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Notes for speech to be given by the Hon D L Chipp, MP, Minister for Customs and Excise to the conference of residents of National Associations of Manufacturers



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NOTES FOR SPEECH TO BE GIVEN BT THE HON. D.L. CHIPP, M.P., MINISTER FOR CUSTOMS AND EXCISE TO THE CONFERENCE OF PRESIDENTS OF NATIONAL ASSOCIATIONS OF MANUFACTURERS ON

THE 21 ST APRIL, 1971, IN CANBERRA

At the outset I wish to apologise for the absence of ray

colleague, the Treasurer, Mr Snedden, who had accepted an invit­

ation to speak to you today. Mr Lynch, the Minister for Labour and

National Service has also asked me to apologise for him. Both

members have asked me to deputise for them. It gives me a strange

sense of togetherness, to know, as I stand before you, that there

is a secret wish in every heart here that I was somebody else.

However, what I propose to talk to you about is in fact Government

thinking - as I understand it - and I therefore ask you to be

gracious enough to discuss it with me. As you know both of my

colleagues are attending a special meeting of the National Labour

Advisory Council to discuss such matters as the payment of fines

imposed on certain unions by the Commonwealth. Industrial Court, the

sanctions provisions of the Conciliation and Arbitration Act and

procedures for enforcement.

I understand that you expressed a wish that this address be

devoted to the subject of industrial relations. I understand,

too, that Mr Snedden addressed you on a similar subject at your

Conference in October last year. A request for a repeat perform­

ance certainly manifests your intense interest in this subject.

I shall try not to cover the same ground as Mr Snedden covered

on the last occasion.

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National ¥age Case Decision

Since your October meeting an industrial relations development

of great significance .was the National Wage Case decision handed

down by the Commonwealth Conciliation and Arbitration Commission in

December last. The decision has been the subject of a good deal of

comment and it is not my purpose to analyse it or the reasons on which

it was based; instead I wish to consider its implications. However,

let me first recall the nature of the claims which the national

wage case bench was called on to consider. First, there was an

offer by employers for a 2 per cent increase in award wage rates.

Then there were claims by the A.C.T.U. on behalf of a number of

unions for a $9.00 per week increase in award wage rates and the

minimum wage. There were also claims by white collar unions for a

19 per cent increase in award wage rates. The $9.00 per week claim,

if granted,· would have had approximately the same effect on the

national wages bill as would a 19 per cent increase in award wage

rates. The A.C.T.U. and white collar unions also sought the intro­

duction of automatic quarterly adjustments to wage rates in accor­

dance with movements in the Consumer Price Index. The practical

effect of the employers' offer and the unions' claims was that the

Commission was called on to determine a wage increase of between

2 per cent and 19 per cent. In the event the Commission decided

to award a six per cent increase in award wage rates and to increase

the minimum wage by $4.00. It rejected the claims for automatic

quarterly adjustments of wage rates in accordance with movements in

the Consumer Price Index.

The six per cent national wage increase became operative in

January this year. This followed -en estimated increase of about

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eight per cent in average weekly earnings per employee for the

calendar year1970. In the previous year the increase was of the

order of nine per cent. It would be wrong to attribute the very

high rate of wage inflation experienced in the years 1969 and

1970 wholly to national wage case decisions of the Commission.

In fact, national wage case decisions accounted for only a quarter ,

of the total increase in average earnings in 1969 and 1970, the

balance being due to other award wage increases (granted on work

value or other grounds) and increases in overtime and overaward

payments. In recent years the role of overaward payments in

particular has tended to increase. In 1967 and 1968 these were

probably responsible for about 15 per cent of the increase in

average weekly earnings. In 1969 their contribution increased to

about 30 per cent and last year overaward payments probably

accounted for as much as 40 per cent of the increase in average

weekly earnings.

Whatever the impact on the economy of the decisions in previous

national wage cases has been, there is no doubt that the 1970

decision will make a significant contribution to inflationary

pressures in the economy in 1971. Whereas the 1968 and1969

decisions added only two per cent or so to average weekly

earnings the 1970 decision will probably add about four per cent.

If the pressure on other award and overaward payments continues

unabated in 1971 the result could be an increase in average

weekly earnings of 10 per cent or more.

Wage increases of the order we have experienced would not

he serious if they were matched by commensurate increases in

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productivity. Unfortunately, this is not so. Over the last few

years productivity in the non-farm sector has been showing a

trend rate of growth of about three per cent per annum. If

productivity increases this year by three per cent, an increase of

10 per cent in average weekly earnings would result in a rise in

wage costs per unit of output of approximately seven per cent.

There is thus a very real possibility that cost-push inflation

will continue to be a major problem confronting our economy.

Remedial measures to counter cost-push inflation are called

for on a number of grounds. You will already be aware of action

taken by the Government to curtail public expenditure and to slow

down private investment in plant and machinery. The Government

also proposes to do away with restrictions on competition that1

are against the public interest and is taking action to strengthen

the Trade Practices Act particularly with regard to resale price

maintenance. Restrictions on competition can contribute to inflat­

ion in a number of ways: they can make it possible in some cir­

cumstances to sustain abnormally high profits; or permit contin­

uation of inefficiency, or a break in increased productivity;

they can indirectly encourage demands for wage increases and

facilitate the granting of such increases; they can hamper the free

movement of economic resources to areas of high productivity and

they can stifle enterprise efficiency and innovation.

A further important area for Government research and initiative

is the promotion of a better geographical balance between job

vacancies and job applicants. This can be achieved through

improved labour mobility and wherever feasible through relocation

of industry.

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The containment of cost-push pressures in the economy also

calls for socially responsible attitudes on the part of trade

unions and industry leaders. Trade unions must realise the

fallacy of pushing up wages in excess of productivity growth.

I have yet to hear a cohesive or coherent argument from even

Mr Hawke that disputes this. Employers must become more resistant

to excessive demands by trade unions. From what I previously said

about an increase in the level of overaward payments, increases in

unit labour costs cannot be laid solely at the door or arbitration

tribunals.

An intensification of effort is also needed to stimulate our

rate of productivity growth, which by world standards is not too

good. The' National Productivity Promotion Council which was formed

in September, 1969, has begun to develop a keener awareness in

the community and industry of the relevance of high productivity

to national welfare and constructive wbrk at the level of individual

undertakings is being done by the 185 productivity groups now in

existence. These involve some 6,350 business and government under­

takings. Both the National Productivity Promotion Council and the

productivity group movement deserve the full support of leaders

of industry and in particular by manufacturing companies represented

here today.

Central to efforts to stimulate! productivity growth is the

improvement in the range and quality of training facilities. I

feel sure that the people assembled here will be aware of the National

Conference on Training for Industry and Commerce that is being

convened by the Commonwealth and State Ministers for Labour next

month. The Conference, which will be held at the Australian

National University from the 11th to 13th May, will provide the

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opportunity for a thorough examination of Australia's needs in the

training field at all occupational levels, and for the formulation

of proposals to assist the systematic development of training.

Industrial tribunals will also have a significant part to

play in our efforts to contain inflationary pressures. It is

essential that' in settling industrial disputes that they have

regard to the economic consequences of their decisions. This

applies not only to federal tribunals but also to State tribunals.

In this context it should not be overlooked that a higher propor­

tion of wage and salary earners work under State awards than

under federal awards. The latest figures published by the Common­

wealth Statistician indicate that for Australia as a whole some 40

per cent of employees are covered by federal awards whereas some

47 per cent are covered by State awards. These figures must surely

point to the need for employer organisations to be just as concerned

with decisions of State tribunals as they are with decisions of the

Commonwealth Conciliation and Arbitration Commission.

Suggestions are made from time to time that the Federal

Government should amend the Conciliation and Arbitration Act to

restrain the Commission from granting wage increases and changed

working conditions that are likely to have adverse economic

repercussions. The Government, of course, keeps the functioning

of the conciliation and arbitration system continually under

review and it has demonstrated that it is prepared to amend the

Act to bring its provisions into line with present day needs.

However, it must not be overlooked that there are constitutional

limits on the type of provisions that can be included in the Act.

This was made clear by the Chief Justise of the High Court,

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Sir Garfield Barwick, in his judgment in the High Court case

(1967), the Queen v. Commonwealth Conciliation and Arbitration

Commission; Ex parte Amalgamated Engineering Union. It will be

recalled that the case was concerned with a challenge, which

proved unsuccessful, by unions to the Commission's decision in

1967 to express award wage rates as total wages instead of in the

form of basic wage and margins components. The Chief Justice's

comment on the Commonwealth Parliament's industrial powers reads

as follows :

"The Parliament is unable itself to legislate the level of wages to be paid. Nor has it power to direct the arbitrator as to the level of wages he shall prescribe in the settlement of a dispute as to wages. The constitutional power requires that settlement of the dispute be left to the arbitrator. His award will be valid if it remains within the ambit of the dispute

and its terms are relevant to that dispute and to its settlement, the dispute, of course, itself falling within the constitutional limitation." (118 C.L.R., p. 219 at p. 242)

In the same case Mr Justice Windeyer spoke in similar terms.

The relevant extract from his judgment re&ds as follows :

"The Commission exercises a far-reaching authority over the national economy. But the Parliament has no . power "under the Constitution to direct that it go about its task of settling industrial disputes by fixing wages

according to some particular principle or formula. It must be given a discretion as to means having regard to the end, the prevention and settlement of industrial disputes by conciliation and arbitration." (118 C.L.R., p. 219 at p. 269)

Constitutional limitations on the Parliament's industrial

power does not, of course, prevent the Commonwealth from inter­

vening in cases that come before the Commission. Over the last

two decades the Commonwealth has made a practice of intervening

in cases of major economic importance.to make submissions on the

state of the economy and other relevant matters. The Government

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has already announced it will oppose claims that are expected to

come before the Commission for an additional week's annual leave

and additional pay during leave. It views with even greater

concern the announced intention of trade unions to seek a shorter

working week.

Industrial Disputes

I turn now to our industrial dispute record for the year 1970»

To say tie least it was a dismal one. Preliminary estimates

published by the Commonwealth Statistician indicate that during

the year there were 2,738 disputes involving a stoppage of work of

ten man days or more and that these resulted in a loss of 2.4 million

working days and a loss of some $31 million in wages. The number

of disputes and the estimated loss in wages were the highest since

industrial dispute statistics began to be collected in 1913 and time

lost as result of industrial disputes was the highest since 1929

when some 4j million working days were lost.

We do not have to look for the causes of heightened industrial

unrest over the last few years. Experience has shown that the level

of industrial disputation tends 4/0 rise during conditions of economic

expansion and prosperity. It then that the bargaining power of

unions is at its highest and j^ere is a strong temptation for

unions to use this power to yj.n wage increases and other benefits

for their members. Furthermore, economic expansion is accompanied

by technological change and changes in the structure pf the work­

force which in turn give ripe to disputes over demarcation issues,

wage rates for new jobs or ^jobs that have undergone a <^hange in skill

requirements and displacement of labour.

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it is somewhat of a paradox that success in maintaining

conditions of full employment should carry the seeds of industrial

disputation. This is because people tend to exploit the situation

for their own ends. Unions are not alone in this. Unfortunately,

there are some employers who seek to outbid other employers by

offering inflated wage rates to attract workers in short supply and

this often creates industrial unrest amongst workers generally who

seek to win similar conditions. There are employers also who concede

excessive wage demands in the expectation that they will be able to

cover increased costs through higher prices. This, of course, adds

to inflationary pressures which are inimical to industrial peace.

Full employment places high demands on responsibility of employers

and unions. A failure to live up to this responsibility could

threaten our living standards and undermine the Government’s policy

of full employment. .

There is a tendency for the community to look to Governments to

resolve industrial disputes. While Governments can provide the

machinery for the settlement of industrial disputes, industrial

harmony in the long run depends on the relationship that exists

between employers and their employees and between employer

organisations and unions. The objective of industrial harmony can

be facilitated by the widespread use of dispute settling procedures

agreed last year by the then Minister for Labour and National Service

the then Attorney-General, the A.p.^.U. and the National Employers

Policy Committee.

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Sanctions Provisions

When an invitation was issued to Mr Snedden to address this

Conference he was advised that you would be interested in hearing

him discuss fines imposed on certain unions by the Commonwealth

Industrial Court. In view of the fact the cause of my being here

to deputise for Mr Snedden and Mr Lynch is that both of them are at

this very moment attending a special meeting' of the National Labour

Advisory Council to discuss, inter alia, the subject of fines it

would not be proper for me to address myself to the subject.

However, I do wish to say something of the Government’s attitude

to the general question of sanctions.

The Government's approach to sanctions has been made clear

on a number of occasions. This is that sanctions are an essential

feature of our system of conciliation and arbitration. The rationale

for this attitude is simply expressed. It is that any system of

industrial relations which provides for industrial awards to

regulate with the force of law the relations between employers and

employees and the conditions under which workers may be employed,

must also provide judicial backing for these awards to have the legal

force which they purport to have. This principle is just as important

in systems under which employer/employee relations and terms of

employment are regulated by collective agreement as it is where

arbitration is resorted to. :

The proposition is often advanced that the use of strikes and

lockouts is ruled out under the Australian arbitration system if not

by the legislation itself at least by the spirit of it. The Aust­

ralian system certainly aims to prevent direct action in industrial

disputes by providing a conciliation and arbitration machinery, but

the sanctions provisions of the Act do not, in themselves, spring from

the proposition that direct action must not be resorted to in the

event of industrial disputes. Sanctions provisions have nothing to

do with the method of settling disputes: they are designed to ensure

that awards created by the tribunals set up under the Act are capable

of being upheld at law.

While the Government believes that sanctions are an essential

part of the conciliation and arbitration system it sees the sanction

process as being one of last resort. It considers that every reason­

able effort should be made to solve disputes between management and

labour by the process of negotiation, conciliation, and, where

necessary, arbitration and only when reasonable efforts have failed

should recourse be had to sanctions.· It was with this objective in

mind that the Government last year amended the sanctions provisions

of the Act, Previously sections 109 and 111 of the Act dealt with

industrial stoppages on the basis of the Commonwealth Industrial

Court's injunction-making power and its power to punish for contempt.

The Act now deals with an industrial stoppage as a breach of an

award but before prosecution may proceed it is necessary for the

parties to have taken advantage of the conciliation or if necessary

the arbitration of a presidential member of the Commission.