In this speech to the IR Society Centenary Convention Bob Hawke discusses what sort of tribunal system will serve Australia’s interests best in the 21st Century.
Before coming directly to this specific question, posed by the topic you have asked me to address, it seems sensible to spend a little time examining the history of the establishment of the federal arbitration system. The first point to make is that placitum (xxxv) of Section 51 of the federal Constitution enumerating the powers of the Commonwealth Parliament: “Conciliation and Arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State” divided our founding fathers more seriously and closely than any other issue.
Rejected in the first two Conventions of 1894 and 1897 it was passed in 1898 by 22 votes to 19 – a switch of two votes and we would not be holding this Conference today. The passion, and ideological gulf between, the Convention delegates on this subject were reflected in the parliamentary debates of 1903-4 leading to the establishment of the Commonwealth Court of Conciliation and Arbitration. For a measure primarily concerned with conciliation this Bill had an unusually stormy career. Seventeen months and two days elapsed from the nomination of the Bill on the 7th July by Charles Cameron Kingston, the Minister for Trade and Customs in the Barton Government, to its final passage out of the House of Representatives on the 9th December 1904 – I don’t know whether the fact that the 9th December is my birthday means that there was something written in the stars. In that period the Bill acquired an impressive list of casualties – one Minister resigned, two Governments fell and in fact it was steered through Parliament under four different Prime Ministers. And it was during this protracted debate that the loose, amorphous system of parliamentary representation began to crystallise into the fundamental dichotomy of Labor and anti-Labor that has endured to the present day.
It is fascinating in examining those parliamentary debates one hundred years ago to see, essentially, how little the philosophies – the vision if you like – of the protagonists in this great issue have changed up to the present day. On the one hand consider the words of that great early liberal thinker, Alfred Deakin, who, as Attorney-General, introduced the Bill. Deakin said that formerly the issue had been one of which side could command the most powerful forces, might had made right but now it was intended to determine what was the fair settlement of a dispute. He asserted that in this legislation the House was touching some of the springs upon which the working of society depended and continued:
“We realise now-a-days that society is a living organism in every sense of the term. In all of its capacities of adaption, in its changefulness, and in its varieties of action, it partakes of the nature of the living beings who compose it. They, too, are under the influence of various motives, inspirations and aims, passions, interests, and prejudices and although human history may be said to repeat itself, we find it repeats itself with infinite variety, and never twice in quite the same fashion. The rigid provision of legislation therefore, must necessarily be ineffective in dealing with a living society. The only way to cope with the ever-changing, ever developing needs and forms of unfoldment in society and its industries is to create some authority of independent mind able to follow its workings so far as their knowledge and ability permit, and to assist its progress by adapting force to foster growth, not once, but from time to time.”
Deakin continued his tour de force with these words:
“The task here commenced will be long and painful. There will be painful incidents, there will be the inevitable swing of the pendulum, and many obstacles will have to be surmounted. But, at least, the aim with which we have commenced is high… Social justice is a lofty aim… We have trusted for centuries to the various tribunals erected for the administration of civil justice, and I hope that we shall begin from this day forth to trust to these courts for industrial justice.
Compare Deakin’s vision with two of the most outspoken critics of the Bill, Mr Bruce Smith (Parkes) and Sir William McMillan from that seat which has always thrown up such interesting characters – Wentworth. Smith asserted the futility of attempting to interfere with inexorable economic laws – exactly the same principle, he maintained, were involved in the labour contract as in the sale of any other commodity. He went on:
“It is …a complete travesty upon modern commerce and a complete reversal of the whole spirit of living which runs right through our history, and by which every man is enabled to do just as he chooses, as longs as he does not interfere with the equal rights of the other person.”
Sir William McMillan’s philosophy was equally clear:
“Is it an advance, seeing that we are asked to give up the whole of the principles which have made our race what it is, that instead of confining Government to the sanitary inspector and the policeman, we are called upon to sacrifice all our cherished ideas of individual liberty in order that the police court, in other words an arbitration court, may be so brought into the life of the individual that he cannot exercise individual intelligence in his pursuits?”
McMillan went on to deplore the intention to alter entirely “the principles on which business has hitherto been conducted…and the relative position of employers and employees”
As they so often do, the French capture it best: “Plus ca change, plus c’est la meme chose” – the more things change, the more they are the same.
Against that illuminating background let me now go directly to this question of a vision for an Australian tribunal system and more specifically what sort of tribunal system will serve Australia’s interests best in the twenty-first century? Two questions are involved – what are Australia’s interests and what sort of tribunal system will best suit those interests?
Essentially Australia’s interests in the twenty-first century are in building a nation characterised by social cohesion and sustainable economic growth – peace and prosperity. The two aspirations are inextricably linked. Social cohesion is about:
It is about peace at home and peace with our neighbours – and we will have no guarantee of maintaining the former, if we fail to achieve the latter.
Where there is violation of human rights, where there is opportunity and hope for only some, where outcomes are not fair, and are seen not to be fair – there you have resentment, rejection, rebellion, delinquency, and substance abuse. There you have the breeding grounds for social exclusion and poverty across generations. Without social cohesion there can be no durable success for any nation state, including Australia, in the twenty-first century.
I believe there can really be no dissent to the proposition that social cohesion is in Australia’s best interests. Our best bet as a nation is to give all our kids the best opportunity we can in life irrespective of the financial circumstances of their parents:
These are the things that underpin and reinforce respect for law and institutions and respect for others. They underpin peace at home and, to the extent we work to achieve the same goals for others in our region, so do we further guarantee our own security.
So too will continued sustainable economic growth. Those of us in this audience have witnessed outstanding economic development in our lifetimes. The innovation and technological revolution in the way we produce goods and provide services almost defies imagination. I think the wonder of it all is still best captured in the words of the late American economist and sociologist, Kenneth Boulding: : “The world in which I live today is as different from the world in which I was born as that world was from the world of Julius Caesar.”
This spectacular advance in scientific knowledge and technological inventiveness which has underpinned the capacity to raise living standards shows no sign of slowing. The capacity for continued growth is unquestioned but I believe that in the century ahead Australia’s real interest will be measured in terms of sustainable production.
If we make the right decisions I have no doubt that Australia’s production will be economically sustainable. The necessary decisions are I believe fairly self-evident – they include significant investment in education and training, incentives for increased investment in research and development and a continuing opening up to international trade. One issue which I believe is profoundly important but insufficiently addressed is the issue of population. We have the capacity and the attractiveness to substantially increase our population, which makes abundant sense, both in terms of the possibilities of economies of scale, and security. A significant growth in the Australian population will add to our capacity to be more competitive, efficient, adaptable and innovative – the foundations for building the economic strength of the Australian nation.
Australian production must also be socially sustainable. To achieve this our workplaces and work arrangements must allow for and facilitate the balance of work and family life and allow time and space for our workers to be citizens in our communities. Our workplaces must be safe and healthy environments.
And, thirdly, Australian production must be environmentally sustainable. The mounting, and I would say overwhelming, domestic and international evidence of the detrimental, indeed, dangerous impact of past production practices upon our natural environment must surely by now have put behind us the “she’ll be right” attitude of so many in the past. Benign neglect is no longer acceptable – our objective should simply be that at the end of production process the condition of our land, water and atmosphere should be as sound, stable and conducive to the good life as it was at the beginning.
If we get these three elements of sustainable production right then Australia can look forward to sustainable economic success in the years ahead. We will have the basis for a nation achieving a high and rising standard and quality of life. A fair distribution of the fruits of economic success will establish a firm foundation for social cohesion. For all of us, for the prime years of our life, these two come together in the workplace. In the century ahead, with economic success and social cohesion Australia will be well placed to secure a decent society at home and to engage confidently with the region and the world.
I believe that herein lies Australia’s interests in the twenty-first century. The question is – what sort of tribunal will best serve these interests?
First let me address the question of whether there should be a federal tribunal at all – for remember the ghosts of Smith and McMillan are still rattling around in the Conservative cupboards of Canberra – in those quarters there are those who after one hundred years favour the abolition of the federal tribunal.
I would assert that the simple indisputable fact is that the federal arbitration tribunal has been an integrally important player in establishing the degree of social cohesion and economic prosperity we enjoy in Australia today. The Australian Arbitration Commission has shaped the introduction in this country of the following:
is high by international standards
Commission against the opposition of organised employer groups. On all these issues Australia was at the forefront of change worldwide and on a number of occasions we have led the world. By the end of its first century the Australian Industrial Relations Commission had revamped and restructured all its awards, with multi-skilling career paths and consistent minimum rates of pay.
Of course it must be understood that the abolition of federal tribunals would not guarantee the abolition of State tribunals. To the contrary, Victoria would be likely to establish its own industrial tribunal system to set minimum standards for vulnerable workers should the federal Commission be abolished. But suppose that the abolition of the federal Commission could be imposed on all corporations Australia-wide to the exclusion of State industrial tribunals. The ostensible argument in support of that proposition is that effective minimum standards in the workplace are a regulatory constraint on economic success. This is the deregulatory mantra gone mad – few is better, none is best.
The facts of Australia’s experience give the lie to this nonsense. In the context of the operation of the Australian arbitration system operating at both the federal and State levels, Australia’s economic performance has gone along with or exceeded that of the developed economies. That system has not prevented the growth of the Australian economy but indeed in conjunction with the co-operation of the trade union movement in the 1980’s participated in the most positive transformation of the Australian economy in our peacetime history.
There is no certainty at all that the economic pie would grow any faster if the Commission were abolished and minimum standards were eroded. Maintaining decent minimum standards is a pro-productivity policy. Inefficient enterprises tie up capital and resources that could be put to better use elsewhere. Professor Wilfred Salter who I produced as a productivity expert in my first appearance before the Court in the 1959 Basic Wage Case proved this point conclusively forty-five years ago and it is still true today.
Inefficient enterprises don’t get market discounts on:
Higher risk works in the other direction and it is nonsense to suggest that inefficient firms should get a discount on labour costs. Those labour costs are someone else’s wages and we are talking now of minimum social standards.
The abolition of the Commission could have only one definite impact and that is downward pressure on living standards and social cohesion. The argument for abolition simply does not stand up.
The deeper argument for the abolition of the Commission was put by the employer in my last – and final – appearance before the IRC – the Weipa Case in 1995. The employer argued that the regulatory presence of the Commission at its workplace was a fetter on the successful operation of its enterprise – that a third party interfered with what should be a two-party relationship. The company was paying a premium – several thousands of dollars annually – to those of its employees who agreed to sign a contract intended to place the company beyond the reach of the Commission. Employees who did not sign did not receive the bonus. The company claimed the bonus was paid for performance but the best performing worker did not get the money – because he wouldn’t sign the contract.
On the evidence before it, the Commission found that the employer was embarked on a strategy to remove any and all union presence from its workforce under the cover of individual employment contracts. The company strategy was to deny its workers the right to have their union negotiate on their behalf – a strategy to deny workers their basic human rights. The Commission found the employer discriminated, and ruled against it
Even if the abolitionists don’t get their way and thus give carte blanche to the Weipa philosophy, the newly returned Howard government with control of the Senate is promising further restrictions on the powers of the tribunal and the rights of the unions. And this is a situation where already according to a recent independent analysis “Australian employers already have one of the most favourable labour law environments in the world. Their freedom to choose whether to bargain with their employees and to lock them out exists in no other industrialised country.”
I take this opportunity of making a genuine plea to the Prime Minister to reconsider what appears to be an intention to take Australia further down what can only be a more confrontationist, and in terms of social cohesion, self-defeating road. I ask him to sit down with an open mind and discuss these issues frankly and fairly with the ACTU. The Australian trade union movement deserves to be dealt with in this way. Certainly some trade unions have in the past behaved irresponsibly and against the national interest but many employers come in the same category.
I believe that no other non-governmental organisation has played such a significant role as the ACTU in contributing positively to the character of the nation and the quality of life we pride ourselves on today. Four points. First, virtually every employee in Australia today directly or indirectly – owes a debt for the wages and conditions they enjoy to successive generations of trade union members who, by their membership dues and commitment to collective action and legislative reform, have made the emergence of those conditions possible.
Second, the single most important governmental decision ever taken to determine the character and strength of our nation today was that to implement the vast post-war immigration program. The idea was an anathema to many unionists who had never experienced full employment but, with great foresight, the ACTU leadership fully supported the concept and the planning of that program. The Prime Minister’s Liberal predecessors, Sir Robert Menzies and Harold Holt, publicly acknowledged that the program would not have been the success it was without that co-operation and participation of the ACTU.
Third, for decades up to the early 1970’s consumers in this country had been exploited by Australian manufacturers’ ruthless use of the system of resale price maintenance. Under this system, goods were supplied to retailers on the condition that such goods were sold at the price fixed by the manufacturers. If the retailer attempted to sell at a lower price supplies were refused. As ACTU advocate I had argued to government and in the Arbitration Tribunal against the iniquity of this practice but without avail. When as President of the ACTU I began the association with Bourkes Store we had the opportunity of taking RSM head-on. Manufacturers refused Bourke Stores supplies because the store insisted on selling at prices lower than those fixed by the manufacturer. Dunlop was one such manufacturer and with the support of our affiliates I told Dunlop that we would stop their business unless they left us free to set lower prices than they insisted upon. After a brief confrontation Dunlop capitulated. This was the end of the pernicious practice of RSM. In the event Australian consumers have been saved scores of billions of dollars. This was the triumph of collective action over collusive action.
Fourth, virtually every economist in the country acknowledges that the current strength of the Australian economy owes a great deal to the massive restructuring reforms undertaken by my government in the 1980’s. Many of the things we had to do went against the grain of long-held attitudes within the trade union movement. But the leadership of the ACTU realised that these changes had to be made if we were to have a sustainable economy in an increasingly competitive world. They co-operated in these changes under the Accord, accepting restraint in money wage increases in return for improvements in the social wage. That transformation from which all Australians continue to benefit would not have been so readily achieved without the foresight and co-operation of the ACTU.
Prime Minister, I believe that an objective assessment of these facts, should persuade you to the path of consultation and co-operation as you consider your approach to the future shape of the federal industrial relations system. Australia’s interests will best be served by building on our institutional strengths. I believe that in consultation with the trade unions and the employers the ideal outcome would be to examine whatever can be done to ensure that the federal tribunal is a “best practice” tribunal ie one that is:
evidence and argument
conciliation and not only at the point of economic emergency
Such a tribunal will be well placed to give direction and leadership to the State tribunals and co-ordinate them around common issues, to administer a system of awards which establish acceptable minimum standards in our labour market, and have regard to economic success in maintaining and improving those standards over time.
May I conclude, on this centenary occasion, by looking back again to the beginning as a basis for our legitimate hope for the future. Let us keep McMillan in the Wentworth cupboard and rally to the flag of Deakin – “the aim with which we have commenced is high. Social justice is a lofty aim…”
Indeed it is and Australia’s best interest in the twenty-first century will be best served in the industrial relations field by having a tribunal committed to that aim – social justice and cohesion and a growing sustainable economy.
SPEECH BY THE HON BOB HAWKE AC TO THE INDUSTRIAL RELATIONS SOCIETY OF AUSTRALIA – CENTENARY CONVENTION, MELBOURNE, 23 OCTOBER 2004
Commonwealth Parliamentary Debates, Vol XV p. 2836
 ibid p.2871
 Ibid p.3460
 Vol. XVI p.3961
 Ibid p.3973
 Article, Sydney Morning Herald 20.10.04, by Ron Callus and John Buchanan, Director and Deputy Director, Sydney University’s Workplace Research and Training Centre.