With changes to the wage fixing system and the introduction of the Industrial Relations Bill, in Federal Parliament, the framework is more conducive than it has ever been to enabling this country to face up to the serious economic and structural challenges. Simon Crean, President ACTU.

Ladies and Gentlemen,


Thank you for the opportunity to address the Perth Press Club today.


In facing up to the hard decisions the Trade Union movement has accepted three very fundamental changes.


First, we can no longer see our role simply confined to arguments about the distribution of benefits. Whilst this may have been .appropriate in the context of a full employment steady growth economy, the challenge presented by the current economic environment requires us to actively encourage improvements to productivity and competitiveness and to assist a climate for growth and wealth creation. This does not mean that questions of distribution and equity are less important but that our capacity to influence such questions is diminished unless we are prepared to play a more pro active role.


Second, that the living standards of the community can and should be influenced by means other than just money wage increases. The trade union movement has been prepared through the Accord to moderate wage claims where benefits accrue in other forms, e.g. Medicare, superannuation, taxation and the social wage. Inherent in this trade off concept is that living standards be maintained, not eroded. The same opportunity exists now at the enterprise level to obtain trade offs between efficiency and productivity and wages. Again this is not to suggest that wage rates are less important but that they are being negotiated within the context of a much wider agenda. It should also be noted that in participating in a broader agenda the outcomes which result can benefit the whole community.


Third, that if as a body which seeks to obtain benefits for its constituency from a system which enables a wider involvement then there is a greater obligation on us to accept the discipline of that system. The giving by unions of the “no extra claims commitments” reflects more than anything else acceptance of this balance between benefits and obligations.


These changed attitudes, together with the newly supportive framework which I will come to later, provide a significant basis for the sensible development of a co-operative approach to the ongoing solution to our economic problems. But it is an approach which will only succeed if there is acceptance of the legitimate role of the trade union movement as one of the partners in social and economic reform.


The Government accepts the legitimacy of that role. This is not the granting of a special privilege to the union movement but a recognition that it has an influence and that such influence should be constructively encouraged.


Employers however seem still to have a strange ambivalence privately they concede the co-operative approach as the only way to go. However, they allow their public position to be manipulated by an extremist minority. The reaction to the Industrial Relations Bill is a good example which I want to return to in some detail at the conclusion. But it is typical of how business is allowing the agenda to be set for them.


In many cases the views which are put on behalf of business are promoted by people who have either never been employers or who represent employers of labour not in unions.


It is an agenda not borne out of developing constructive approaches but of pursuing political goals. This is a necessary consequence of the Australian political scene in which the Trade Union movement is closely identified with, not only a political party but one which holds power nationally and in a majority of States. Attacking the relationship, particularly if it is proving successful, becomes the essential thrust for the Opposition. It provides a convenient substitute for not having to properly consider the outcome the relationship produces.


The real difficulty however is that by obscuring the positive consequences of developing a co-operative relationship we retard progress being made in overcoming the difficulties.


It is salutary to reflect that those countries which have been prepared to accept the legitimacy of the role of trade union movements and to work with it have shown themselves to be better able to make the necessary adjustments.


There is a growing recognition of this trend in the international forums. I recently attended an ILO convened meeting as a preliminary to a high level conference later this year of Finance and Labour ministers. The meeting is to address the question of stabilisation and structural adjustment policies having regard to their effects on employment and living standards. In other words, the limitations of economic theory alone in addressing the world economic problem have been accepted. In addressing the issues there is a recognition that we also take account of institutional structures and the social consequences. Whilst certain countries because of their political approach have shown a reluctance to date to participate in the Conference it is significant that all international agencies including the OECD, the IMF, the World Bank and GATT are prepared to participate.


This underpins the direction which we are trying to promote in Australia. The preparedness by the Government to involve the trade union movement in a wider agenda has clearly helped in developing a more responsible trade union movement. We have been prepared to bargain with what we can influence, i.e. wage outcomes, to obtain access to and influence upon other issues.


This preparedness to involve us is promoted by our opponents as undue influence on Government, or too much union power. In fact it is nothing more than the normal consequence of negotiations, give and take on both sides. It is not a privileged position for the ACTU. The same opportunity exists for the business community. The difference is we, unlike the employers, have developed a united and disciplined approach.


Our capacity to continue to deliver a wages policy which makes the necessary adjustments according to economic circumstances is going to depend on how much progress is made in developin4 the wider agenda not only with Government but with employers. Obviously if the agenda is narrowed because employers refuse to embrace discussions on other issues, unions are forced back to arguing wages and conditions the stakes in that scenario will inevitably get raised.

Industry Policy

A critical component on this wider agenda is industry policy. Through it we can overcome the constraints to economic growth including the difficulties presently faced of inadequate investment levels and skill shortages.


For Australia the problem currently is not international competitiveness. Through a combination of the devaluation and a significant reduction in unit labour costs we are currently by all measures a very competitive nation. The issue for us is how to become more productive by taking advantage of our competitive position and by producing more for export and competitive import replacement. That requires increased investment to enable higher levels of economic growth to be generated.


The difficulty for the Australian economy however is that market forces are not providing the necessary investment response. This is not to dismiss the importance of market forces but rather to argue that we must also recognise their limitations and work at overcoming them so . that we don’t get caught in a vicious circle of slow investment responses because-of balance of payments problems (eg. high interest rates, uncertainty, slower economic growth) but no capacity to address the balance of payments problem, in particular our balance of trade, without greater investment.


We have argued that what is needed to break into this vicious circle is an effective industry development strategy. We argue for such a strategy built around agreements between business and unions at either the enterprise or industry level. Such agreements should develop a long term strategy of expanding productive capacity, of achieving greater export earning and less reliance on imports in tradeable goods and services. Such an approach involves addressing issues like improved productivity, restructuring, overcoming skill shortages, the elimination of restrictive work and management practices, information sharing, the greater involvement of the workforce in decisions which affect them, the minimisation of industrial disputation through and the development of effective dispute settling mechanisms to ensure promptness and guarantee of supply, Government should play an important facilitative role in giving direction and stability and in bringing the parties together, also in giving assistance where necessary and appropriate following the identification of needs by the parties.


The recent report of the Australian Manufacturing Council argues strongly for a tripartite long term comprehensive strategy to reverse the decline in our manufacturing industry.


Under its auspices there has been considerable success to date in the steel, vehicle, heavy engineering, iron ore, stevedoring, maritime, shipbuilding, textile clothing and footwear, chemical, pulp and paper, communications and aerospace industries. They involve large sections of the workforce and large numbers of unions. This underlines the commitment of the Trade Union movement at all levels and across the different spectrums to address these issues.


There is therefore capacity to continue to build upon the success stories at the industry level. In addition, significant scope exists, through the structure of the second tier of wage fixation. Properly applied it can implement and strengthen such strategies at the industry and enterprise level by compensating in a non inflationary way the workforce for improvements in efficiency and productivity and by rewarding skill formation.

The New Wage System

The new wage fixation system which introduced the second tier also has within it the capability of addressing the proper balance between macro and micro economic considerations as well as continuing to recognise valid equity considerations.


The Trade Union movement has overwhelmingly committed itself at the Special Unions Conference to working within the framework and to give the necessary commitment to make it work. Importantly, the union movement has also indicated it will not support those unions who pursue claims inconsistent with that collective commitment.


However for the true capability to be realised also requires a commitment from the employers to negotiate sensibly within the parameters of the decision as well as from the Government in ensuring a favourable economic environment.


The system won’t survive if employers seek to use it to deny claims. Neither will it survive in a high inflation environment. Apart from burden sharing considerations this is why the prices issue attracts so much prominence in our deliberations.


The system which the ACTU favours and which has been adopted enables wages outcomes consistent with economic recovery and structural adjustment to be achieved. It gives a particular priority to redressing inequities in livingstandards by giving a special emphasis to the needs of low income earners both in the short term through flat amount first tier increases which have regard to the July tax cuts, and in the longer term through the development of supplementary payments. This direction of equity redress cannot be confined to the wages system. It has to be further developed through the social wage with particular emphasis on low income families. Our talks with the Government prior to the May Economic Statement and to the Budget have and will continue to focus on achieving significant increases in family allowances.


The decision also introduces a new principle which as mentioned earlier encourages efficiency and productivity improvements.


This is not a negative mechanism to erode award rates and conditions such as annual leave, hours of work etc. but rather a positive mechanism to enable the linkage between wages, skill development, work and management practices, together with investment and industry/enterprise strategies.


The opportunity now exists therefore to build agreements for periods into the future which address improved productivity, job security, elimination of restrictive work practices, effective dispute settling mechanisms, greater participation by the workforce in decisions which affect them, and real improvements in living standards.


This can be achieved in a way which doesn’t create claims inconsistent with the centralised system and thereby jeopardise the overall outcome. At the same time, if sensibly applied, it can be used to develop a broader based commitment to a longer term comprehensive strategy as advocated by the Australian Manufacturing Council.


The Accord mechanism enabled trade offs between money wages and improvements to living standards through other means, e.g. Medicare, taxation, superannuation with less cost pressures on employers. Likewise the second tier enables trade offs aimed at increasing efficiency and productivity in return for improved benefits, with lower cost implications.


It also provides scope and involvement for negotiations at other than the national or peak body level as well as providing a constructive and manageable response to the wage flexibility debate.


Clearly the potential is great and is properly geared to meet our needs. But it requires a change in attitude to make it work. The Trade Union movement has indicated its preparedness to apply itself to the task.

The New Industrial Relations Bill

The past four years have demonstrated the possibility of sustaining historically low levels of industrial disputation. The basic reason for this is the discipline which the Commission has required of unions in giving a no extra claims commitment to obtain the benefits of national wage decisions. It has shown clearly that the self discipline approach through a strong centralised system is a very effective sanction.


The new Bill however provides for a strengthening of the hand of the Commission in enforcing that discipline. It does so through the introduction of an injunction process under the Act. In providing the new process for redress it limits the ability of employers to pursue other avenues before exhausting the processes under the Act. The emphasis is correctly therefore on resolution of the dispute, not on punishment. It is really saying those who want the benefits of the system, including employers who expect unions to give the no extra claims commitment have to abide by the rules of that system and not have the luxury of opting out when it suits them.


We have criticisms of the Bill. We believe its continued reliance on penalties is not appropriate. By their retention the fact still remains that unions in Australia, their officials and members are exposed to a range of legal penalties for taking industrial action which is without equal in the industrialised world. Simply put, unions in Australia have never, as is often asserted by our Opponents, been “above the law”. The new legislation, despite the assertions, does not change that position.


But it is this continued distortion of fact which consistently muddies the water and makes the task of responding positively in the way described earlier much more difficult.


Take the recent advertisements placed by employer groups across the country concerning the legislation. Whilst not objecting to the right of employers to criticise the legislation, the ads do more than just criticise. They are greatly misleading and the distortion is treacherous in that it does not accurately reflect to the public and to their own membership what the Bill does; as such it can’t be conducive to a rational consideration of the merits of the legislation.


For example the advertisement says that the Bill “effectively endorses industrial action and its continuation indefinitely”. This is not true: the Bill gives employers the opportunity to seek a direction from the New Industrial Relations Commission to stop such action. It can then enforce that direction through injunctions issued by the Labour Court. Breach of the injunction exposes the union to a range of penalties including fines.


Further the advertisement asserts “the Government proposes to over-ride properly made state laws” as a “grab for extra federal power”. The so called “over ride” occurs only when the action relates to an “industrial dispute” or where it is already covered by the Federal Trade Practices Act. By virtue of the constitution any attempts by State Governments to duplicate are not valid state laws. The Federal Government is only legislating to its constitutional capacity and cannot by the legislation create “extra federal power”.


The advertisement asserts that “access to secondary boycott remedies under the Trade Practices Act” is restricted. What the ad omits is that for the first time the ability for the Arbitration Commission to deal with secondary boycotts and assist innocent parties is established. If the Commission attempts at conciliation fail there is no restriction on the range of relief available under the Trade Practices Act. Nor does the Bill “take away” employer access to damages at common law.


Employers in having a blinkered vision about penalties are ignoring the important opportunity this legislation provides in strengthening the role of the conciliation and arbitration commission. One of the major complaints by employers is that the body has had not capacity to enforce. This Bill establishes that capacity. It is amazing that employers ignore that aspect in their comments concerning the legislation. An employer who supports a workable system of conciliation and arbitration would have to be supportive of this legislation.


Despite the importance employer groups say they place on S45D and E and the common law, the reality is that seldom have these provisions been successfully pursued beyond the injunction stage against unions. Limited exceptions such as Mudginberri and Dollar Sweets had some distinguishing features. There was dissention within the workforce concerned; with varying proportions of those directly involved either not on strike or subsequently returning to work. The over reliance on bans and pickets as the prime form of industrial action as distinct from bans complementing strike action. The unwillingness or inability on the part of other unions to support the actions. Communication with the Trade Union movement concerning the disputes was poor. The unions were portrayed as being not prepared to accept the authority of the relevant industrial tribunal. The employer had confined interests and had nothing to lose by pursuing the action. These factors made them ready targets for politically inspired financial backing and that in itself meant that the management directly concerned was not ultimately in control of the tactics.


In contrast the dispute at Robe River showed how through a considered campaign and united strategy the penal provisions are ineffective. There the membership was disciplined, it withstood all sorts of provocation, it was prepared to have the dispute heard before the industrial commission, with the company refusing to accept the decisions. When industrial action was take it involved a strike by all employees of the Company. The Company had large interests and was not supported by other employers or the government. Settlement was achieved not by the Company taking on the union movement but by negotiating with it and not by ignoring the tribunal but using it to settle outstanding matters. Fundamental to settlement was the dropping of all legal action.


The trade union movement in this Country therefore has been prepared to meet the challenge of change. This has involved some difficult decisions.


Further difficult decisions will be made in facing up to the challenge. This has been in evidence this week with our discussion around the future directions document. The trade union movement is prepared to think seriously and act about re-organisation, about better rand and file contract, about better resourced, more efficient organisations about better discipline and co-ordination. It is prepared to continue to position itself for relevance.


In facing up to these challenges as well as those which we have already met the task has not been an easy one. It has not commanded unanimous support and we still have critics within the movement. In adopting our position however we have never been prepared to have the minority determine the position for the overwhelming majority.


It is the basic failure on the part of the business community to isolate their extremists and adequately promote a strategy more in keeping with developing a constructive tripartite relationship which is hindering the pace by which future progress can be made.


Address by Simon Crean, President of the ACTU,-to the Perth Press Club, Thursday, May 21, 1987.