of Christian faith and hope, perhaps, but not a strategy designed to fill shippers with optimism. Six months ago, there was danger to those of us who recognise the importance of transport reform of becoming over excited. The IAC had just released its final report into coastal shipping with the remarkable recommendation that Cabotage be abolished. This, they estimated, would save the Australian economy half a billion dollars per year or $98,000 for every seaman employed.

Six months ago, the Prime Minister seemed to endorse the IAC sentiments when he said in a Business Council of Australia address that if it was good enough for Australia's mining and farming industries to face international competition, the same should also apply to coastal shipping.

And, six months ago, on every occasion we ran into Ted Butcher, encouragement would be forthcoming about the final ISC Waterfront Report. But since then, micro-economic reform of the maritime and waterfront sectors seems to have run off the rails. A beam of light was presented by the IAC and ISC Reports. This has been dimmed to a flicker by the Ministerial Statement.

To their credit, the stevedoring companies have shown more resolve to institute reform than they have in the past. I expect, however, that this resolve will dissipate over the three months set aside for negotiations.

I was concerned to read in the 'Canberra Times' recently that it is expected that the in-principle negotiations would reach a successful conclusion before the three month period expired. This will be done with minimal shipper involvement. The process now in train is going down the same path as past failed efforts on waterfront reform. There is a sense of deja vu, a revisiting of the Woodward and Kirby Inquiries, when many of our current waterfront problems were conceived. It's a return to th Cosy Club, those salubrious surrounds in which the AEWL and WWF ordered lavish banquets at shippers' expense. At the expense of all Australians.

Australia is in grave danger of falling into the Argentinian abyss, the black hole of economic adversity. If we are to avoid this fate there must be a resolve to address issues of micro economic reform, especially in the transport sector in a firm way, overriding resistance from sectional interests. It is only through such action that the underlying productivity of the Australian economy will increase and the living standards of all Australians sustainably improve.

Why HR Nicholls?

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