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IBC Conference's Waterfront and Shipping Reform Congress, Novotel, Darling Harbour, Sydney, 18 February 1998: transcript of address.


...(Inaudible)...momentous reform. One of the things that strikes me when I think of the waterfront reform process in the UK is that, Margaret Thatcher was elected in 1979, it was actually a decade later, in 1989, before the breakthrough was achieved and significant benefits were able then to flow through to the UK economy as a result of those reforms. An interesting contrast of the speed of reform that has taken place in Australia, by comparison.

Ladies and gentlemen, a year ago I gave an address to a similar conference with similar a theme, the ' Need for Reform on the Australian Waterfront and Maritime Industries'. Not surprisingly since then some things have changed and some things regrettably have remained the same. I said then that Australia's waterfront has an entrenched and well deserved reputation for unreliability, inefficiencies and poor productivity. I said then that the Government wants a waterfront that is efficient and reliable compared with the best of similar ports around the world and that the Government wanted to see spirited and real competition amongst stevedoring companies.

These basic objectives have certainly not changed, and over recent weeks we have seen the arrival of PC Stevedores at Webb Dock in Melbourne and the beginnings of true competition with all the attendant benefits that will flow to the Australian economy from that.

Their arrival has been widely applauded in most quarters, and the Government is heartened by the very clear indications of wide spread public support for real reform of the Australian waterfront.

Let me place on record my appreciation of the efforts by the farmers, to undertake this major challenge. There can be no question that they have a bonafide interest in waterfront reform.

The Union movement would have you believe that this is a matter of no interest whatsoever to the farming community, but that's an interesting remark when you remember it was the ACTU that established Bourkes Stores, or came to a deal with Bourkes, with their principal objective being to break the practice of retail price maintenance for the benefit that that would accrue for their membership. A course of action that no-one challenged because they were entitled to pursue a commercial interest in the benefit of their membership.

I particularly congratulate those associated with the initiative, with Don McGauchie as President of the NFF, who I think has provided real leadership and those who are with him, James Ferguson and of course Paul Houlihan, who brings such a wealth of experience to the old trade unionist sitting in the back row there, bring such a wealth of experience of the practical matters at hand which I think gives this venture the real chance of success which it obviously has.

I also want to pay some tribute to Chris Corrigan, who is the first of the major stevedores that we've seen in Australia who is prepared to stand up and say, that which the public have long known, and that is enough is enough. And he has certainly come in for the barrage of criticism you'd expect any employer who had the guts to do that and to participate and to contribute to that which needs to be done.

And there is no doubt whatsoever, that he has played his cards close to his chest, at various times and quite frankly who can blame him. And I'd have to say that goes to his dealings with the MUA as much as it does with his dealings with the Government. And again, I would have to say if you look at the history of Government activity in this area who can blame him for wanting to play his cards close to his chest. This is no easy venture.

He is a person who, however, does have a track record of being prepared to challenge entrenched, privileged interest and he did so, in that profession for which he is perhaps better known until more recent times and that is in the financial sector, where he took on the practice of fixed commission rates for stockbrokers and broke an entrenched privileged position.

I think that history will treat Chris Corrigan very well, because he is the first to stand up and provide some real leadership on an issue that has long needed some real initiative and the real reforms which this set of circumstances obviously is about to bring about.

The reason for wide public support I think is very clear, there have been many new entrants onto the waterfront over recent years, but they haven't generated real competition, because I think as we all know, all those prior entrants in one way or another have basically had to do a deal with the devil, with the MUA before they were allowed to commence business.

They struck deals with the MUA which has seen the continuation of a culture and work practices that have no place in a modern, export oriented society. A society which if it is going to maintain and improve its standard of living must have a competitive waterfront.

While new stevedores have entered the industry they have not been competing in the true sense because they have had to deal with a situation of a monopoly supply of labour.

The MUA effectively dictates the terms and conditions under which a new operator can start. For this point on the work practices and culture that so be- devil our waterfront are passed onto any new operation. And that is why the MUA is so determined to prevent PC Stevedores from getting a foothold in the Australian stevedoring industry. It would upset the cosy arrangements that have existed on our waterfront to the detriment of all Australians.

Let me just read to you some of the objectives of the MUA outlined in their union rules and you will see why they are determined to see off the farmers.

Object 4(a) reads in part:

To regulate and protect the wages and conditions under which all members or other persons entitled to become members of the union may be employed.

To control the supply of labour.

To regulate relations between the members and their employers and between the members and other employees in or in connection with the industries of the union and to foster the best interests of members of the union.

Section 4(c) reads:

To secure preference of employment for members.

This is nothing but a manifesto to run the Australian waterfront and don't kid yourselves for all intents and purposes the MUA does run the Australian waterfront because it has managed to control the supply of labour. It's only interested in one thing and that is preserving a system that operates to enrich a handful of union elites at the cost of all Australians.

The farmers believe that they can change the culture of the waterfront by introducing real competition, being better able to manage their own work force rather than have the MUA manage it for them. The current practices that occur on Webb Dock would be anathema to any business outside stevedoring in Australia.

Managers on the dock cannot suspend employees for disciplinary reasons, they cannot talk to an employee unless a union representative is present, all security and labour allocation staff are members of the union. In fact, the MUA does not allow management to allocate the best person in the right job, nor will the MUA allow regular individual performance appraisals to improve productivity.

Which is as most of you would appreciate, standard practice in those firms which genuinely work with their workforce to improve the benefits and conditions for both their employees and thus to the benefit of the business.

It is because of this prescriptive approach and the MUA entrenched monopoly that Australian ports have a deserved reputation for being amongst the most inefficient in the world. I've said it before, but the message must be rammed home. With a five port average crane rate of just 18.3 Australia cannot effectively compete with its competitors. Our chronically poor rates effectively put a tax on every cargo movement across the docks, a tax that is paid for out of the hip pockets of every Australian. It is also a tax on our ability to trade and to strengthen our economy.

An editorial in the Far Eastern Economic Review, of the 19th of February 1998, underscores the urgent need for reform of our docks if we are to compete in Asian markets particularly in light of the current problems facing the region. After a scathing review of the situation in our ports the editorial concluded and I quote:

"In the past few years Australian officials have been fond of talking about joining Asia. It is becoming more clear that this might first depend on them having their dock workers becoming part of the 20th Century."

That is why I welcome the move by PCS. If they can reduce the price of a container movement by up to half and provide a reliable service, Australia will be able to secure more exports and more jobs.

In Melbourne where approximately a million containers are moved annually, savings could be between 50 and 100 million dollars annually. In a modern global economy, every dollar counts. That margin in winning and maintaining a contract these days can be slim, just a percentage or two. Australia cannot afford to continue to have inefficient work practices.

It seems that the MUA will go to any lengths, to any lengths, to preserve their rorts and prevent any real competition on the Australian waterfront. The Workplace Relations Act specifically spells out when legal industrial action may take place. If illegal industrial action does take place, employers have several remedies. The most recognised and perhaps the most used in recent times and since it was introduced on the 1st of January in the Workplace Relations Act last year, is a section 127 order which can require employees to return to work. Patrick have successfully used this section to ensure that workers returned at Webb Dock.

On Monday the MUA decided to take action which they thought could circumvent the law be getting workers at East Swanson Dock to take industrial action for 48 hours, on the pretext of a political strike against the Workplace Relations Act.

Political strikes cannot be authorised industrial action, and that is made quite clear by the Full Bench test case decision on section 127 know as the Coal and Allied case. Industrial action can be taken to obtain an agreement on employee terms and conditions, but not simply because the MUA is opposed to a Federal Law.

This outrageous outburst from Mr Coombs, saying in effect that the MUA when they can't take legal action will take illegal action, emphasised the fact that he is a man under significant industrial pressure. And that should not be a surprise given the revelations of last week that he was prepared to a deal and offered a deal to Mr Corrigan to sell out his own members on the condition that Mr Corrigan somehow break a lease with the NFF and thereby see the farmers off the wharf.

A desperate act by a desperate man prepared to sacrifice the jobs of his own members paying subscriptions to pay Mr Coombs' salary, he was prepared to sacrifice their jobs for his own.

This brazen promise to break the law is not accessible and never will be. We will not tolerate illegality for whatever reason, least of all to prop up a privileged position. The law is there for everybody to abide by and not just when they feel it suits their own narrow purposes.

So where does that leave the MUA?

Object 4(i) of their rules is:

To promote the interchange of membership between the union and other maritime unions throughout the world.

Now that brings me to one course of action that MUA believes maybe open to it and that of course is the International Transport Workers' Federation. The bellicose rhetoric of the ITWF belies its real ability to thwart change on the Australian waterfront and I was therefore very interested to hear Mr Finney's anecdote of the ITWF's claim to blackban a ship which never actually arrived in the port to which the ban was directed, as achieving some industrial pressure on the employer. Kees Marges would have you believe that the ITWF is an all powerful almost omnipotent force, it is not. Let me put the power of the ITWF into perspective, I have some anecdotes of my own.

He said that any ship loaded with non-union labour in Australia would be declared black, that it would sail around the world never to be unloaded, a sorry sight indeed. That it would have more value if it were to be junked.

Well the facts are somewhere different to what he would have you believe. In New Zealand for example, ships are regularly loaded using both union and non-union or a combination of union and non-union labour. Yet they sail and dock unhindered despite threats by the ITWF.

The ITWF threatened action over the Liverpool Dock's dispute. Whilst the dispute has been long running, it ended a few short weeks ago. It has not been a win for the ITWF.

Successful legal action has also been taken against the ITWF in the Merkur Island Shipping Corporation against Laughton Case, Merkur won damages against the ITWF when tugmen boycotted a Merkur ship over a dispute re terms and conditions. The court found for Merkur on the basis that the ITWF prevented the performance of a contract.

In another case, Universal Tank Ships of Monrovia against the ITWF, Universal successfully won on appeal, a case to recover monies it was forced to pay into the ITWF's welfare fund which the company had to pay when tugs were blacked to allow their vessel to sail.

In May 1997 in the face of an intensified boycott campaign over flags of convenience ships, the ISF, the International Shipping Federation accused the ITWF of "bowing to pressure from a small minority to keep the organisation in a time warp" and of attempting to flex industrial muscle.

The ISF stated in advance that is was campaign that was likely to prove ineffectual and they were right.

The ITWF claim to have taken action over a record 300 ships, but the ISF said cases of alleged boycotts which were investigated turned out to be minor delays of usually one hour.

This is just a sample of the information and the anecdotes available to the Government attesting to the lack of power of the ITWF. It is not the powerful body they claim to be. They are not able to hold a democracy like Australia to ransom at the behest of the MUA just because it doesn't like the federal laws of our democracy.

Let me say, however, at the same time, the Australian Government does not appreciate the threats from the ITWF issued from London.

We have assembled a team of top flight legal experts to advise us on legal remedies, should the ITWF be tempted to play its hand.

Whilst not wanting to flag our intention in advance, it should be noted that the ACCC has written to the MUA after the Cairns dispute pointing out that the actions taken by the MUA may well have been illegal.

It is something the ITWF would be wise to bear in mind.

Ladies and Gentlemen, let me just put this dispute into some sort of perspective. The Government is not intent on destroying the MUA or the union movement. What we are seeking is a long lasting and ever improving performance on our waterfront.

The MUA would have you believe differently, by alleging a conspiracy, by alleging that it's a union busting exercise, by alleging anything that will divert attention from the real issue at stake here, which is of course, improved productivity on the waterfront and the abolition of the closed shop.

In fact, what's at stake here is also that basic human right to enter a union, the right to join a union or not to join a union.

And that's why we've heard so much sabre rattling from the MUA and the ITWF. Both organisations are intent on diverting attention from the real issue of productivity.

Of course, part of the argument that's going on is about the rorts, the excessive rates of pay for little work and so on. But these issues are fundamental to the reform program.

Unless these issues are tackled then the way forward will be forever stymied as they preserve the culture that does prevent reform.

Now, that brings me to another point, the embarrassed silence by the ALP on this matter. The ALP would have you believe that they reformed the waterfront through the WIRA process and that substantive gains were made.

Well certainly container rates did rise from a lousy crane rate of around 13 to a very poor 18 now. But this was achieved at a very great cost, some $420 million in redundancy payments, which halved the workforce but without producing the sort of ongoing reform that our ports so need.

Yesterday Lindsay Tanner was arguing to you that the National Transport Planning Taskforce should be reestablished, that productivity targets should be negotiated and that there should be productivity bonuses. Apparently, to be paid on top of the roughly $80,000 or so being demanded by the MUA.

The Government has spent endless hours negotiating with the MUA over productivity, yet the union steadfastly refuses to agree to publicly stated benchmarks.

At our last meeting with the MUA the union walked out of the talks. When I say to John Coombs, John why can't we do as well as New Zealand, he says 'you're being provocative.' When I say, John why can't we have a benchmark about industrial actions given the fact that the level of industrial action in Australia by the waterside workers is something like 10 times the national average, and he says, 'you are being provocative.'

And, when I say to him that, we think that the 'nickoff' is a totally unacceptable practice, he likes to say, because I've actually heard both stories from him, 'you're being provocative' or alternatively, 'this no longer happens.' Although he hasn't run this line since 60 Minutes showed it to be true last year.

But when I say to him that there ought to be benchmarks, he ultimately says, well that is nothing to do with you.

The reality is we ought to have some benchmarks. The ones that he finds difficult to deal with but even here he is ultimately unable to sit down and talk about is the need to have some benchmarks about safety performance. Because one of the concerns that we have in this whole dispute, productivity and efficiency and reliability obviously are high on our list. But it also ought to be a matter of common interest and concern, that the safety record on the Australian waterfront is a long way from what it ought to be.

And we know from the experience of many industries that better employee relations leads to a better safety record and surely even John Coombs, despite the ideology, the rhetoric and the dislike of a conservative government, surely despite all those things, he could see the benefit ultimately during accruing to his members by an improvement.

The facts are very clear. In his address to you yesterday, Lindsay Tanner said that Australian ports are small, that they are not terminal ports, implying that comparisons were unfair.

Well, that is something I would agree with him on. That is very true. It is unfair to compare Australian ports with ports such as Singapore and Hong Kong. That's why we don't. Mr Tanner is basically an apologist, however, for the MUA because it is possible to make some comparisons sure. You've got to make sure that you're comparing apples with apples and where nearly every factor is always going to be exactly the same.

But there are comparisons, comparisons which on any criteria are very unsatisfactory about Australia's performance.

By simply looking at percentage increases, I suppose you could make any performance look good and he has some of those which he puts. But in the end, by any reasonable measure, Australia's performance is not good.

In similar ports around the world, crane rates are continuing to improve at a pace that outstrips Australia's ability to compete. Despite the injection of hundreds of millions of dollars in new capital equipment, our ports still cannot compete with places with Laem Chabang in Thailand for example, where I personally witnessed crane rates of 30 moves an hour and where the equipment used is not much different to Australia.

Mr Tanner and the Labor Party would have you believe the only way forward is through another WIRA type programme. Three years of negotiations for little return at very great cost. But Bob McMullan, the Labor spokesman for Industrial Relations Minister said only yesterday on 3LO:

"there are management problems and labour problems on the waterfront and a slow process of improvement was under way."

I've already pointed out the management problems. Basically, management cannot manage and we all know of the labour problems documented daily.

And he's right that a slow process of reform was under way, but, it stalled years ago, because of the MUA's reluctance to embrace change.

In fact, it is interesting to note that Mr McMullan is in conflict with his leader Kim Beazley over the pace of reform under Labor.

Earlier this month, Mr Beazley commenting on the pace of reform under Labor said, and I quote:

"we had magnificent productivity increases."

That fact of the matter is that the pace of reform cannot be slow, it must be dynamic so that it can adapt to the changing circumstances of trade. It is only by adapting to change that jobs will be maintained and created, not just on the waterfront but throughout the whole economy.

The Labor Party is in a bind over the waterfront. At their recent conference in Hobart, they passed a resolution calling for new stevedoring entrants.

But faced with the arrival of a new entrant, that is not sanctioned by the MUA, they will not endorse it as they know they should.

Nor will Kim Beazley support the removal of a closed shop on the waterfront. On the ABC's AM programme on 3 February he was asked three times if he supported the use of non-union labour on the waterfront and three times he skirted the issue for fear of upsetting the MUA.

Kim Beazley knows he's shackled hand and foot to the MUA who are vehemently opposed to the end of the closed shop, and on the other to Cheryl Kernot, who voted for the laws which are making these necessary changes possible.

The Cheryl Kernot Clauses I call them.

The Labor Party knows that PCS should have the right to operate unhindered by the MUA. They should be able to operate just as any other business does throughout Australia.

In fact there are some in the Labor Party who know that the MUA's position is intolerable and are quietly enjoying the moment.

Their silence perhaps reflects their real view. Many people in the Labor party are saying privately we can't be seen to be defending the indefensible. And when you think of the trouble that the MUA gave to the last Labor Government it might give you a clue about who thinks what within the Labor Party about the MUA.

Their problem is that it is hard for them to say so publicly because they are tied to the MUA.

Bob McMullan almost let slip yesterday, what the private view from within the Labor Party is when he was asked by John Faine on 3LO:

Faine: You've been very quiet on the wharfies battle, if you don't mond me saying so. Do you unequivocally support the stance taken by the ACTU?

McMullan: Well, it's not a question of unequivocal support.

Oh no, what is it then I ask?

The fact is that the Labor Party, Kim Beazley and Bob McMullan among many others know what's right but they are beholden to the union movement and will not speak out.

They've had their Cabinet meetings where they've even talked about troops on the wharves, would you believe? Keating behind closed doors, never to their face, but behind closed doors, called the wharfies, bludgers, but in 13 years was never prepared to stand up and see real reform. It is time that they provided some real leadership and spoke up on this issue.

They should support their own resolution. It's only a few weeks old, they should support their own resolution from Hobart to allow new entrants and condemn the closed shop of the MUA and support the right of people to be in a union or not to be in a union.

Ladies and gentlemen, all that the Government is asking for on the waterfront is to allow companies to establish operations that are not run by the MUA, to set a reasonable crane rate of 25 as a benchmark for improvement, and to see jobs created on the waterfront and throughout the economy as a result.

It is not too much to ask for in today's environment. It is something that the rest of society faces on a daily basis. The waterfront should be no exception.

Before concluding I would like to talk about what's been achieved by this Government over the past year in other areas of interest to you, the maritime industry.

The Government is well underway with the sale process for ANL. We have appointed business and legal advisers to facilitate the sale in conjunction with the Office of Asset Sales.

We advertised for registration of interest. Information is currently being made available to interested parties.

Unlike the Labor Party I can assure you that the sale will go ahead and the Australian public will not be held to ransom with a national shutdown of our ports by the MUA as occurred in 1995 when the ANL sale to PO was aborted by the union.

ANL having undergone a major restructure, now represents an attractive proposition. Particularly, for a dedicated shipping operator who could benefit from the synergies and economies of scale it offers.

We have also moved to abolish the pooled labour system for the maritime industry. Pooled labour is an outdated mode of employment for any industry. There is no justification for it. The Government will not tolerate it. On 18 December last year, I wrote to the Australian Maritime Safety Authority, instructing them to withdraw from the administration of the Seaman's Engagement System by the 1st March 1998.

I also instructed my Department to commence the process of denouncing ILO Convention 9 which underpins the SES and it is underway.

Abolition of the SES will allow shipping companies to adopt normal company employment arrangements that will give them the flexibility to compete more effectively.

Last week at a meeting convened by the Government, I reaffirmed to shipping industry employers that there would be no possible consideration of fiscal measures for their industry as recommended by the Shipping Reform Group until full company employment has been introduced.

I also pointed out that any move towards company employment would have to be consistent with their legal obligations including the Trade Practices Act. I was pleased to hear from the employers during their meeting that they've been negotiating with the MUA on these issues. However it does seem that John Coombs as of yesterday is going to try and scuttle this move to company employment by taking out an injunction against AMSA to prevent their removal of administrative support for that scheme.

The Government is absolutely determined. We are opposed to the SES. We are opposed to pooled labour arrangements and I look forward to Mr Coombs' further moves which only demonstrate again that he will do anything to protect a monopoly position for the MUA.

The Government will not therefore resile from its position and we will urge and continue to urge the employers to stand resolute against any move by the MUA to protect it's position.

Last year, I also indicated to the industry, both maritime and stevedoring that the Government, consistent with practices adopted by previous administrations would establish a framework to facilitate redundancy payments for the industry, but at no cost to the taxpayer.

The Government stands by this commitment.

We have acted to remove cabotage for the Christmas Island trade. This move will help to create jobs and open markets for Christmas Island Phosphates.

The change will remove an anomaly whereby Christmas Island was the only Commonwealth Island Territory where shipping services were still subject to cabotage.

Similarly the cruise liner industry has been exempted. The tourism industry believes that move will generate up to $10 million annually in the tourism industry and create hundreds of jobs. This will abolish the requirement for cruise liners having to apply for Single Voyage Permits. We believe that the removal of SVPs for passenger travel is an incentive for innovative for small business operators to develop new passenger services in niche markets.

Another significant change has been the streamlining of the SVP and CVP system to generate greater flexibility in the interstate coastal trade.

The changes are aimed directly at the users of shipping services in the $1 million plus coastal trade and reflect the Government's desire to reduce costs for businesses and consumers.

SVPs are being issued more quickly due to the removal of the requirement that the Maritime Union and the Australian Shipowners Association be given 24 hours notice prior to the granting of a permit.

As well, the cost of an SVP will be halved from $403 per permit to $200, saving shippers some $160,000 annually.

These reduced costs will particularly benefit small shippers as the penalties for carrying small volumes of cargo will be reduced.

CVPs will now also be easier to obtain due to the removal of restrictions that they be used only when it's in the long term interests of the shipping industry.

The fees for CVPs have been cut from $2,000 to $400.

The Government is determined to see a process of continuing reform on the waterfront and in the maritime industry.

What we've set in place is only part of the reforms that will be undertaken by this Coalition Government, not just in these vital industries, but across the whole of the economy.

The changes we are effecting should not be seen in isolation but rather as part of a broader reform programme that will create a more dynamic and more prosperous nation.

Just before I finish, I also want to read a quote from another international magazine publication, on this occasion, the Economist editorial 7th February 1998:

"Much of Australia remains far from modern. The monarchy is not the only anachronism. A waterfront dispute in which farmers are trying to break the iron grip that dockers' unions have on the country's inefficient ports, looks like a parody of Britain in the Aggro- Britain ridden 1970s. Compared with the frenetic East Asians and post- Thatcher Britons, Australians still prefer the easy life, but want the earnings that go with a harder one."

Unfortunately, the Economist has neatly summed up the situation, particularly as it applies to the waterfront. And unfortunately, that is Australia's international reputation today. Which is why so much is at stake in securing a more efficient waterfront. It is a position that no Australian could be proud of. We must and can do better. We can no longer cling to the sinecures of the past.

If we are to have a prosperous future, it surely lies in adapting to the environment in which we live rather than clinging slavishly to the practices of the past.

That concept applies equally to our working environment as it does to any other.

Australians can be world leaders in any field of endeavour, if we put our minds to it, whether it is in sport, the arts or science and technology and the like.

There is no reason why we can't lead the world in the waterfront. We have the capacity to manage an efficient waterfront.

We have the people. We have the equipment. That should be our goal. All it takes is the will and the courage.

Thank you very much.