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Friday, 5 October 1984
Page: 1346


Senator BUTTON (Minister for Industry and Commerce)(4.03) —I move:

That the Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-

CONCILIATION AND ARBITRATION AMENDMENT BILL (No. 2) 1984

The Bill is introduced in conjunction with the Trade Practices Amendment Bill 1984 and forms part of a legislative package with that Bill for arrangements to deal with secondary boycotts. The major purpose of the Bills relates to the Government's intention to repeal Sections 45D and 45E of the Trade Practices Act 1974 and to replace them with a more effective mechanism under the Conciliation and Arbitration Act for dealing with disputes involving secondary boycotts.

Sections 45D and 45E which prohibit secondary boycotts and agreements giving effect to secondary boycotts were introduced into the Trade Practices Act by the Fraser Government. Section 45D has operated since 1977 and Section 45E since 1980. Section 45D has its origins in the 1976 report of the Swanson Committee, established to review the Trade Practices Act. One of the specific terms of reference of that Committee was to give particular attention to the application of the Act to anti-competitive conduct by employees and employee or employer organisations.

In a wide ranging report which only briefly discussed the problem of secondary boycotts, the Committee recommended that the law provide an effective avenue of recourse for a trader directly affected by a boycott, by allowing him access to an independent deliberative body. The Committee was not satisfied that satisfactory procedures for solving these matters were available at that time. The Committee had no firm view as to whether such procedures for recourse should be established under the Trade Practices Act or the Conciliation and Arbitration Act.

Following this report, the Fraser Government added Section 45D to the Trade Practices Act in 1977. As enacted, Section 45D went far wider than prescribing only those price maintenance activities that were of prime concern to the Swanson Committee. Unlike other provisions of Part IV of the Act, Section 45D is not solely concerned with competition. Indeed the Section was so widely drawn that its main operation is in respect of industrial action which often has little, if any, effect on competition. In fact one test for the Section- substantial lessening of competition-has been little used.

During the entire period of its existence, Section 45D has not been widely accepted as a provision concerned with competition-rather it has become more a weapon directed at the industrial relations activities of trade unions under the guise of competition policy. The Fraser Government amended Section 45D in 1978 and 1980 to broaden its application against union activities. In addition, during 1980, Section 45E was introduced into the Trade Practices Act. Section 45D commonly operates to prohibit boycott situations arising from a refusal by employees to handle goods intended for a third party for the purpose of pressuring the third party to accede to certain demands. Section 45E supplements that provision by prohibiting contracts, arrangements or understandings between a union and another person to prevent or hinder the supply of goods or services to, or their acquisition from, a third party.

At the same time, the Conciliation and Arbitration Act was amended to permit the Commission to play a conciliation role in relation to disputes involving secondary boycotts. The relevant provisions are contained in existing Division 5A of Part III of the Act, which is to be repealed. Under these provisions, where there has been a contravention of Section 45D or 45E of the Trade Practices Act and an injunction has been applied for in the Federal Court of Australia in relation to that contravention, the dispute concerned may be notified to the Commission. The Commission is empowered to conciliate, if the dispute involves a federally registered union, or a member or officer of the union, or work under a Federal award. This was a more realistic assessment of how secondary boycott disputes are resolved. It suffered, however, from the destabilising effects of the contemporaneous proceedings before the Federal Court under the Trade Practices Act.

Sections 45D and 45E have been the subject of considerable controversy since their introduction. It is the Government's view that these provisions should not have been enacted in the Trade Practices Act. The essential concern of the trade practices legislation is to promote fair trading and free competition. On the other hand, the real purpose of Sections 45D and 45E is to prohibit union activity which usually has little or no detrimental effect on competition or fair trading. In the context of legislation dealing with trade practices matters , the sections provide unrealistic sanctions to be applied against unions in relation to their industrial activities. The Government's position is absolutely plain-the Government does not, in any way, condone the industrial tactic of a secondary boycott. However, the Government does not believe that such action is so different in nature to other forms of union and employee action in support of their industrial claims that it should be singled out to be dealt with under the Trade Practices Act, rather than through the established industrial channels.

The principal objective of any regulation in this area must be the speedy, fair and effective resolution of the underlying dispute. The Government believes that this will not be achieved by the legislative prohibition of secondary boycott activity. Indeed, provisions such as Sections 45D and 45E may only serve to exacerbate a dispute and resort to them may result in a worsened industrial relations climate not only between the parties, but in the relevant industry as a whole. The special characteristics of industry disputes demand that they be handled by expert bodies under our industrial machinery rather than under trade practices legislation which is not designed to resolve the underlying issues which give rise to the boycott activity.

The Government is concerned about the possible effect of the remedies of penalties and damages which are available under the Trade Practices Act for contraventions of Sections 45D and 45E. These are potentially highly disruptive to Australia's industrial relations. Their application, where boycotts occur, is unlikely to lead to the effective or satisfactory resolution of the dispute. Indeed it is worth pointing out that pecuniary penalties under the Act have never been imposed. In addition, damages are not the principal objective of the parties where proceedings are instituted. Practical experience has shown that the remedies provided under the Trade Practices Act have not been effective in the way which is often claimed. The only remedy which has been seriously pursued has been the granting of an interim injuction to seek to force a union to lift its bans before, or during, negotiations on the issue at the hearing of the dispute. Yet when the evidence is examined, there is not much reason to conclude that the injunctive process has been particularly speedy or that using this legal remedy will help to resolve a dispute. In some cases, the issuing of an injuction under the Act has even led to a worsening of the dispute.

To illustrate this, I will refer to the applications of which the Government is aware that were made under Sections 45D and 45E in relation to secondary boycotts involving unions. We know of 78 such applications. Periods of 2 weeks and more betwen the imposition of bans and the application for an injuction are quite common. This occurred in 38 of the 64 cases for which relevant information is available. The Government is most concerned about the delays in resolving boycotts. It is hardly sensible that these legal remedies under the Trade Practices Act are available in relation to secondary boycotts, if no action is taken to resolve the disputes before those remedies have to be called upon.

Once injunctions are granted, their effect on the boycott dispute has varied considerably. The Department of Employment and Industrial Relations has examined the 25 boycott disputes involving unions which have occurred since the beginning of 1983. Interim injunctions were granted in relation to 15 of these disputes. In 5 of the cases where injunctions were granted, action under the Trade Practices Act actually led to an escalation of the dispute through, for example, the widening of bans or the extension of their duration. In 9 cases, including those I have just mentioned, the injunction appeared to have little or no direct impact on the secondary boycott action. Bans have continued, for example, for periods ranging from 5 to 25 days. The injunctions appear to have been of direct effect in only 3 of these 15 cases. In none of these were damages granted or penalties imposed and no permanent injunctions have been granted.

I have argued to this stage that action under the Trade Practices Act in respect of secondary boycott disputes is neither the most appropriate course for resolution of the dispute nor necessarily a particularly quick or effective course of action. Following our repeal of these Sections, the Government is not proposing to leave a void in the handling of such disputes. Let no-one underestimate our concern at the impact of these disputes. What the Government is proposing is an alternative mechanism whereby such disputes can be dealt with , in the first instance, through the established industrial relations machinery. Such a course of action will ensure that boycott matters are dealt with effectively and speedily through the tribunal best qualified to deal with them.

Earlier this year, the Attorney-General and the Minister for Employment and Industrial Relations issued for public comment a discussion paper on the application of the Trade Practices Act to trade unions. That document examined these issues and outlined the Government's views. Many responses were received to the issues canvassed. The Government has carefully considered all the views expressed by employers and their representatives, as well as by some State goverments, the Australian Council of Trade Unions and individual unions. Extensive discussions have also been held within the National Labour Consultative Council on the substance of the Government's proposals. It is clear that employers and their organisations are seriously concerned about the resolution of secondary boycotts. In essence, the position of employers is that the remedy of injunctions is required to protect them from secondary action by trade unions. They seek the retention of this remedy under Commonwealth legislation. It has been suggested that it be introduced into the Conciliation and Arbitration Act in addition to what the Government has proposed. At the same time, there is widespread acceptance that the Commission should be able to seek to resolve these disputes.

Nonetheless, the Government's consideration of the responses to the Green Paper and its examination of the operation of Sections 45D and 45E have led us to the conclusion that the retention of a statutory legal remedy for secondary boycotts is not warranted. Whatever the effect of proceedings under Sections 45D and 45E may have been in the years immediately after their introduction, and I have to say that it is simply not clear that they were generally effective then, it is apparent that unions have paid far less regard to them in recent years. As mentioned, in some cases the issuing of injunctions under the Trade Practices Act has even exacerbated disputes. The Government does not believe that the retention of similar remedies under Commonwealth law will help to resolve boycott disputes. Our emphasis is not upon prohibition and sanctions but on the settlement of disputes where they occur. Experience has shown that by far the greatest number of secondary boycott disputes involving unions arise in relation to industrial issues. The best way to deal with such disputes is to provide for them to be brought before an industrial tribunal.

Accordingly, the Government proposes that, upon the repeal of Sections 45D and 45E, the Australian Conciliation and Arbitration Commission should be able to dealwith such disputes where a federally registered union or its members, or work under a federal award is involved. We believe this should also apply where these boycott disputes do not concern strictly industrial issues. The Commission should be able to bring the parties together to see if they can settle their differences.

We propose to allow the Commission to conciliate in relation to these disputes. This is similar to what exists at the moment, but with a significant improvement . Instead of the delays under the present arrangements which require the initiation of Federal Court proceedings under Section 45D or 45E, anyone involved in or affected by a boycott dispute will be able to notify the Commission immediately, and the Commission will also be able to act of its own motion. These matters should be dealt with as quickly as possible by the Commission and provision is to be made to ensure that this will be done.

The legislation will enable the Commission to deal with boycott disputes in relation to both industrial matters and non-industrial issues. Industrial matters will be the same as those which the Commission can deal with in its normal jurisdiction except that they will not require a particular employment relationship. Security of employment which sometimes gives rise to boycott disputes will be included as an industrial matter for the purposes of the Commission's jurisdiction under this legislation.

We do not believe that the Commission should be asked to deal with boycott disputes over non-industrial issues if it cannot play any useful part in their resolution. Provision will therefore be made to require the Commission to make a threshold judgement as to whether it will be able to resolve the dispute or bring about an end to the industrial action. It may be unrealistic, for example, to expect the Commission to play a role in overcoming a boycott which has an explicitly political basis, such as a ban in protest against aspects of Government policy.

There have been some suggestions that in lieu of remedies like those under the Trade Practices Act, the Commission should be able to arbitrate in secondary boycott disputes in a binding and enforceable way. We do not consider this necessary or appropriate. Where a secondary boycott is imposed, as is often the case, in support of claims in an industrial dispute within the Commission's normal jurisdiction, the Commission will be able to arbitrate, if that is required, in relation to those underlying claims. This is because the Commission will be able to use the arbitral powers under the Act that are available in industrial disputes. To facilitate this, provision will be made to allow the joint hearing of an industrial dispute and an associated boycott dispute, where that is appropriate.

In some cases, of course, secondary boycotts are ancillary to industrial disputes which can be dealt with by industrial tribunals. However, if there is not an industrial dispute involving an employer and employee relationship, the only formal procedure at the Federal level to resolve the dispute is the unsatisfactory mechanism of existing Division 5A.

In other cases, the Commission would, if it had to arbitrate, be required to deal with issues which are simply not suitable to be dealt with under its award making powers. An example is where there is a dispute over marketing or pricing arrangements which arises through union concern over employment for its members. An area like this involves considerations which the Commission could not realistically be expected to deal with by decisions which could be enforced under the Act. There are other problems. An arbitrated decision could have the direct effect of putting a company which was the target of a boycott out of business entirely or depriving that company of a substantial share of a market. Its enforcement would present difficulties and might well destabilise employment in that market.

It would also be undesirable if enforceable arbitrated decisions over these wider issues which would not involve direct employer and employee relationships were to conflict with other Commonwealth or State laws, reflecting, for example, competition policy considerations or marketing arrangements. On the other hand, if such laws were to be overridden by arbitrated decisions, this could actually encourage secondary boycotts as a mechanism to circumvent those laws. Nonetheless, there may be some place for arbitration in situations where the parties are close to agreement. We will enable the Commission, therefore, to be able to arbitrate with the agreement of the parties. However, its decisions will not be enforceable or reviewable under the Act.

In addition, these decisions, like agreements to settle boycott disputes reached through conciliation under our proposals, will be subject to the general law. By way of example such a decision or agreement may require authorisation under the Trade Practices Act where it would otherwise contravene a competition provision of that Act. In providing for more effective machinery to deal with boycott disputes, we are not proposing to restrict access to common law remedies in relation to secondary boycotts, except in one important respect.

The exception concerns injunctions which may be sought where an action in tort is taken in relation to a secondary boycott. We believe that the granting or enforcement of an injunction while a matter is before the Commission may destabilise the efforts of the Commission to resolve the dispute. Indeed, as I have already said, we see this as an important defect in the existing legislation. We are proposing, therefore, to restrict such action where the Commission is dealing with a dispute involving a secondary boycott. This restriction will not apply to injunctions which prevent personal violence or the damage or destruction of property. Employers will also be able to pursue action for compensatory damages. This proposed restriction is to be strictly limited to the period in which the Commission feels that it is likely to bring about promptly the end of the boycott or the settlement of the dispute. If it concludes at any time that this is not likely, a party to the proceeding will be able to obtain a certificate to that effect from the Commission which will end the restriction on the injunction.

The Commission will also be able to recommend the lifting of industrial action connected with a boycott dispute and, consequently, to take into account any lack of compliance with such a recommendation when considering the issuing of a certificate. I have already mentioned the delays which frequently occur in seeking injunctions under Sections 45D and 45E. Similar delays can be expected in relation to common law proceedings, if they are used. Under our proposals, during the period before the initiation of proceedings, conciliation will be able to take place before the Commission. As I have indicated, the absence of such an arrangement is a serious deficiency under the existing provisions.

A further important point is that there is no reason why an employer affected by a boycott should not be able to prepare his case for a common law remedy while Commission proceedings are underway. If that party is suffering serious harm through the continuance of the boycott, there will be no obstacle to that party immediately applying for an interim injunction when a certificate is issued by the Commission. In a case where the situation was extremely serious for the applicant, this could conceivably happen within a matter of hours of the granting of a certificate. This does not mean that the Government believes that resort to the common law would prove any more effective than the remedies under the Trade Practices Act have been. In our view, common law remedies are unlikely to play a useful role in the resolution of disputes involving secondary boycotts .

Another important aspect of our approach is reflected in the Trade Practices Amendment Bill. I refer to the provision in that Bill which is designed to maintain an across-the-board prohibition of price maintenance activity. Successive governments have accepted that the prohibition under the Trade Practices Act on resale price maintenance should not be subject to any exemption . It has also been accepted that any action to promote resale price maintenance should be prohibited. The prohibition on price maintenance activity extends to trade unions which are generally not suppliers of goods and therefore cannot engage in resale price maintenance themselves. However, they are capable of bringing about that result through their activities. Our concern is that the repeal of the secondary boycott provisions of the Trade Practices Act may leave a gap in the prohibition on such price maintenance activity. To ensure that this does not occur, we are proposing the amendment contained in Clause 12 of that Bill.

I now turn to the main provisions of the Bill.

Clause 3 of the Bill establishes the new arrangements whereby the Commission will be able under proposed Sections 88DA to 88DN to deal with boycott disputes. These provisions will comprise a new division 5A of Part III of the Conciliation and Arbitration Act when Sections 45D and 45E are repealed. Proposed Section 88DB identifies the types of boycotts which will be able to be dealt with by the Commission. These boycotts are similar to what is covered by existing Sections 45D and 45E.

Proposed Section 88DC enables a wide range of persons to notify the Commission of the existence of an impending, probable or actual boycott dispute. Under proposed Section 88DD, the President is to refer the dispute to a Member of the Commission. This can also be done where the Commission itself becomes aware of a boycott dispute without formal notification. The Commission must then commence within 48 hours proceedings to determine whether there is a boycott dispute within its jurisdiction and if so whether it involves an 'industrial matter' as defined. The Commission has to make a written finding of the dispute. If the dispute does not concern an industrial matter, the Commission can only deal with it if it certifies in writing that it is satisfied it will be able to bring about a prompt cessation of industrial action, the abandonment of the boycott or the settlement of the dispute.

I draw the attention of Honourable Senators particularly to proposed Section 88DE. This provision requires the Commission to deal with a boycott dispute expeditiously. This reflects the Government's concern that boycott disputes should receive the active attention of the Commission without delay. In some circumstances a boycott dispute may relate to some other industrial issue before the commission. Proposed Section 88DF enables the President to allow a boycott dispute to be dealt with jointly with such related matters. The Commission as so constituted would, of course, be required to deal no less expeditiously with a boycott dispute in joint proceedings.

Proposed Section 88DG provides for the form of arbitration which I mentioned earlier, by consent of the parties, and with their agreement to abide by all decisions reached by such arbitration. Proposed Section 88DH defines the parties to proceedings under the proposed Division. Honourable Senators will note that all directly involved parties may be represented, as well as a Minister. Other interested persons will be able to seek leave to intervene in the usual way. Proposed Section 88DJ provides for the prohibition on the granting or enforcement of injunctions in connection with actions in tort against any persons engaging in a boycott dispute.

Proposed Section 88DK requires the Commission on application, or of its own motion, to certify that it cannot bring about promptly the abandonment of the boycott or the settlement of the dispute. When a certificate is issued, the restriction on injunctions will end. An unsuccessful applicant will be able to re-apply for a certificate to a Full Bench or to the Member dealing with the dispute. I have already mentioned that the Commission will also have to take into account the extent of compliance with its recommendations in the proceedings.

This package of provisions provides a comprehensive mechanism by which secondary boycott disputes can be dealt with effectively and speedily. By removing the provisions prohibiting boycotts from the Trade Practices Act, and establishing new machinery in the Conciliation and Arbitration Act to deal with boycott disputes, the Government is ensuring that such disputes are dealt with in the forum which is best equipped to achieve a satisfactory resolution to the industrial relations issues which underlie most disputes.

Finally, I refer to other provisions of the Bill which are of a more technical nature. They concern the financial accounting and reporting requirements under Part VIII AA of the Act for registered organisations and their branches. It is proposed to provide less onerous and costly requirements for small organisations and branches. This principle has the support of members of the National Labour Consultative Council. The proposed amendments will not, however, prejudice the proper financial administration of these bodies. Clause 5 of the Bill enables organisations or branches whose annual incomes do not exceed $10,000 to apply to the Industrial Registrar for a certificate of exemption from certain of the existing financial and reporting requirements of Part VIII AA of the Act.

An organisation or branch which obtains a certificate will be exempted from the current requirements in relation to the preparation of accounts, their supply and presentation to members and their filing with the Registrar. Instead the new requirements that are to apply will be more appropriate to the type of organisation or branch concerned. The organisation or branch will be required to prepare its accounts and other statements for the financial year in accordance with less onerous requirements that will be prescribed by Regulation. The accounts and statements of the organisation or branch are to be presented to a meeting of members. Members of the organisation or branch will be able to obtain free of charge copies of the accounts on request. The accounts and statements and the Auditor's report are to be filed with the Registrar within 90 days after the date of the Auditor's report.

I would point out to honourable senators that, in all other respects, the existing requirements of Part VIII AA will continue to apply to organisations or branches with a certificate. Thus, the rights of individual members to seek further information concerning the accounts or to ask the Registrar to investigate the accounts will continue to apply. Likewise the powers and duties of the Registrar to investigate any deficiencies and to require rectification will also continue to apply to such organisations and branches. I commend the Bill to the Senate.

TRADE PRACTICES AMENDMENT BILL 1984

This Bill is introduced in conjunction with the Conciliation and Arbitration Amendment Bill (No. 2) 1984 for the legislative purpose already outlined in the second reading of that Bill. The purpose of this Bill is to repeal sections 45D and 45E of the Trade Practices Act 1974, clearing the way for the commencement of new provisions in the other Bill which will enable the Conciliation and Arbitration Commission to settle secondary boycott disputes. Pricing and marketing agreements reached under those new provisions will be made subject to the Trade Practices Act. Certain transitional measures must also be introduced and necessary consequential changes made.

Transitional Provisions

No new proceedings may be instituted concerning conduct prior to the repeal of sections 45D and 45E. However, proceedings already instituted will be unaffected . Appeals also will not be affected. Section 80AA is repealed but that section will continue to apply to enable an injunction granted before repeal to be stayed to facilitate conciliation.

Price Maintenance Activities by Non-Suppliers

Proscriptions on price maintenance behaviour have existed since 1971 but have been limited to conduct by suppliers only. Governments of all persuasions have recognised since that date that resale price maintenance is inherently bad. Non suppliers are capable of effecting the same detriment of competition through secondary boycott activity although they may have no commercial objective. Accordingly, the Government has decided that resale price maintenance activities by non-suppliers should be subject to injunction.

Conciliation resulting in Marketing and Pricing Agreements

The Government's position is clear: secondary boycotts are a symptom of industrial disputation arising out of industrial demands and the reaction to them. What, however, may appear to be a matter of industrial disputation can lead to arrangements which are essentially commercial. Marketing and pricing agreements between employers and unions would fall into this category. If they are anti-competitive the Government sees no reason why they should not be dealt with under the Trade Practices Act.

The Government also considers it to be necessary to prevent the new provisions in the Conciliation and Arbitration Act from being used as a 'back door' to avoid the Trade Practices Act. Accordingly, the Bill makes clear that conciliation resulting in legitimate industrial agreements shall fall outside the Trade Practices Act but that marketing and pricing agreements will continue to be subject to that Act. Such agreements may, of course, be capable of authorization by the Trade Practices Commission on public benefit grounds pursuant to the Trade Practices Act. I commend the Bill to the Senate.

Debate (on motion by Senator Collard) adjourned.