The Legacy of the Hungry Mile
Terminating the Button Rents on Australia's Waterfront
There is now almost universal recognition that Australia's
stevedoring and waterfront industries constitute a
major economic problem, contributing in a unique way
to our declining competitiveness and our growing economic
plight. The papers we have heard this afternoon have
outlined, from various perspectives, the range and
extent of this problem. The work of the Inter-State
Commission over the last two years has been important
in surveying the features and drawing a map of the
waterfront and its associated industries. Its various
reports are helpful documents, providing us with a
common text for reference purposes, for debate and
However, surveying the complex terrain and drawing
a map of the waterfront and its associated industries
is one thing. finding a way out of the maze which they
comprise, is another. Today I have to take issue with
the Waterfront plan put forward by the ISC. I do not
believe the ISC has the answer to our problems.
The ISC's report, and its Waterfront Plan, was conceived
five years ago. In September 1984, the then minister
for Transport, Mr Peter Morris, also known as the Minister
for Inquiries, established the Task Force on Shore-Based
Shipping Costs under the chairmanship of Mr lan Webber.
This Inquiry's Report of June 1986 was the launching
pad for another inquiry into the same problem, this
time by the ISC.
In December 1986, Mr Morris, together with the then
Minister for Employment and Industrial Relations, Mr
Ralph Willis, jointly announced that the ISC would
be required to formulate a blue print for dealing with
'long term structural issues in the waterfront industry'.
The ISC's Waterfront Plan was released last March.
As I have said, this plan is fatally flawed. Nonetheless
it is undergoing further modification by the AEWL and
the WWF under the WIRA negotiations.
This is, to put it kindly, microscopic reform at glacial
speed and fits into the long tradition of our history
of expensive, official inquiries into the waterfront
and maritime industries in Australia. These inquiries,
and the governments which acted on their reports, have,
tragically, embedded and compounded the problems of
There is, beyond argument, the need to look at this
industry with fresh eyes; to seek to understand where,
and when, and why we went wrong; and then to propose
fundamental solutions, rather than reforms at the margin.
To understand the waterfront we need what economists
call a model. For this purpose let us compare Australia
to a large productive valley, entirely surrounded by
very high and impassable mountains, except for one
well defined pass, a sort of Khyber Pass. In this broad
and fertile valley, we grow wool and wheat and meat
and many other crops. We mine coal and iron ore, gold,
base metals, alumina, and we truck these things out
through this metaphorical Khyber Pass, which is our
only access to the outside world.
In return for these commodities we bring in computers,
and photocopiers, and machinery and some motor cars
and all the things we need to prosper according to
the contemporary modes of life.
Our problem is that this metaphorical Khyber Pass,
through which all our trade has to flow, is owned and
controlled by what is virtually an hereditary caste.
This caste is an exclusive group of citizens. They
have hereditary rights to the control of the Pass and
they charge very substantial toll fees for the right
to move goods through the Pass. Not only do they impose
these exorbitant fees, but permission to move to and
fro is unpredictable and sometimes arbitrary.
These privileged citizens, then, have hereditary rights
to what economists now call monopoly rents. Senator
Button some months ago, quite rightly, drew attention
to an example of what appears to be an unusually pure
form of monopoly rent, one deserving of textbook recognition.
I propose that we should call it the Button Rent, in
the Minister's honour.
The Minister referred to a waterside worker who was
in the enviable position of being driven in a taxi
to the port, to clock on, and then driven immediately
home again, in the same taxi. He had enjoyed this lifestyle
for twenty years.
I do not know whether it was the perception that the
taxi fare was also part of this privileged wharfy's
emolument which particularly excited Senator Button's
indignation. We were not told the gentleman's name
so we cannot ascertain what I am confident is also
true, and that is that this person almost certainly
inherited his job, and therefore his rent. This phenomenon
of hereditary rights is one to which I shall return.
It is an intriguing and, I think, very important part
of the waterfront picture.
In Chile, until recently, the Button rents were even
more highly developed. The waterside workers of that
country, the trade unionists, were the owners of a
medallion, which was passed on from father to son.
The holders of the waterfront medallions received the
Button rents from the port authorities but the actual
work on the waterfront was carried out by subcontractors
who were paid by the medallion owners at marginal and
very low rates.
These are examples, at home and abroad, of what are
legally sanctioned monopoly rents. As well as these
legally sanctioned rents there is, however, a substantial
body of industrial folk lore concerning the payment
of illegal commissions. It would be surprising if all
of the monopoly rents took the form of legally sanctioned
payments, or recognised and accepted forms of quiet
life on the job.
There is an obvious difference between the model I
have proposed, of an Australia surrounded by impenetrable
mountains except for the one passage through the mountains,
and the reality of our situation.
Australia has an enormous coastline with many fine
harbours. Why do we not have competition, within ports
and between ports, for the transport of our goods in
and out? Why is it that the existence of these substantial
monopoly rents do not constitute a powerful incentive
for new entrants to come into the industry and make
The answer, briefly, is that Billy Hughes, back in
the first decade of this century began putting together
what became a very successful monopoly, the Waterside
Worker's Federation. The WWF has had ups and downs
in its history but, particularly since the last war,
it has survived and prospered as a monopoly enterprise.
The children, grandchildren, and now great grandchildren
of those privileged few who were mesmerised by the
gifted Welshmen eighty and more years ago, have done
well out of his creation.
Since Hughes was expelled in 1916 the WWF has had
some able leaders, notably Jim Healy, and more recently
Charlie Fitzgibbon. This leadership is an important
part of the history of the creation and sustaining
of a monopoly on Australia's waterfront.
The story of the creation of the WWF and the collection
of the first, ever so reasonable, monopoly rents, is
described in Fitzhardinge's biography of Billy Hughes.
In 1899 Hughes was a member of the NSW Parliament representing
the electorate of Lang, which covered the Darling Harbour
wharf area where the coastal and interstate shipping
was then concentrated. The waterfront union, like the
Shearers' Union, had been broken by the crash of the
1890's and Hughes set out to rebuild it.
Hughes worked energetically for three months, persuading
wharfies to join what was, in 1899, a totally moribund
and bankrupt organisation. In December of that year
Hughes was elected Secretary of the reconstructed branch
of the Sydney Wharf Labourers Union, with a membership
of 1500, and 200 pounds in its bank account.
As well as organising the wharfies Hughes organised
the Trolley, Draymen, and Carters' Union. This trade
union brought into Hughes' orbit the workmen who carted
produce and material from the Sydney wharves to the
adjacent warehouses and the Sussex St produce stores.
Unorganised, they offered a likely source of alternative
labour should the need arise; organised, they could
be valuable allies in any dispute on the wharves. Hughes
became President of this union, and remained in that
office until 1916.
Hughes became the federal member for West Sydney in
the first Commonwealth Parliament. When he left for
Melbourne in May 1901 to take up his seat he was ambitious
to create a federation which would unite all the waterfront
unions, and he had secured the authority of his own
Sydney union for that purpose. During the next twelve
months he made rapid progress with his plans. However,
early in March 1902 he found that the Sydney wharfies
had gone cool on a federation, and were concerned to
obtain registration with the newly created NSW Arbitration
Hughes went back to Sydney and turned the Sydney wharfies
around. He told them of the advantages of being able
to 'discommode', 'inconvenience', and 'harass' (as
he put it), through the good offices of the Australia
wide WWF, shipping and stevedoring operations anywhere
around Australia. The speech is quoted at length in
Fitzhardinge's biography, and it is well worth reading.
In Sydney and Newcastle in February and March of 1908
there was a major waterfront strike. Billy Hughes,
now a leading member of the Federal Parliamentary Labor
Party, was also President of the WWF, General Secretary
of the Sydney Wharf Labourers Union, President of the
Trolley, Draymen and Carters Union, advocate for the
Merchant Service Guild, and an extremely skilful manipulator
of the press. He had a total victory over the shipowners,
the stevedores, the Master Carriers and the Employers
This victory was a major step forward along the road
to total control over the labour supply on the waterfront,
a position finally achieved in 1942 with the establishment
of the Stevedoring Industry Commission, under the National
Security Act of 1939. The SIC, as part of the wartime
arrangements with the trade unions, and in a position
of acute labour shortage, gave the WWF responsibility
for the supply of labour.
After the war there was a period of major industrial
unrest. The communist issue was the dominant issue
in industrial relations, indeed in politics generally.
Various Acts relating to the waterfront were passed
but the WWF always maintained its monopoly position
as supplier of labour.
Having established an unchallenged monopoly all that
remained was to legitimise and increase, bit by bit,
the monopoly rents. But in the end, the monopoly rents
are never enough. The successful monopolist is always,
like Clive of India during his impeachment proceedings,
pleading 'By God, Mr Chairman, at this moment I
stand astonished at my own moderation'.
As soon as the monopoly rent becomes an important
aspect of remuneration, the pivotal issue always arises
of how to regulate recruitment into the industry.
There are theoretically a variety of methods of selection
of new members. Vacancies could be auctioned. Or licences
could be issued and traded as in taxi cabs. The Wharfies
adopted the hereditary principle and have found it
very successful. I have not been able to discover when
it happened, but it must have been fairly early on
in the history of the union.
Recently the hereditary principle was extended to
include descent to the female line. 'The Australian'
carried a story, on the 12 July last, concerning the
successful application by Miss Sandra Elliman for a
vacancy as a trainee stevedore in Townsville. I quote
from the article.
'Although other women have been allowed to join the
WWF she is the first to be given the opportunity to
work alongside the men.
There can be no argument she has the pedigree for
the job---her father and 39 year old brother are employed
as stevedores in Townsville's bustling port. In fact
Mr Ray Elliman, 59 and one of the established characters
of the Queensland waterfront, was given his start as
a 21 year-old on 10 July 1951, on the recommendation
of his stevedoring father Jack---38 years to the day
Sandra reported for work.
After undergoing a series of five written tests to
assess her general intelligence and aptitude for the
demands of wharf work, Miss Elliman fronted a selection
panel last month made up of representatives of the
Association of Employers of Waterfront Labour and the
local WWF branch.
She and five male recruits were approved out of 76
There can be no doubt that the principle of sons and
daughters following their parents into their occupations,
be they professional, or on the land, or in trades,
or even in politics, is widely accepted, and supported.
The present Premier of Victoria gained critical support
in his run for office, because his father had held
the same office. Wills have been overturned by the
courts in favour of the children of the deceased who
have claimed they have been treated unfairly.
Machiavelli tells us that 'men will sooner forget
the death of their fathers than the loss of their patrimony.'
The conservatives amongst us (and we all have a conservative
streak) may admire an industry in which family inheritance
is so deeply entrenched. However, we have to understand
that this hereditary rule is a very successful mechanism
for limiting the claimants to monopoly rents; rents
which have been built up since Billy Hughes first set
out to establish the monopoly more than eighty years
A monopoly rent is a very different thing from other
forms of property which are passed on from parents
to children. Indeed, the fundamental difference between
the ISC report, and my argument here, is that monopoly
rents are not legitimate property rights. On the contrary,
they are morally equivalent to ill-gotten gains, even
though in this situation they are sanctioned by government
Not only are those rents, in my view, illegitimate
but, furthermore, they are now well beyond the capacity
of the nation to support. Our competitiveness in international
markets is critically dependent upon having waterfronts
which are themselves internationally competitive. From
that view point a particularly damaging monopoly rent
on our waterfront is the one which takes the form of
the benign neglect of duty or obligation---the quiet
and easy life.
The WWF maintains its monopoly position not only through
its control of labour recruitment but also, as the
ISC report states, through its ability to prevent new
entrants into the stevedoring business. Virtually all
stevedoring in Australia is now carried out by five
companies. Any new contestant in the stevedoring industry
must obtain the approval of both the WWF and the AEWL
before having access to waterfront labour.
This arrangement was formalised by the Kirby Conference
in 1977, with the caveat that approval of new entrants
should not be unreasonably withheld. That caveat was,
arguably, for the benefit of public relations purposes
The ISC Report wrongly attributes the possibility
of collusion to the degree of concentration in this
industry. Concentration may be helpful in organising
collusion but it is not a sufficient condition for
it. It is the absence of any real and effective threat
of new entry into the industry which enables, promotes
and entrenches collusion.
The existing stevedoring companies are entirely protected,
by the WWF, from the threat of new entrants. The individual
ports tend to be monopolistic enterprises mostly operating
under statute. The whole industry has become elegantly
and tightly structured as a monopoly. This is where
the Australian Waterfront differs in a significant
way from the British Waterfront. Up until last April
there were, in Britain, two waterfront industries.
One industry was very much like our own. It was made
up of 63 ports, called Scheme Ports, which operated
under the National Dock Labour Board Scheme. The other
waterfront industry operated outside that Scheme, and
comprised 36 ports known as Non-Scheme ports. The Scheme
Ports operated under legislation similar to our own.
The elements of this industry were:
i. joint control and management of workplace decisions
ii. a guaranteed minimum weekly wage;
iii. the determination of the size of the work force
register of each port;
iv. the legal definition of dock work and the reservation
of such work for registered dockworkers (RDWs)
v. the allocation of all RDWs as permanent workers
to registered employers.
This constitutes a very similar panorama to our own
waterfront. The difference in Britain was that 36 ports
were outside this legislation. In Australia the monopoly
is as perfect a device as can be contrived.
In Britain, as one would predict, many of the scheme
ports have suffered from chronic decline, and most
of the 36 non-scheme ports, contrariwise, have prospered
The largest non-scheme port is Felixstowe. Yet 30
years ago, Felixstowe was a small East Anglia grain
port. It is still denigrated by wharfies in Scheme
Ports as 'the farmers' port'. I am one farmer that
wants farmers' ports, like Felixstowe, all around Australia.
Today Felixstowe handles 13 million tonnes of cargo.
It is the fourth largest port in Britain. Profits were
1.5 million pounds last year and are expected to double
this year. Two hundred extra workers were put on last
year, with a 21% increase in cargo handled.
Felixstowe is the best known of the non-scheme ports
because its growth has been the most dramatic. But
the 36 non scheme ports (out of the 99 total) handle
55% by value of all British exports. It would have
been easy for the UK Government to let the scheme ports
just wither on the vine. But that Government, early
this year, decided to tackle the problem. Doubtless
the fact that the Port of London lost 19 million pounds
last year, and the Port of Bristol lost 11 million,
helped to concentrate its mind wonderfully.
It repealed the legislation which established the
Dock Labour Scheme last April, and the Minister's statement
in the House of Commons is worth quoting. Mr Norman
Fowler, Secretary of State for Employment, inter alia,
'The scheme will not simply wither away of its
own accord. For that to happen our great historic ports
as well as smaller ports around the country would have
to close permanently.
That would involve abandoning major facilities
with all the natural advantages of location and tidal
waters, fixed assets and infrastructure, much of it
provided at public expense over many years.
The government has concluded, therefore, that positive
action is needed to free the scheme ports from their
present artificial constraints.
Our intention is to bring all port employees and
dock workers into exactly the same position as other
employees and workers. The only way this can be done
is through the abolition of the Dock Labour Scheme.
Its amendment or restriction would not remedy present
defects and would merely create new problems.'
The policy of the UK government in repealing the special
legislation covering the scheme ports contrasts dramatically
with the ISC Waterfront Plan.
That Waterfront plan, resiles from any attempt to
break the monopoly power of the WWF. I quote:
'For over four decades it has been the practice
to require waterside workers to be members of the WWF.
The Commission does not see any advantages in reopening
this issue now and there are substantial potential
disadvantages that could arise from injecting a particularly
contentious matter into arrangements that require cooperative
work for their solution'. (Vo1 1 p198)
The whole purpose of establishing and maintaining
a monopoly is to collect the monopoly rents and, in
the case of the WWF, to bequeath them to one's descendants.
There can be no lasting and dramatic improvement in
the performance of our waterfront industries until
the monopoly power of the WWF, on which all the various
monopoly rents in that industry are based, is broken.
There is no purpose in seeking to disguise, or obscure,
that fundamental truth.
The ISC Report, whilst it acknowledges the problem,
seeks to glide around this fundamental issue. The Commonwealth
Government itself has refused to entertain even the
most marginal reforms for permanent stand down provisions,
or a reduction of union coverage.
If it is agreed, then, that it is the monopoly of
the WWF which has to be broken (and such a resolve
would, in itself, be a major step forward) how it is
to be done?
In Chile they solved the problem of the inherited
medallions by buying them from the owners and then
declaring the waterfront to be free for any contestant
to enter. The costs of moving things on the Chilean
waterfront are now one quarter of what they were. As
Jose Pinera has said:
In Australia, perhaps regrettably, we have no medallions
Senator Fred Chancy has called for a Wapping for the
Australian Waterfront. Who could disagree with him?
It seems to me that that metaphor is an inspired and
illuminating one. First it suggests the prospect of
replicating, here, the industrial and economic impact
of Wapping on the British publishing industry. That
impact has been dramatic. British publishing has boomed
since Wapping. Second, it is welcome because 'Wapping',
the name of the Docklands area in East London where
Rupert Murdoch located the new plant, has a satisfying,
onomatopoeic ring to it.
The triumph of Wapping was due to the entrepreneurship
of Rupert Murdoch on the one hand, and the upholding
of the rule of law by the British courts and the Thatcher
Government on the other.
I am confident that the spirit, the drive and the
energy of Australia's entrepreneurs, once they are
unshackled from the monopoly powers of the trade unions,
can do for the Australian waterfront what Wapping has
done for British publishing.
Once Commonwealth legislation is passed, giving lawful
contracts between participants in stevedoring, and
other waterfront work, a legal status that is superior
to awards of the IRC (or of any of the other statutory
bodies to be found littering the waterfront) Australia's
entrepreneurs will surely soon create a Wapping on
There should be no constraint, other than common law
constraints, on these contracts. The other requirement
for the recovery of freedom, efficiency and prosperity
on our waterfront is the statutory reassertion of the
principal of freedom of association. In politics, in
sport, in religion, in professional life, we take freedom
of association for granted. The proposal that we should
all have to pay, through tax imposts, for the upkeep
of our churches, and for the stipends of the clergy,
would be regarded, today, as close to lunatic.
The argument that all ex-servicemen should be compelled
to join and pay dues to the RSL or that all farmers
should be compelled to belong to the NFF, would be
bitterly, and properly, attacked by most editorialists.
But in industrial relations, we have become accustomed
to accepting the most blatant and oppressive denials
One of the major problems that has grown up over the
years is that employers have become accustomed to agreeing
to, and becoming accomplices in, these attacks on freedom.
Legislation reasserting the principal of freedom of
association should therefore contain provisions for
significant penalties for employers who connive, and
assist, in enforcing membership of associations upon
people who do not want to belong to them.
Employers, journalists and politicians particularly,
have become very easily impressed over the years by
bluster. Last week the Minister for Primary Industries
and Energy, John Kerin, let it be known, indirectly
of course, that the NFF's proposals for greatly improved
productivity at the Fisherman's Island Wheat Terminal,
could lead to 'an industrial bloodbath'.
Similarly, well after the live sheep dispute in 1978,
our current Prime Minister, Mr Hawke, conjured up for
his biographer images of unprecedented violence during
that dispute, which he had been able to ward off by
means of his presidential incantations.
The words, 'industrial bloodbath', remind me of the
immortal exchange between Owen Glendower and Henry
Hotspur in Henry IV part I. Glendower boasts to Hotspur
To which Hotspur replies
'Why so can I, so can any man, but do they come
when you do call for them?'
The conjuring up of bloodshed, domestic fury, fierce
civil strife, is certainly mischievous. And it is all
the more mischievous because it is all Glendower style
bravado. The spirits from the vasty deeps, which they
use to frighten the timid souls of many employers,
are phantoms of the imagination. We have shown that
to be so in the Wide Comb dispute, at Mudginberri,
in every place where we have stood our ground on the
rule of law.
The argument that the Australian people will support
civil insurrection against the rule of law is a fantasy.
Once legislation reasserting the legitimacy of contract
and freedom of association on the waterfront is passed;
once the rule of law in the waterfront is re-established;
new or existing participants in the waterfront industries
will seek to take advantage of the freedom, under the
law, that we used to have. They will do so because
freedom allows us to become prosperous, and we all
prefer prosperity to impoverishment.
There is no doubt that this proposal will be described
as confrontationist. Tas Bull may well have a conniption.
The great virtue of this proposal is that it does confront,
without equivocation, the problem we face. It puts
forward a measure which will do for our waterfront
what Wapping did for the British publishing industry.
In Britain, after the passage of the legislation,
of last April, repealing the Dock Labour Scheme, Mr
Todd, General Secretary of the TGWU (Transport and
General Workers' Union) told the Tilbury waterside
workers on 12 July,
Familiar words indeed. Yet while Mr Todd spoke, 18
out of 63 ports had ignored the call to strike. By
28 July last, 2,432 dockers were working normally,
4,247 were on strike, and 2,542 had taken redundancy.
A the beginning of August another 1,000 dockers were
back at work.
A few days later the dispute which Mr Todd had earlier
described as 'the like of which had never been seen
had disintegrated completely. This story of the British
waterfront bears directly on our Australian situation.
We have almost identical industrial history, cultures
and institutions; virtually identical habits of thought
We can learn two lessons from the recent British experience.
The first is that the comparison between the scheme
ports and the non-scheme ports shows that the degree
of labour regulation is in inverse proportion to the
efficiency of the port.
The second is that the threat of union action should
not deter our resolve to implement waterfront reform.
Often these threats are mere bluster. I suspect this
is true of the threat of 'industrial bloodbaths' over
Fishermans' Island Terminal.
If the custodians of the present waterfront monopoly
threaten, like Owen Glendower, to call up spirits from
the vasty deep, let us say to them, with Winston Churchill:
I have no doubt that Australians, everywhere, will
support a government which stands for freedom, and
the rule of law, not only the waterfront, but in all
of industry and commerce.