Back to the Waterfront
Waterfront Reform and Industrial Relations
Dr Peter Barnard
What an unexpected pleasure this invitation is. I
feel a bit like Saddam Hussein being invited to address
Congress. I will try and make my points as forcefully
as Saddam, but less disastrously.
Actually, of course the whole industrial relations
structure in this country, of which your Society has
been called 'the Club at Play', and which forms an
integral part of that structure, is a lot like the
Gulf States. Like the Gulf Sates our industrial system
is an artificial creation. Like them it has its own
aristocracy. In lieu of Sheikhs and Emirs you have
Deputy Presidents and Commissioners.
The ability to travel and live well at others' expense,
although not as great for Australian Industrial practitioners
as for the Gulf Sheikhs, is still none the less way
above that available for the mere mortals.
Of course, no one gets all of these privileges without
a corresponding responsibility. In the Gulf that responsibility
is discharged periodically by raising the price of
oil. Here it is the price of labour.
The difference is that at least the Arabs have a mechanism
that permits them to allow the price of oil to decline,
they do not just have to pour it out into the desert.
Here we have no such mechanism for the price of labour,
we just cast people out into the desert of unemployment.
And of course we are about to cast quite a lot in that
What has been the response from the industrial relations
world to the changing economic circumstances?
The ACTU, that absolute paragon of accordance rectitude
is now saying the IRC is irrelevant to their claims
and saying they will take on the Employers.
CAI has responded courageously by saying this is not
the time for that sort of thing.
The Federal Treasurer, in his 'man of the people'
mode has said that he 'bloody well won't, bang workers
around the head'. Not him, particularly if they are
The IRC, itself the temple of this lay sect, is silent.
It is obviously preoccupied with such esoterics as
Structural Efficiency Principles, Broadbanding, Multiskilling,
Skills Enhancement, and so on, and so on.
Like Saddam, the IRC is always interested in expanding
its territory. It used to be that the IRC confined
itself to the setting of basic wage rates and work
conditions. No longer. We have become used to industrial
relations orders relating to manning levels and union
coverage. But grand new territories were claimed in
the Industrial Relations Club early this year during
the trucking dispute.
In the Industrial Commission, NSW and AIRC, actually
made recommendations on traffic laws.
In a remarkable decision the worthy Sweeney J. and
Harrison C 'strongly' recommended that the speed limit
for trucks be increased to 100 kms/hr on 'principal
inter-State routes'. This was the proposal of the NSWTA
and TWU. The NSW Government believed that the speed
increase should be confined to 'low trafficked, high
What expertise Sweeney J. and Harrison C. possessed
in speed limit regulation was not revealed. One would
hardly view knowledge of industrial relations as an
ideal background to advise on traffic laws.
The decision represented a stunning, audacious incursion
into new areas. Hussein's march into Kuwait has, of
course, been correctly described in similar terms.
The Gulf crisis arose from Hussein's desire for port
access. Australian rural producers can well understand
this---we have a similar desire for port access. Our
access to competitive international shipping is choked
by poor port performance. Fortunately, Australian rural
producers have thus far refrained from actions akin
to those of Hussein.
Hussein's march into Kuwait has irrevocably changed
the structure of world affairs. It is a pity that the
Australian Government's actions on our waterfront have
not had a similar effect on our affairs. The basic
structures of our waterfront are still intact.
That the waterfront reform program was never intended
to be of the structural variety is clear from its stated
objectives as outlined in the In-principle Agreement
(IPA). This is the document which establishes the major
parameters of the reform process. The commitment made
by the parties to the IPA was to ensure:
'a reliable, efficient and competitive industry through:
- more effective management responsibility;
- a more flexible and skilled workforce;
- a rejuvenating of the age structure of the industry;
- a more satisfying career structure for all employees,
- real productivity gains'.
Nought is there here about increasing the underlying
contestability of the industry. Nought is there here
about increasing ease of entry into the stevedoring
industry. Nought is there here about removing existing
labour monopolies. And as if to emphasize the centralized,
administered, interventionist nature of the reform
program, the Federal Government is itself a signatory
to the Agreement.
There is no structural change. The State Governments
will maintain control over the port authorities.
On the whim of the new Victorian Minister for Transport,
for instance, Peter Rocke was not appointed to another
term as Chairman of the Port of Melbourne Authority,
(PMA) despite being widely respected among importers
Here was a man attempting to eliminate some of the
more reprehensible work practices within the Authority.
Would you believe that the PMA still go to the Trade
Halls Council for permission every time they wish to
engage an outside contractor to maintain their heavy
There is no structural change. The stevedoring industry
is still highly concentrated.
Indeed, in the past year, the stevedoring industry
has become even more concentrated with the mergers
of NTAL and Patricks and Strangs and Patricks.
Australia's largest terminal stevedore is still 60%
Government owned. Given that the Government is proposing
to sell Aussat and the airlines, there is a striking
contradiction in retaining AML in public ownership.
Why, might we ask isn't this issue being discussed
on 24 September?
There is no structural change. The Industrial Relations
Commission still holds sway over virtually every aspect
of employer/employee relations.
In stating this I am, of course, well aware that the
intention is to strip back the national award and provide
increased emphasis to negotiations at the enterprise
But when these negotiations break down either of the
parties can take unresolved matters to the IRC, for
This is as it has always been.
And although negotiations have been decentralised
on the employer side of the equation on the employee
side all significant matters are passed through to
the Federal Waterside Workers' Federation (WWF) Office.
Union officials are not stupid. That they are well
aware of the score-card is exemplified in an internal
WWP memo dated 13 July 1990, and titled Negotiation
of New Award and Enterprise Agreements. 'Dear Comrades',
the memo begins, 'the In-Principle Agreement provided
for a new framework for the operation of award in the
industry ... and enterprise agreements are to operate
in conjunction with the award'. It went on to note:
'A critical issue has not been resolved. The issue
concerns the delineation of industry award matters
as opposed to matters which should be contained in
The Federation ... has consistently argued that we
will not accept any reduction in, or removal of, conditions
in the establishment of a new award. In particular
we have argued that the award should be a 'paid rates'
award as opposed to a 'minimum rates' award. Given
the superior conditions obtaining in stevedoring industry
awards, it would clearly be a major tactical error
to accept a minimum rates award in the current negotiations.
The simultaneous negotiation of a new award and the
enterprise agreements has placed the Federation in
'double jeopardy'...The obvious strategy is to focus
on the enterprise agreement and to endeavour to divide
the employers negotiating position on the award.
This strategy is now in place and has been achieved
by the making of an interim new stevedoring award.
The interim award will enable the award negotiations
to be put on 'hold' while enterprise agreements are
This is evidence of the sort of detailed planning
and strategic development that characterised the British
waterfront reform program. Unfortunately, over here
it is the employees who are doing all the planning
and strategic thinking, not the employers (or, for
that matter, the importers and exporters).
Under the process, as it now exists, unions have not
one, not two, but three chances at securing desirable
outcomes from the Enterprise Based Agreements (EBAs).
First, the stevedoring firms place their developed
EBAs before the unions. The unions can select those
elements of the EBAs that are acceptable and reject
Second, either of the parties can then take the matters
in dispute to WIRA for assistance in achieving a resolution.
Third, if the WIRA recommendations are not to their
liking the unions can go to the IRC for an arbitrated
The inescapable conclusion is that for any change
in the current employer/employee arrangements stevedoring
management must rely entirely on the good offices of
the IRC. Stevedoring labour force control is not in
the hands of management, but the IRC.
The IRC is able to exert much greater control over
the waterfront workforce than over labour in most other
industries. The Conciliation and Arbitration Act 1904
contained a separate Division (Division 4, Part III)
relating to industrial matters---waterside workers.
Whereas the balance of the Act principally relied on
placitum 51 (xxxv), the conciliation and arbitration
power, for its constitutional validity, this division
relied on placitum 51(i), the trade and commerce power.
In the Industrial Relations Act 1988 there was no
need for separate provisions to apply to waterfront
industrial matters, since the general provisions were
drawn more widely. Jurisdiction in relation to the
waterside can be upheld either under the conciliation
and arbitration power or the trade and commerce power.
It is as a result of the trade and commerce power
that the Commission's jurisdiction in relation to stevedoring
is wider than it is in relation to other industries.
The Commission is not even restricted to conciliating
and arbitrating. In so far as stevedores load ships
which engage in trade and commerce with other countries
and between states, the Commission has almost unlimited
powers to determine matters or things affecting or
relating to work done or to be done.
The Commission has jurisdiction to order that members
of the WWF are employed in stevedoring operations.
The Commission has jurisdiction to order that recruitment
of employees be made from a union register.
The Commission has jurisdiction to require a new entrant
to pay and observe all terms and conditions on which
members of the WWF are currently employed.
The Commission has jurisdiction to rule on how many
men are used for particular stevedoring tasks.
With labour costs representing 90-100% of total stevedoring
costs in bulk operations, 80-90% in break bulk operations
and 50-70% in container terminal operations, the role
of the IRC does not leave much for management to manage.
The IRC has abused the great powers available to it.
No less a body than the ISC came to this conclusion.
In a remarkable condemnation of another judicial institution
the ISC stated:
'Some of the past decisions (of the Conciliation and
Arbitration Commission) relating to the container depots
have not resulted in satisfactory working arrangements
when considered from a national economic perspective.'
No doubt, when the three wise men of the ISC referred
to the need for attitudinal change in waterfront institutions
the IRC was uppermost in their mind. Of particular
concern to them was that the Conciliation and Arbitration
Commission had tended to limit opportunities for third
party invention. The ISC in its Final Report urged
both the Trade Practices Commission and importers and
exporters to in future intervene in waterfront industrial
The Industrial Relations Commissioners, if they have
read the ISC report at all, apparently skipped over
pages 246-248. It is just as difficult today to intervene
in IRC hearings as it was prior to the ISC report.
NFF attempted to intervene in waterfront proceedings
earlier this year. Predictably, up jumped the WWF,
ACTU and AEWL, one, two, three to oppose the intervention.
Predictably full intervention rights were not provided.
How ill versed these Commissioner's must be in economics.
Do they not realize that it is this country's farmers
and consumers that end up paying the lion's share of
the increased labour costs of waterfront employees?
If the centralized control over stevedoring labour
exercised by the IRC was not enough, the waterfront
workforce rejuvenation program utterly constrains individual
firms optimizing their labour mix.
The program involves 3,000 older waterside workers
leaving the industry and 1,000 young waterside workers
being recruited. Since there are currently, approximately,
9,000 waterside workers the manning reduction is 23%,
or, put another way, the implied labour productivity
improvement is 30%.
Part of the Government established Waterfront Industry
Reform Authority's (WIRA's) responsibility is to survey
and approve the restructuring plans of individual enterprises.
Such a degree of interference in the operations of
individual firms, wads of dollar notes were dangled
in front of industry participants.
The 30% labour productivity improvement is going to
be achieved at a cost of $300 million, over three years.
But stevedoring firms will not have to meet one cent
of the redundancy payments to their waterside workers.
Half of the redundancy payments are to be met from
general revenue and half from statutory levies on imports
There has never been a clearer demonstration of that
old adage about 'throwing money at your problems'.
But despite the gift of $300 million to their industry,
stevedoring companies are predicting no price reductions
for their customers. NTAL, for instance, at a recent
Prices Surveillance Authority (PSA) hearing stated
'The bottom line in cost terms to a terminal that
achieves say a 25% manning reduction should be a 25%
reduction in labour costs. However, it is important
that the broader requirements are fully understood
before calculating the net impact of the reform process.
On-costs could clearly negate most, or all, of the
gains through manning reductions. National Terminals
does not, at this stage, envisage that major labour
cost savings, if any, will result from the WIRA process.'
National Terminals estimate that the labour cost savings
from manning reductions will be swallowed up by:
- training costs increasing to 5% of payroll;
- wage increases from multi-skilling induced re-classifications,
amounting to 15%;
- extra payments associated with the possible need to
introduce productivity incentive schemes; and
- capital financing expenses associated with new investment.
NTAL is to invest $102 million over the next 5 years.
Indeed it is this massive capital injection that accounts
for a significant slice of the manning reductions.
It is not increases in labour productivity, by substitutions
of capital for labour that is driving NTAL's restructuring.
NTAL assert that ship turnaround times will vastly
improve. Short term I have no doubt that they will.
This will occur if for no other reason than the ISC's
astute observation that in the stevedoring Industry
'matters improve considerably while they are under
But ship turnaround times can be turned on and off
like a tap. To again quote the ISC 'matters will lapse
once the pressure is removed'.
Meanwhile the union movement is adroitly using the
reform process to vastly strengthen its position. No
longer will we have to merely deal with the labour
monopoly in stevedoring, but now this monopoly is to
be extended to port authorities and other areas of
Those men of the ACTU have met and decided. A new
super union, the Maritime Union of Australia, is to
receive coverage of all operations in all of the major
ports and in many of the minor ports, including all
NSW ports, all Victorian ports, all Tasmanian ports,
and all South Australian ports.
What is amazing is that shipping companies, port authorities
and many importers and exporters are unreservedly enthusiastic
about the ACTU proposal.
Of course, any monopoly's behaviour will be tempered
if its territory is spread wide enough. If a firm has
a monopoly over the supply of motor vehicles and fuel,
it will not set the price of fuel at as high a level
as it would if it just had a monopoly over the supply
This is the logic that leads on to advocate longer
and longer labour monopolies.
But any monopoly, labour market monopoly or product
market monopoly, breeds inefficiency. This much has
been admitted by even some of the union movement. For
example, one official of the OTC union, the Professional
Radio and Electrical Institution of Australia, Mr Michael
Roberts, said in a recent radio interview:
'The only thing that produces efficiency is the need
to produce profit comparative to a competitor ... I
believe any monopoly stymies efficiency, whether it
is a monopoly of a union over telecommunications or
the monopoly of one airline in the country'.
There is a world of difference between single enterprise
unions and single industry unions.
Reform need not be of this ilk. Last year New Zealand
achieved waterfront reforms of only dreamt of proportions
Overall since the beginning of 1989 New Zealand's
waterfront workforce has been reduced by 50%.
Since October 1989, the date of the legislative changes,
it has been reduced by 44%. This follows on from a
40% reduction in the port authority workforce.
The port of Tauranga represents a good example of
the benefits of waterfront reform in New Zealand.
Pre-reform in this port there were 441 waterside workers;
now there are 202.
Pre-reform in this port it was normal to average 350,000
tonnes of cargo per month, with berth occupancy rates
of 65-70%, but recently 500,000 tonnes of cargo were
handled in one month with a berth occupancy of 48%.
Pre-reform in this port log ships used to be in port
for 8-9 days; now they are in for only 2-3 days.
Pre-reform in this port conventional ships used to
be in port for 11 days; but now they sail in 4-5 days.
While we seek to achieve a 30% waterfront labour productivity
improvement over 3 years, New Zealand and Britain have
achieved waterfront labour productivity improvements
of 100% in the space of 12 months. Our reform waterfront
program, like our coastal shipping, aviation and telecommunications
reform programs do not seek to match, or better, best
overseas practice. In micro-economic reform under the
Hawke Government we strive for mediocrity, not excellence.
1. Inter-State Commission 'Waterfront Investigation,
Conclusions and Recommendations', Vol. 1, AGPS, 1989,
2. Michael Roberts, President, PRE,2CN Radio, 26 July