Back to the Waterfront
Back to the Waterfront: The New I.R. Bill
Peter H Costello, MP
The Industrial Relations Legislation Amendment
Bill 1990 ('the Bill') was introduced into the Senate
on 23 August 1990. It amends the Industrial Relations
Act 1988 ('the Act') which commenced operation on 1
March 1989 and which involved a substantial overhaul
of the old Conciliation and Arbitration Act. The amending
Bill proposes four principal changes to current industrial
legislation. First, it enhances the role of Peak Councils;
secondly, it amplifies the powers of the Industrial
Relations Commission (IRC) to grant preference to union
members; thirdly, it requires unions seeking registration
under the Act to have 20,000, rather than 1,000, members;
and fourthly, it provides a procedure to make union
The 1988 Act was brought forward after years of gestation
and a full enquiry into Australia's industrial relations
system. Some might wonder why it is necessary to amend
it so soon. The answer lies in a document issued by
the ACTU in 1987, entitled: 'Australia Reconstructed'.
The general thrust of that document was that if unions
are to survive in the future they need to amalgamate,
become larger, and more relevant, and offer more services
to their members. Of course, there is nothing to prevent
unions amalgamating at present. All that is required
is for one-quarter of the members to vote and more
than one-half of those voting to vote in favour. In
other words, one-eighth of the membership can secure
Indeed, where a declaration is made by the IRC that
an amalgamation would further the objects of the Act,
it is not even necessary to get one-quarter of the
members to vote. All that is required is for more than
half the votes cast to be in favour of the amalgamation.
Given these generous provisions one would be excused
for thinking, that if members really wished their unions
to amalgamate, there would be no difficulty in doing
so. The fact is that in recent ballots some major amalgamation
proposals have gone badly for officials. Union members
have voted against amalgamation. The authors of 'Australia
Reconstructured' do not want the members to frustrate
their plans in the future. As a result, Parliament
is being asked to intervene to make union amalgamation
more attractive. The purpose of the Bill is to secure
by legislation what union leaders have been unable
to secure through member support.
The Role of Peak Councils
A Peak Council is defined in the Act as a national
council or federation that is effectively representative
of a significant number of organisations representing
employers or employees in a range of industries. When
the definition was introduced it was thought that 'Peak
Council' would mean the CAI and the ACTU.
With recent membership losses it is doubtful whether
it still includes the CAI. It certainly includes the
The Bill proposes, that when the Commission is exercising
powers in relation to a demarcation dispute, it 'must
consider whether it should consult with appropriate
peak councils', which, in this case, means the ACTU.
After considering this, it is up to the Commission
whether it does consult or not. Of course, the ACTU
is not a union and would not ordinarily be directly
concerned in demarcation disputes. The parties are
the unions concerned. The Commission is the arbiter.
The Bill is designed to constitute the ACTU as some
kind of Board of Reference for the arbiter. Clearly,
it is no longer solely the role of the Commission to
determine these matters. The ACTU will be available
to give a guiding hand.
The object of this amendment is to enshrine the centrality
of the ACTU to the union amalgamation process. The
ACTU has a role even though the unions involved may
not be constituents. Its role is to be enhanced as
against individual unions. Unions themselves are being
legislatively collectivised under ACTU auspices.
Extension of Preference
The Commission does not have the power to order employees
to join a union. What it does have is the power to
award 'preference'. This means that union members can
be given preference in employment as against non-union
members. In reality, through judicious use of preference
clauses, the Commission can ensure all employees are
union members by ensuring that only union members get
jobs. This runs counter to opinion polls showing 89
percent support for voluntary unionism.
Under the Bill the areas where preference can be given
to union members are specifically amplified for the
first time and set out as:
engagement in employment, promotion, regrading, transfer,
retention in employment, taking annual leave, overtime,
It is clear that, if union members are given preference
in all or a significant number of these areas, few
rational people would fail to join a union. Of course,
the preference power also allows preference for members
of one union over members of another union. The amendment
enhances the power of the Commission to effectively
direct which unions employees 'choose' to join.
In order to register a trade union under the Act,
it is necessary to have 1,000 members. (However, this
requirement has only existed since March 1989. Previously
it was necessary to have only 100 members). The proposed
amendments require an association to have 20,000 members
to register under the Act. Effectively, this prevents
any new unions coming into existence. It is hard enough
to garner 1,000 members before registration as a trade
union. Before registration there is no recognition
of the union and it has no capacity to represent members
or deliver benefits. Garnering 20,000 members without
the capacity to deliver benefits on the hope of eventual
registration will be next to impossible. This flies
in the face of opinion polls which show over 60 percent
support for the right to form a new union. Democrat
voters are the strongest supporters of that right,
with 69 percent in favour.
Of course, even if one signs up 20,000 members one
still cannot have the union registered if there is
already a registered union to which those members could
'conveniently belong'. The effect of this statutory
provision has been to keep new entrants out of the
market. The requirement that a new entrant have 20,000
members before it can apply for registration merely
consolidates the barriers to entry.
To form a company one needs five subscribers, or, where
the company is a proprietary company, two subscribers.
It is relatively easy to form a new company and to
have it registered. Imagine the difficulty if it were
necessary to have 20,000 subscribers before a new company
could be formed. Imagine the advantages to existing
companies if new companies could not be formed unless
they could show there was no existing company to which
potential subscribers could conveniently belong. The
market for new companies would dry up. The advantages
to existing companies would be enormous. This, of course,
is the intention of the legislation: to enshrine advantages
for existing unions and, of course, those who are their
The Bill proposes a two-stage process to force existing
registered unions into amalgamation until such time
as they have 20,000 members. It works on the premise
that 'big is beautiful', which, of course is the theme
of 'Australia Reconstructed'.
Stage 1 begins on 1 March 1992, and ends on 28 February
1993. During Stage 1 unions which have fewer than 1,000
members need to prove there are special circumstances
that justify their continued registration in the public
interest. If the Commission is not satisfied that special
circumstances exist, a precedential member must cancel
the registration of the union. Small unions have to
justify their existence. If they don't, state appointees
will extinguish them. This says a lot about the Labor
Government and the labour movement's respect for trade
union rights and the right to form and join a union
of one's choice.
If the small union survives Stage 1, it has a three-year
breather. But every three years, whenever a presidential
member of the Commission considers it appropriate,
it can be asked to prove that special circumstances
in the public interest justify its right to existence.
If it fails to convince the presidential member its
registration is cancelled. The process can be repeated
at three-year intervals.
- Stage 2 begins on 1 March 1994 and ends on 28 February
1995. In Stage 2 any union with less than 20,000 members
must establish there are special circumstances that
justify its continuance in the public interest. Failure
to do so will mean the cancellation of its registration.
Again a presidential member can conduct an enquiry
into the union's right to registration every three
years. Failure to show that there are special circumstances
in the public interest which justify its continuation
means cancellation of registration.
Given the fact that the Government and the ACTU clearly
consider unions with less than 20,000 members not to
be in the public interest, it is doubtful how many,
if any, of these unions will survive. This is the stick.
The carrot is easy amalgamation.
There are some real incentives to amalgamate provided
by the Bill, and some are dearly notorious.
If one union wishes to amalgamate with another a quarter
of its size, it can apply for an exemption from holding
a ballot of its members. A presidential member of the
Commission is required to grant such an exemption unless
he considers that 'in the special circumstances of
the case' the exemption should be refused. The purpose
of this proposal is to allow the large to swallow the
small, without the members getting in the way. The
Commission is prima facie obliged to deny members the
right to vote. One wonders why such a provision is
necessary. It is hard to imagine the members of a large
union voting against the absorption of a small union.
The probability is that it would take some time or
cost to ballot the members of the large organisations
and large organisations are to be relieved of this
onerous chore. Democracy can sometimes be time-consuming
and expensive. The Bill apparently is designed to do
away with the cost and delay of members' rights. This
is simply done by doing away with the democratic right
To overcome any doubt, the legislation will, for the
first time, expressly authorise unions to use members'
funds to campaign in support of amalgamation. There
is, of course, no requirement to allow equal funds
to opponents to campaign against amalgamation. Nor
is there any provision for a union to use members'
funds to campaign against amalgamation. Members' funds
can only be used one way. They can be used to secure
amalgamation whether the members like it or not.
The Act has hitherto required elected officials to
face election every four years. The amendments allow
for those holding office in an amalgamated organisation
to continue to hold office without the necessity of
a new election, and to hold that office for up to four
years after the amalgamation takes effect. If, during
those four years, another amalgamation can be effected,
those holding office can hold office, without election,
for four years after the next amalgamation. If a union
were able to secure three amalgamations in twelve years,
its federal secretary would not have to face election
for more than a decade! This is a real incentive to
amalgamate! If the organisation kept amalgamating with
organisations a quarter of its size, it would never
have to hold a ballot of its members on amalgamation.
If it did have to hold a ballot, it could spend members'
funds campaigning for the amalgamation. Under the current
law a minimum of 250 members can have a 'no' case circulated
with the ballot. The Bill will increase this minimum
to 1,000. More people are now required if the 'no'
case is to be heard but very few are required to actually
vote for amalgamation! If it is determined by the Commission
that there is a community of interest between unions
proposing amalgamation, all that is required would
be half of those voting to vote in favour. This means
amalgamation could be secured in a union with 20,000
members by two votes out of three! Nothing is to be
left to chance on amalgamation!
The stick is the on-going necessity for small unions
to justify their existence. The carrot for the large
unions is that officials not only get additional members
and additional finance but can avoid elections whilst
they keep amalgamating with small unions. Even though
members who have voted in amalgamation ballots in recent
years have, on significant occasions, rejected amalgamation,
this legislation has been drawn so cleverly and with
such a combination of incentives and burdens, that
it is almost impossible to conceive amalgamations failing
in the future. The Bill is designed to produce fewer,
larger unions, regardless of the views of the members.
Some argue that fewer unions will mean fewer demarcation
disputes. However, this is very unlikely. The great
majority of demarcation disputes occur between large
unions, most of which will continue to exist. Companies
with multiple unions will continue to be faced with
the consequential problems of that phenomenon. What
it will mean, however, is that where demarcation disputes
occur they will occur between larger organisations
with larger memberships and greater industrial muscle.
Even if disputes occur less frequently, they are likely
to occur on a much greater scale with a much greater
dislocation to the public.
This amending legislation severely limits and restricts
rights to free association for union members. It is
regrettable that it does nothing to protect the rights
of those who do not wish to join unions at all. It
is regrettable that it virtually extinguishes the right
of employees to form unions of their choice. It is
regrettable that it will extinguish some unions mat
members might have voluntarily joined and voluntarily
chosen in the past. In the future, the choice of unions
will be virtually non-existent. The ACTU and the Commission,
through preference, amalgamation, and cancellation
will determine what type of employees can belong to
which types of unions, and which unions can cover which
The centrality of the ACTU to this process should
not be overlooked. Although Australia Reconstructed,
the genesis of this legislation, posited the necessity
for all Australian employees to be classified into
20 big unions, it is now more realistic to see the
goal of the ACTU to have one big union (the ACTU) with
20 individual departments. Fitting employees into pre-determined
structures with huge mass membership, as directed by
appointees of the State guided by 'Peak Councils',
is the very essence of corporatism. Big unions with
wide powers formed along lines determined by State
appointees, may be consistent with the vision of the
Labor Government and the ACTU for 'reconstructing'
Australia. It is the very antithesis of individual
freedom and rights to free association. Australia Reconstructed
is unreconstructed corporatism.