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Speech at the third national convention of the industrial relations society of Australia



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SPEECH BY THE MINISTER FOR EMPLOYMENT AND INDUSTRIAL RELATIONS,

THF HON TONY STRFFT. AT THE THIRD NATIONAL CONVENTION OF THE

INDHSTRiAl RFIATTONS SOCIETY OF AUSTRAI TA - SATURDAY 2 SEPTEMBER 1978

THIRD NATIONAL CONVENTION OF THE INDUSTRIAL RELATIONS

SOCIETY OF AUSTRALIA -SATURDAY 2 SEPTEMBER 1978

AFTER 75 YEARS - WHAT NOW?

Every nation has measures of one form or another to regulate in d u s tria l

re la tio n s . Usually these measures have evolved from a combination o f

h is to ric a l and c u ltu ra l factors so that a regulatory framework is established

which is ta ilo re d to the needs o f the in d iv id u a l, in d u s tria l organisations

and the nation. The nature of th is regulation varies a great deal

between countries. However, there are two overall objectives which each

country trie s to meet through it s arrangements fo r the conduct o f

in d u s tria l re la tio n s . The f i r s t is the p u rsu it of equity or ju s tic e and

the second is achieving a.maximum degree o f in d u s tria l s ta b ility .

As in other countries, the Australian in d u s tria l re la tio n s system is a

product o f many factors - h is to ric , c o n s titu io n a l, economic, social and

p o litic a l forces have a ll combined to give us what we have today.

UUnder the C o n stitu tio n, the Federal Parliament was vested w ith the

power to make laws fo r the prevention and settlement o f in te rs ta te

in d u s tria l disputes by means o f c o n c ilia tio n and a rb itra tio n . This

development can be seen as a reaction to the economic d islo catio n and

social distress which were features of the in d u s tria l scene o f the e a rly .

1890s. In a general sense, the development can be seen in terms of, the

need to more closely balance the bargaining positions o f the two major

p a rtie s by encouraging a more highly unionised workforce and providing a

sta tu to ry a lte rn a tiv e to the s trik e weapon as a means o f pursuing improved

wages and conditions. . .

Today, the ch ie f objects of the Act include :

. to promote goodwill in industry; . .

. to encourage the organiation o f representative .

bodies o f employers and employees and th e ir v

re g is tra tio n ; and

. to encourage the democtractic control o f organisations

registered and the f u ll p a rtic ip a tio n by members o f

such an organisation in the a ffa irs o f the organisation.

Perhaps the fundamental basis o f the system's o rig in s is best summed up in the often quoted words of Mr Justice Higgins, th a t eminent Judge of

the Commonwealth Court o f C o n cilia tio n and A rb itra tio n

years when ha said :

. "The process of c o n c ilia tio n w ith a rb itra tio n

in the background, is substituted fo r the

rude and barbarous processes o f s trik e and

lockout. Reason is to displace force; the

might o f the State is to enforce peace between

in d u s tria l combatants; and a ll in the in te re s t

of the p u b lic ." ·

2.

in those e arly

Bearing in mind at a ll times tha t A ustra lia has a Federal system of

Government, and th a t the A ustralian in d u s tria l re la tio n s system contains

a number o f in d u s tria l trib u n a ls - both Federal and State - we are able,

to consider, b r ie fly , the d ire c tio n and strength of. the influences there .

have been on the system.

Under the Federal system the A ustralian C o n cilia tio n and A rb itra tio n

Commission has strong claims to description as the predominant in d u s tria l

trib u n a l in A u stra lia . Where State laws or awards c o n flic t w ith Federal

awards, the la tte r p re v a il. ,

An ABS Survey in 1974 estimated th a t 39.2% of A ustralian employees were

covered by awards o f Federal Tribunals, compared w ith 47.8% covered by

awards o f State Tribunals. However, the real measure o f the influence

o f the Federal Commission lie s in the fa c t th a t, by e ith e r le g is la tio n

or custom, decisions o f the Commission have flowed in to State areas.

This has tr a d itio n a lly been the case w ith national wage judgments, as

they are based on grounds predominantly related to the national economy.

Further, the creation and development o f the federal in d u s tria l ju ris id c tio n

provided encouragement fo r in d u s tria l p a rtie s , p a rtic u la rly unions, to

organise on a national basis. .

In keeping w ith social a ttitu d e s in the A ustralian community, the

in s titu tio n a l approach to in d u s tria l re la tio n s l.ed to the development o f

an "e g a lita ria n " wages and conditions stru ctu re , w ith heavy emphasis on

a comparison o f lik e w ith lik e in the formal award structure and a

d is tin c t preference fo r the d is trib u tio n o f p ro d u c tiv ity gains on a

n a tio n a l, rather than a sectional basis.

The concept o f general wage review based on the a rb itra tio n o f claims

on grounds predominantly related to the national economy was an e arly

development through the Commonwealth Government's "basic wage" approach

and has continued in the form o f national wage cases. At the same time

·' ·â– : ■.=»

3.

th a t i t was decided to adopt a to ta l wage approach in the federal

ju ris d ic tio n , a mininum wage was introduced as a protection fo r low wage

earners. When introduced, th is provision had application to adult

males, but in 1974 the Commission awarded the same minimum wage to adult '

males and females.

Through the years then, a rb itra l decisions which, by convention and

consensus, have general a p p lica tio n , have played an important ro le in

wage determination in A u stra lia . The concept of a National Wage Case

represents an e g a lita ria n approach to wage determination. There is ■

general agreement amongst unions, employers and government th a t National

Wage Cases should continue to be at the core of wage fix a tio n . S ig n ific a n t

disagreement e x is ts , however, as to what are the appropriate c r ite r ia

fo r assessing the level o f general wage adjustment and what should be

the nature and extent o f "ru le s" and "guidelines" surrounding a system

based on regular, national wage review. · *· ■ .

Over the years, the in s titu tio n a l system in A ustralia has not been

without it s c r itic s . The system is by no means perfect - no system

designed to regulate such a complex set of in te r-re la te d facto rs can

claim perfection - but i t has been generally e ffe c tiv e in dealing w ith

the needs o f the p arties. .

I t has often been suggested tha t the available recourse to compulsory

a rb itra tio n , should p rio r agreement not be reached, s ig n ific a n tly

overshadows the c o n c ilia tio n process o f dispute settlement. Where, i t

is argued, is the encouragement to give ground in an attempt to secure

agreement at the c o n c ilia tio n stage when such a concession may prejudice

the outcome o f any eventual a rb itra tio n ? Why waste time w ith prelim inaries?

L e t's get rig h t down to the a rb itra tio n .

The answer lie s not so much in divorcing the two processes, in a formal

or le g is la tiv e sense, but more in an understanding by both sides and the

c o n c ilia to r o f the need to explore the various a lte rn a tive s th a t may be

able to produce agreement fo r settlement o f the dispute.

Another aspect o f th is argument involves the co m p a tib ility of c o lle c tiv e

bargaining w ith a system which provides fo r compulsory a rb itra tio n . A :

process o f c o lle c tiv e bargaining involves resolution o f c o n flic t by

negotiations between unions and employers and involves no inconsistency.

w ith the c o n c ilia tio n processes of the Act. However, i t is a fa c t o f

l i f e th a t bargains made in one area can and do influence wages and ·

conditions in other areas. : .

■V' * -- y *. xS-c*. V

I

: ■;: · ;■ :

. 4. X

Moreover, the c o lle c tiv e bargaining process can often involve the open

ended use o f in d u s tria l action in p ursuit of claims. In d u stria l re la tio n s

must involve not only the parties concerned, but wider considerations o f

the community. C o lle ctive bargaining can only be f u lly e ffe c tiv e as a

method o f dealing with in d u s tria l disagreement i f a ll the parties d ire c tly

involved are prepared to accept th a t the public in te re s t is a most

important fa c to r.

In A u s tra lia , wages can be adjusted in one o f two ways - by decisions of

in d u s tria l trib u n a ls or by agreement between the p arties. I t is the

in te r-a c tio n o f these two processes which has l^d to problems o f wage

determination and v/age bargains made in one area being extended to other

areas which lack the capacity to affo rd them.

When a bargain between two parties becomes, a springboard fo r demands in

other areas - often completely unrelated - and these demands are met

through the application o f a loose form o f comparative wage ju s tic e ,

then quite damaging economic and in d u s tria l re su lts can fo llo w .

The concept o f comparative wage ju s tic e is e sse n tia lly a product o f the

in s titu tio n a l framework o f wage fix a tio n in A ustra lia . In the e arly to

mid 1970s, the concept operated with considerable force, re su ltin g in

wage increases won in major in d ustrie s being extended fu rth e r and fa ste r

than ever before.

The present wage fix a tio n system severely re s tric ts the application o f

comparative v/age ju s tic e and I would hope tha t the system introduced as

a re s u lt o f the Commission's wage fix a tio n in q u iry continues th a t re s tric tio n .

A centralised system o f wage fix a tio n - a type such as has been in

operation over the la s t three years - provides protection fo r the weaker

sections o f the workforce which may have lacked the power to b en e fit

from extensive c o lle c tiv e bargaining which had prevailed before.

P arties to in d u s tria l re la tio n s in clu ding , I think i t is f a ir to say,

union peak councils, have recognised the damage th a t can be done by

c o lle c tiv e bargaining without re s p o n s ib ility . . .

Has c o n c ilia tio n and a rb itra tio n worn well', or is i t we'll worn? I th in k v

most c e rta in ly the former, but there are s t i l l more challenges and

issues, th a t the system must face.

The most s ig n ific a n t event in your sphere of in te re s t th is year w ill

almost c e rta in ly be the decision o f the Commission in the Wage Fixation

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In q u iry. This w ill set the pattern fo r wage fix a tio n in the immediate

fu tu re .

I shouldn't think there would be anyone here who envies the Commission

it s task or who would suggest tha t it s task is easy. I t is not. The

Commission has been presented with some va stly d iffe re n t a lterna tive s as

to the appropriate course fo r wage fix a tio n in the futu re . There are

many differences, including one fundamental issue which has been a

continuing source o f debate over the years. That is , the Commission's

ro le in reconciling it s in d u s tria l re la tio n s re sp o n sib litie s in national

wage cases with the requirement to have regard fo r the lik e ly e ffe cts o f

it s decision on the.national economy. .

I t is· true th a t the two considerations - in d u s tria l and economic -

cannot be e n tire ly separated; there is obviously a degree o f in te ra ctio n

between them. I t is also tru e , though, th a t each consideration may lead

to c o n flic tin g re s u lts . As the Commission noted in one of it s q ua rte rly

. decisions: "Economic chaos is predicted i f we grant the claim, in d u s tria l

chaos is predicted i f we do n o t." . .

I f the two considerations are seen to be in c o n flic t then they must be

assessed and balanced to produce the best possible outcome fo r the

community. .

I believe th a t when the Commission is s ittin g in a National Wage Case,

there is a great awareness in the community th a t the re s u lt can have

s ig n ific a n t im plications fo r the national economy. As the p u b lic 's

representative, the Government has been arguing tha t greater weight

should be placed on the economic consequences of general wage adjustment.

The present economic environment is quite d iffe re n t from the general

post-war experience. In the 50‘ s and 60's in d u s tria l re la tio n s and wage

determination took place in a period of f u ll employment. Today, in the

wake o f the very high wage settlements of 1974 and 1975, and the very

high in fla tio n rates o f the recent past, we have a new problem to

face - an unacceptably high level o f unemployment. I t 'is a problem

which must be faced and it s solution requires a co ntribu tio n from a ll

sections of the community. ■'·

Those who might say tha t greater emphasis in National Wage Cases on

economic factors goes against the Commission's primary function to

prevent and s e ttle disputes must, in my view, reassess th e ir thinking

and accept th a t wages have a v ita l role to play in overall economic

recovery. Wage decisions can be achieved which are consistent w ith

economic, needs and are in keeping with the Commission's in d u s tria l

re la tio n 's re s p o n s ib ilitie s .

The Government has argued before the wage fix a tio n in q u iry fo r the

adoption o f a 'capacity to pay' concept as a prime consideration in

national wage fix a tio n . 'Capacity to pay' relates to that level o f

general wage increase th a t the economy can sustain without general

adverse e ffe c t on in fla tio n , p r o f it ia b ilit y and employment. A wage

increase in excess o f capacity to pay re su lts in price in s ta b ility ,

d istorte d fa c to r shares and higher unemployment. Capacity to pay also

means consideration must be given to adverse consequences fo r future

economic growth o f se ttin g wages at a level which maintains e xistin g

imbalances in an economy instead of re c tify in g them.

The major ground on which those who oppose the importance o f capacity to

pay as a va lid approach in wage fix a tio n is it s d if f ic u lt y to be assessed

in 'hard' quantative terms. ;

I t must always be a matter o f judgment; a matter th a t can only be determined

by c a re fu lly applying experience and knowledge to the best available *.

factual inform ation on a broad range o f economic in d icato rs. To suggest

th a t the crucial importance o f the economy's capacity to a ffo rd wage

increases should be diminished, or even disregarded, because i t is a ‘

matter fo r s k ille d judgment rather than fo r hard and fa s t ca lcu latio n by

some pre-determined formula, is to close one's mind to the economic

problems we face. .

I t is in the nature o f a system which embodies a rb itra tio n as the fin a l

settlement machinery tha t claims made w ill not always be met in f u l l .

I t would be u n re a lis tic to in te rp re t the function o f prevention and

settlement o f disputes as a need to grant a level o f payment th a t w ill

ensure no fu rth e r demands or in d u s tria l action. Settlement o f a dispute

cannot always mean f u l l or sustained concession o f claims.

The p rin cip a l consideration o f a rb itra tio n should not be the a c c e p ta b ility

o f the outcome to the party involved w ith the most strength. To assume

that unless the a rb itra te d decision meets the demands which led to the

dispute are met, ignores the question as to whether the demands were

reasonably or r e a lis tic a lly held in the. f i r s t place. . .

Aside from "the broader issues.of. wage determination, there are other

matters o f importance which we must think about in the fu tu re .

7.

,. . . . I

One important, and to p ic a l, issue is tha t of technological change and

it s impact on the workforce. I t is not a new issue - in recent years

the w aterfront has been an area of quite s ig n ific a n t change - but i t is

one which we w ill see amd hear more of in the fu tu re , and i t is one we

a ll must approach w ith an awareness fo r it s social impact, as well as

w ith an appreciation fo r the need fo r progress.

Another issue is the nature and extent of penalty payments. The Government

continues to hear of instances where the additional money paid fo r work

outside the normal spread of hours, where th a t work is part and parcel

o f the business, is adversely a ffe ctin g the industry concerned. I t may

be necessary to look again at the structure o f the awards concerned in

th is lig h t. C ertainly fu rth e r examination is warranted.

The question of union amalgamation is a matter long overlooked. Organisational

structures cannot be s ta tic when the environment in which they work is .

in constant change. The ACTU has presented a paper to the National

Labour Consultative Council on union amalgamation and a committee o f the

NLCC has th is under consideration. ■

The Federal Government is concerned with the question o f an employee's

in d ivid u a l rig h ts to choose whether or not to jo in a union. While

acknowledging the benefits o f union membership, th is must remain a

matter o f free choice so that union membership is not an absolute condition

o f employment.

On another p o in t, dispute settlement procedures ought to fin d th e ir way

in to more awards and these should be honoured. Such procedures provide

a means o f resolving on-the-job problems with fa r less re so rt to d ire c t

in d u s tria l action. I t should be our purpose to fin d other a lte rn a tive s.

The in d u s tria l re la tio n s system in A ustralia has evolved from the recognition

in the community th a t i t should be conducted responsibly w ith regard to

the in te re sts o f the whole community. ·

The system has been developed to preserve th a t aim. It;s ro le has been .

expanded to cope w ith the growing complexities o f our society and to

protect in d ivid ua ls from the pressures created by the pursuit o f sectional

in te re s ts . . .

As th is nation has developed, liv in g standards have improved. This has

not always been a smooth process. In d u stria l pressure has often been

substituted fo r reason; short term gain has sometimes been preferred to

la s tin g development. At such times, the system has been subjected to

intense pressure, but i t has survived.

We a ll must attempt to fin d a way through the in d u s tria l and economic

problems th a t confront us. .

I believe th a t Australians want th e ir in d u s tria l re la tio n s system to be

responsible, equitable and to protect individual rig h ts . The Government^

working w ith the other parties in in d u s tria l re la tio n s , must ensure th a t

the system re fle c ts these goals.