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[Along with the White Australia Policy and tariff protection, conciliation and arbitration was one of the three pillars of Australian social policy for much of the 20th century. It has survived the demise of the White Australia Policy and the terminal illness of tariff protection. However, its survival is by no means assured in the face of sustained attack from economic rationalists, conservative politicians and the forces of social and economic change.
In 1915 one of the founding fathers of the system, Henry Bournes Higgins, spelled out the rationale for the system in an article published in the Harvard Law Review. The present article examines the origins and development of the system by reference to Higgins’ classic exposition.
It notes that the system did not achieve, and almost certainly never could have achieved, all of the objectives identified by Higgins. In particular, conciliation with arbitration in the background has not effectively been substituted for the ‘rude and barbarous processes of strike and lock out’. Nevertheless, the system has made an important, and generally positive contribution to Australian society — most notably in helping to ensure that the outcomes of the industrial relations process are moderated by reference to the public interest.]
The new province is that of the relations between employers and employees ... the process of conciliation, with arbitration in the background, is substituted for the rude and barbarous processes of strike and lockout. Reason is to displace force; the might of the State is to enforce peace between industrial combatants as well as between other combatants; and all in the interest of the public.[1]
This passage constitutes the classic rationalisation for the system of industrial regulation that was adopted in the early days of federation. Its author, Henry Bournes Higgins, played a leading role in the inclusion of the conciliation and arbitration power in the Australian Constitution.[2] He was appointed as a Justice of the High Court of Australia in 1906, and in the following year became the second President of the Commonwealth Court of Conciliation and Arbitration. He is both revered and reviled as one of the progenitors of the system of conciliation and arbitration as it developed in the first quarter of the 20th century.[3]
This system had its origins in a series of resounding defeats which were inflicted upon the Australian trade union movement in the early 1890s. One of the central issues in these disputes was the assertion by employers of the principle of ‘freedom of contract’ — that is, of their capacity to negotiate terms and conditions of employment directly with their employees rather than through intermediaries such as trade unions. Put differently, as a consequence of their victories in these disputes, employers had successfully repudiated the concept of collective bargaining as a means of regulating terms and conditions of employment.
Several of the disputes were long drawn out, and in a number of instances were accompanied by serious levels of violence. They involved enormous hardship for striking workers and their families, and gave rise to widespread social and economic disruption. They were also distinguished by the fact that, for the first time in Australian history, they involved concerted industrial action in two or more colonies.[4]
These developments coincided with the move towards Federation, and they prompted a sizeable body of liberal opinion to conclude that the legislature of the proposed federation should have the capacity to ensure that there be no repetition of the events of the early 1890s, or that, if there were a repetition, the Parliament could take appropriate remedial action. Contemporaneously, significant elements of the labour movement came to the view that, in the prevailing circumstances, trade unions could not realistically hope to persuade employers to engage in collective bargaining without some kind of legal compulsion. Similarly, some, but by no means all, business groups came to see advantage in some kind of system of industrial regulation which could prevent major industrial dislocation, and which could also afford a measure of protection against ‘unfair’ competition from employers (at home and abroad) who enjoyed significant advantages in labour costs.[5]
Taken together, these considerations help explain the fact that by 1900 most of the colonies had developed some form of conciliation and arbitration and/or wages board system for the prevention and settlement of industrial disputes and/or the regulation of terms and conditions of employment.[6] It also helps explain why the Commonwealth Parliament was given power to ‘make laws for the peace, order and good government of the Commonwealth with respect to ... conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State.’[7]
Given the significance that the system put in place in reliance upon this provision was to assume in the future, it is important to appreciate that many of the proponents of its inclusion in the Constitution assumed that it would rarely, if ever, be relied upon in practice.[8] It is even more important to appreciate that conciliation and arbitration for the prevention and settlement of disputes was originally conceived purely in terms of a mechanism that could be called in aid if and when collective bargaining failed — for example, because of the refusal of one or both parties to come to the bargaining table. It seems clear, however, that the framers of the original Commonwealth Conciliation and Arbitration Act 1904 (Cth) (‘the 1904 Act’) expected that the normal means of determining terms and conditions of employment would be through processes of collective bargaining between employers and organisations of workers.
Not only was this the expectation, for a considerable period after its inception, that is how the system operated. Part VI of the 1904 Act made detailed provision for the recognition of industrial agreements between employers and unions. In the early days of the system, these provisions were extensively relied upon in practice, and as late as 1919 the number of agreements exceeded the number of awards by a factor of almost six to one.[9] For a variety of reasons, these provisions fell into disuse from 1913 onwards.[10] They did, however, remain in the 1904 Act, in largely unaltered form, until its repeal in 1988.[11] Furthermore, the Hancock Committee in 1985 recommended that they should
be amended to provide that parties who wish to make their own arrangements for the prevention and settlement of disputes by conciliation and arbitration may do so, and that the terms and conditions of employment resulting from those agreed arrangements would be able to operate to the exclusion of federal awards.[12]
This recommendation was not acted upon in precisely those terms when the 1904 Act was repealed and replaced by the Industrial Relations Act 1988 (Cth), but the sentiments it contained do find clear expression in what is now Part VIB of the Workplace Relations Act 1996 (Cth).[13]
Although the provision concerning conciliation and arbitration which was put in place in 1904 was originally conceived as a support mechanism for the regulation of terms and conditions of employment by means of collective bargaining, that is not how the system developed in practice. Instead, the support mechanism evolved into a highly sophisticated system of industrial regulation which, for good or ill, played a prominent role in the development and implementation of social and economic policy throughout most of the 20th century.
As Australia enters the second century of federation, there are many who would argue that the system has outlived its usefulness, and that conciliation and arbitration should revert to its ‘proper’ role as a supplement to collective bargaining.[14] Others would go further and, in a somewhat disconcerting evocation of the 1890s, urge that the system should be entirely dismantled, and that terms and conditions of employment should be regulated solely on the basis of the law of contract.[15]
The purpose of this article is to analyse the manner in which the conciliation and arbitration power has been utilised over the years, and to consider whether it has indeed lost its relevance. This is done by reference to the four key elements in Higgins’ conceptualisation of the new province for law and order:
It is important to appreciate that the use of conciliation and arbitration (compulsory or otherwise) as a means of preventing and settling industrial disputes is not a uniquely antipodean phenomenon. As Mitchell points out:
[T]he Australasian legislatures relied to a considerable degree upon the experiences with conciliation and arbitration in other countries in order to justify and support the introduction of the conciliation and arbitration process into Australasia. The British experience was clearly of interest to the Australasian parliaments. Debate on the various Bills ... invariably contained historical accounts of the development of conciliation and arbitration in Britain ... [T]he most thorough review was carried out by the New South Wales Royal Commission on Strikes [in 1891], which in a special ‘Conciliation Appendix’ listed and briefly examined the legislative schemes operating in ten countries (including France, the United States of America, Germany, Italy, Denmark, and Sweden) ...[17]
Nevertheless, it is true that the concept of conciliation and arbitration took hold in Australia and New Zealand to an extent that is unequalled anywhere in the world.[18] It is not entirely clear why this should have happened. The accident of timing may provide a partial explanation: the various Australian colonies adopted their systems of conciliation and arbitration and/or wages boards at very much the same time that they were maturing in economic terms and, as such, these systems became part of the established economic order. Similarly, the federal system matured along with the federation and, as noted earlier, played an integral role in the development and implementation of social and economic policy throughout much of the 20th century.
The Commonwealth’s longstanding adherence to conciliation and arbitration can also be explained by the fact that they were the only forms of industrial regulation to be accorded express recognition in the Constitution. As will appear presently, there are several other heads of power that can be, and increasingly have been, used as the basis for federal regulation of industrial issues. But the fact that s 51(xxxv) expressly endorses conciliation and arbitration as the preferred means of preventing and settling industrial disputes must inevitably have served to consolidate the primacy of those techniques.
This latter consideration was no doubt compounded by a certain element of inertia, perhaps stemming from a perception that the system worked in a reasonably effective manner and that in consequence there was no real need to look for alternatives. As against that, there was recognition at an early stage that conciliation and arbitration were not necessarily the most effective means of dealing with industrial and employment issues and/or that the power set out in s 51(xxxv) was excessively restrictive — as evidenced by the fact that in the first 20 years of federation there were no fewer than four attempts either to extend the scope of the conciliation and arbitration power or to give the Commonwealth the capacity to make laws with respect to employment in general.[19] Like most attempts at constitutional amendment, these proposals were rejected by the electorate. Perversely, the inability to broaden the scope of legislative power in relation to employment and industrial issues served further to entrench the system based upon s 51(xxxv).
The fact that the Constitution expressly endorses two specific techniques for the prevention and settlement of industrial disputes is not surprising. It will be recalled that the outcome of the great industrial disputes of the 1890s was that employers had successfully asserted their right to agree terms and conditions of employment directly with their workforce without third party intervention, and that conciliation and arbitration were conceived as a kind of default mechanism to be used where collective bargaining proved impossible or ineffectual. Where that happened, the industrial tribunal was to have the capacity to compel the parties to come to the bargaining table with a view to obtaining an agreed outcome through processes of conciliation. If conciliation failed, then, and only then, could the tribunal impose an arbitrated settlement upon the parties. This explains Higgins’ reference to ‘conciliation, with arbitration in the background’. It also helps to explain why the Australian system of conciliation and arbitration is commonly described as ‘compulsory’ in character.[20]
For the system to operate in this manner, it was essential that there be identifiable ‘parties’, with recognised legal rights. For that reason, the legislation from the outset accorded formal recognition to trade unions and employer associations. It provided for a system of registration, and accorded significant advantages to registered organisations in terms of organisational security and the capacity to activate the processes of conciliation and arbitration. As Higgins observed, ‘[t]he system of arbitration adopted by the [1904] Act is based on unionism. Indeed, without unions, it is hard to conceive how arbitration could be worked.’[21]
In exchange for the benefits conferred by registration, the system exacted a significant price in terms of external control over the internal affairs of registered organisations, and in terms of curtailment of the right to take industrial action.[22] The importance of the legislation as a support mechanism for trade unions can be gauged from the fact that in 1891 there were 124 unions in Australia with a total of 54 800 members; in 1901 there were 198 unions with 97 200 members; and in 1906 there were 302 unions with 175 200 members. By 1911 there were 573 unions with 364 700 members, whilst the million-member mark was passed for the first time in 1941.[23] No doubt there are many other factors which contributed to the growth of Australian unions throughout most of the 20th century,[24] but there is equally little doubt that the advantages afforded by registration under federal (and State) industrial legislation played a major part in this process.[25]
As indicated, in the early days the system did operate in something approximating to the manner envisaged by its founders — as evidenced by the preponderance of agreements as opposed to awards until after World War I. Over time, however, the support mechanism of conciliation and arbitration came increasingly to usurp, or to be seen to have usurped, the role of the process of collective bargaining to which it was meant to lend support.
Awards of the federal tribunal, and its State counterparts, became the principal means of determining the core terms and conditions of the overwhelming majority of the workforce. Set-piece ‘test cases’ in the federal tribunal, and their subsequent ‘flow-on’ into the State systems, became the principal vehicle for the introduction of basic employment rights such as equal pay for equal work,[26] parental leave,[27] protection against unfair dismissal, notice of termination of employment and entitlements in the event of redundancy.[28] Most important of all, national wage cases set the basic wages of the greater part of the workforce.
In Ex parte H V McKay[29] Higgins J was called upon to consider whether the wages paid by a Melbourne manufacturer of farm machinery were ‘fair and reasonable’ for purposes of the Excise Tariff Act 1906 (Cth).[30] This case has gone down in history as the Harvester judgment.[31] In reaching his decision Higgins J endorsed the notion that to be fair and reasonable, wages must be such as to meet ‘the normal needs of the average employee, regarded as a human being living in a civilised community.’[32] The ‘average employee’ for these purposes was assumed to be an unskilled labourer with a dependent wife and three children, and the minimum wage should be such as to keep such a family in ‘a condition of frugal comfort estimated by current human standards.’[33] In addition, ‘those who have acquired a skilled handicraft have to be paid more than the unskilled labourer’s minimum.’[34]
These principles were carried over into the conciliation and arbitration system, and the core concepts of a ‘basic wage’ plus a ‘margin’ for skill, became the bedrock of Australian social policy for the greater part of a century.[35] Even in today’s more deregulated environment, the notion of a basic or minimum wage is still a key component of the ‘effective award safety net of fair and enforceable minimum wages and conditions of employment’, maintenance of which is stated to be one of the means of achieving the principal object of the Workplace Relations Act 1996 (Cth).[36]
Self-evidently, this is all far removed from Higgins’ ideal of ‘conciliation, with arbitration in the background’ as support mechanisms for collective bargaining. Indeed, the concept of compulsory conciliation and arbitration as a means of preventing or settling industrial disputes may well be seen as the antithesis of collective bargaining. By the same token, centralised regulation of terms and conditions of employment may be seen as antithetical to the notion of conciliation and arbitration as a support mechanism for collective bargaining. A fortiori, the use of conciliation and arbitration as a vehicle for centralised regulation of terms and conditions may well be seen as fundamentally incompatible with collective bargaining at either industry or enterprise level.
The inherent tension between collective bargaining and conciliation and arbitration is helpfully illustrated by Niland’s characterisation of collective bargaining in terms of five key attributes:
Despite the evident tension between conciliation and arbitration and collective bargaining, even in the heyday of centralisation, the federal system of industrial regulation always incorporated significant elements of collective bargaining — even if not in the ‘pure’ form advocated by commentators such as Niland. This can be illustrated at a number of levels:
Apart from the last category, these forms of direct negotiation may not have constituted collective bargaining in the sense described by Niland. But they did exhibit many of the key features of such bargaining. Their prevalence certainly suggests that the traditional system was not entirely inimical to collective bargaining. Indeed, in a sense they can be said to furnish evidence that the system did function in the manner envisaged by Higgins — but with conciliation and arbitration playing a more central role in non-contentious situations than Higgins seems to have had in mind. In 1986 Dabscheck suggested that rather than seeing the system in terms of a ‘simple dichotomy of compulsory arbitration versus collective bargaining ... it might be more useful to regard the Australian industrial relations system as being a hybrid in that it combines arbitration, conciliation and collective bargaining.’[41]
It will be recalled that in 1985 the Hancock Committee recommended that the provisions of the 1904 Act which dealt with industrial agreements should be amended, so that parties who wished to make their own arrangements for the prevention and settlement of industrial disputes could do so in a manner which would exclude the operation of federal awards. This proposal was clearly conceived within the framework of the established system of conciliation and arbitration. Like most of the other recommendations of the Committee, it was rapidly overtaken by events. This is reflected in the fact that from the mid-1980s onwards business groups became increasingly vocal in their demands for the ‘deregulation’ of the existing system, and for a greater emphasis upon regulation of terms and conditions of employment by direct agreement between employers and (ideally) employees or unions at the level of the enterprise or workplace.[42]
This rhetoric found some limited recognition in ss 115–17 of the Industrial Relations Act 1988 (Cth), which made provision for the negotiation and certification of agreements at enterprise level. These provisions were regarded as unsatisfactory in certain respects, and in 1992 they were repealed and replaced by the rather more far-reaching Division 3A of Part VI of the Act. These provisions were in turn repealed in 1993, and replaced by the yet more radical Part VIB.
The 1993 amendments were particularly significant for the fact that for the first time, the legislation contemplated the making of collective agreements (‘enterprise flexibility agreements’) between employers and employees without there necessarily being any trade union involvement. They were also significant for the fact that the legislation drew its constitutional validity in part from provisions of the Constitution other than the conciliation and arbitration power — in particular, the provisions relating to non-union agreements were based upon the corporations power in s 51(xx) of the Constitution.[43] Part VIB was further amended in 1996, and the agreement options it provides are now at the very heart of the federal system of industrial regulation.[44]
For present purposes, the significance of these changes is that the principal focus of the system has shifted away from the prevention and settlement of industrial disputes by means of conciliation under the auspices of an independent tribunal in favour of direct negotiation of terms and conditions of employment at enterprise level, with the tribunal relegated to a more or less marginal supervisory role. Despite the fact that they constitute a significant break from the regulatory tradition established under the 1904 Act, agreements under Part VIB are still inherently collective in character, and may be concluded only between employers and trade unions or between employers and their employees as a collectivity (albeit without union involvement).[45]
The 1996 legislation did, however, effect a truly profound change by the introduction of Australian Workplace Agreements (‘AWAs’). These are agreements concluded between incorporated employers and individual employees. They are not subject to any form of public scrutiny, although they do have to be approved by a public functionary in the person of the Employment Advocate, and they do have to satisfy a no-disadvantage test relative to any award that would otherwise be binding upon the employer or an award designated for the purpose by the Employment Advocate. The Australian Industrial Relations Commission (‘the Commission’) has only a very minor role in the administration of this part of the Workplace Relations Act. Once approved, an AWA operates entirely to exclude the operation of any otherwise applicable award, expired certified agreement or unexpired certified agreement which permits the making of AWAs during its currency.[46]
AWAs have not proved to be particularly popular in practice, partly because they are administratively cumbersome; partly because of vigorous union opposition to their use; and partly because the no-disadvantage test means that they cannot be used significantly to undercut award terms and conditions.[47] However, the mere fact that it is now open to employers and individual employees to opt out of the collectivised system of conciliation and arbitration/collective bargaining is a matter of the utmost significance in conceptual terms.
That said, it is important not to lose sight of the fact that the Commission retains its capacity to exercise powers of conciliation and arbitration for the prevention and settlement of industrial disputes — even allowing that its arbitral powers are now subject to the significant constraint imposed by the provisions relating to allowable award matters, which are set out in s 89A of the Workplace Relations Act 1996 (Cth).[48] It is also important to bear in mind that, despite political rhetoric which suggests otherwise, centralised determination of key terms and conditions of employment — especially minimum wages — is still a key feature of the system, and that arbitrated awards constitute an essential reference point for the no-disadvantage test which must be satisfied by all certified agreements and by AWAs.[49]
It is clear that the system has undergone profound change in recent years. But it is also clear that many key features of the traditional system remain intact. It is at least arguable that recent changes are having the effect that conciliation and arbitration are increasingly being called upon to perform the role envisaged by the original framers of the system: a support mechanism for collective bargaining and (what Higgins and the founding fathers certainly did not anticipate) individual agreement making. On the other hand, the severe curtailment of the arbitral powers of the Commission does make conciliation and arbitration less effective as a support mechanism than Higgins might have wished — although for the advocate of ‘pure’ bargaining, the restriction of the Commission’s capacity to arbitrate might be said to make it more effective as a support (rather than displacement) mechanism.
It will be recalled that the dislocation and social divisiveness associated with the great disputes of the 1890s provided much of the impetus for the inclusion of the conciliation and arbitration power in the federal Constitution, and for the adoption in 1904 of the Commonwealth Conciliation and Arbitration Act 1904 (Cth) in reliance upon that power.
Put differently, part of the rationale for the new system was that the Commonwealth should have the capacity to deal with any future industrial disputes which extended beyond the boundaries of more than one State and which were in consequence beyond the legislative and administrative competence of the States concerned. On its own logic the new system should obviate the need for industrial disputation by providing a means whereby such disputes could be prevented and (where prevention proved ineffectual) settled. In such circumstances, not only would disputation be unnecessary, it would be illegitimate.
As noted earlier, the new system conferred very considerable advantages upon registered organisations of workers, both in terms of organisational security and of the capacity to access the federal tribunal. Part of the price to be paid for these advantages was the surrender of the capacity to take industrial action — bearing in mind, of course, that all such action was in any case unlawful at common law, both as a tort and (almost invariably) a breach of contract.[50]
This reasoning found expression in s 6 of the original 1904 Act, which made it an offence, punishable by a fine of up to £1000, for any person or organisation ‘on account of any industrial dispute, [to] do anything in the nature of a lockout or strike, or continue any lockout or strike.’ This provision was almost entirely unused in practice, and was repealed in 1930.[51] Thereafter, the principal vehicles for enforcement of the norms of the system became cancellation of the registration of trade unions and (in principle) employer organisations, and bans clauses.
Deregistration had the obvious attraction that it deprived the errant organisation of access to the benefits of the system. But this was often a two-edged sword: as noted earlier, the system needed registered organisations in order to operate in an effective manner.[52] Furthermore, the deregistered entity might have lost access to the benefits of the system, but it was also beyond the discipline of the system. This helps explain why deregistration as an enforcement technique has been little relied upon since the early 1950s, although the federal legislation continues to make comprehensive provision for deregistration of organisations that fail to adhere to the norms of the system.[53]
Bans clauses were provisions inserted in awards which prohibited conduct that hindered, prevented or discouraged the observance of the award, the performance of work in accordance with the award, or the accepting or offering for work in accordance with the award. The first bans clause was included in an award as early as 1907,[54] and their constitutionality was endorsed by the High Court in 1936.[55] They were extensively relied upon as an enforcement technique in the 1950s and 60s, until their overuse brought about the virtual demise not only of bans clauses themselves but of all of the enforcement provisions of the 1904 Act.[56]
The significance of s 6 of the 1904 Act in the present context is that it neatly encapsulated the underpinning logic of the ‘new province’. However, it is important to appreciate that that logic was seriously flawed in a number of crucial respects.
First, it is quite unrealistic in practical terms to think that in a democratic society any regulatory regime could succeed in entirely eliminating industrial disputation, even assuming that it would be desirable to do so. Secondly, it manifestly is not desirable in policy terms to attempt entirely to deny workers the right to withdraw their labour in pursuance of improved terms and conditions of employment, or in defence of existing terms and conditions.
This reasoning finds expression in a number of developed countries, where the right to strike is accorded formal constitutional protection.[57] It is also reflected in international standard-setting instruments such as the International Covenant on Economic Social and Cultural Rights,[58] and in the jurisprudence of the Supervisory Bodies of the International Labour Organization (‘ILO’). For example, article 8(1) of the ICESCR provides that:
The States Parties to the present Covenant undertake to ensure:
...
(d) The right to strike, provided that it is exercised in conformity with the laws of the particular country.
Meanwhile, the ILO’s Committee of Experts on the Application of Conventions and Recommendations has stated that:
[T]he right to strike is one of the essential means available to workers and their organizations for the promotion and protection of their economic and social interests.[59] These interests not only have to do with better working conditions and pursuing collective demands of an occupational nature, but also with seeking solutions to economic and social policy questions and to labour problems of any kind which are of direct concern to the workers.[60]
Clearly, the framers of the original system of conciliation and arbitration were not influenced by sentiments of this character. In fairness, very few policy-makers anywhere would have subscribed to such views in 1904. Nevertheless, the 1904 Act was unusual in attempting entirely to proscribe all overt manifestations of industrial disputation.[61] It is salutary to note, for example, that only two years after the passing of the Commonwealth Conciliation and Arbitration Act 1904 (Cth), the British Parliament passed a measure which was widely (albeit wrongly) assumed to have conferred blanket immunity upon trade unions against tort liability in respect of action taken in contemplation or furtherance of a trade dispute.[62]
It is important to bear in mind that the progenitors of the conciliation and arbitration system saw it as concerned only with a narrow category of disputes, namely those that extended beyond the limits of more than one State. Whilst inherently unlikely, it is perhaps not entirely inconceivable that such disputes could entirely be eliminated. It is certainly true that there were very few such disputes in the early days of the system — for example, in 1915 Higgins could credibly claim that ‘since the [Commonwealth Conciliation and Arbitration] Act came into operation there has been no strike extending “beyond the limits of any one State.”’[63] There had, of course, been ‘numerous strikes in Australia, as elsewhere’, but they were all intrastate in character, and as such were beyond the jurisdiction of the Commonwealth Court of Conciliation and Arbitration.[64]
The state of affairs described by Higgins could not, and did not, last indefinitely. By 1930 the authors of an ILO Report on freedom of association in Australia noted that ‘the introduction of compulsory arbitration has by no means achieved its aim of preventing labour disputes.’[65] In support of this assessment, the ILO Report quoted figures which showed that between 1914 and 1925 the lowest number of disputes in any one year was 298 in 1918 (leading to a loss of 539 593 working days), whilst the highest was 624 in 1921 (leading to a loss of 1.286 million working days). In 1917, 444 disputes led to a loss of no less than 4.689 million working days.[66]
The pattern described for the period from 1914 to 1925 was maintained over the years, so that by the 1960s Australia had an international reputation as a particularly strike-prone economy. In fact this was never the case: generally it came somewhere in the middle of ‘league tables’ of industrial disputation measured in terms of numbers of disputes and of days lost per 1000 employees.[67] As in most other developed countries, levels of industrial disputation in Australia over the last decade have declined markedly.[68]
Manifestly, however, conciliation and arbitration has not been substituted for the ‘rude and barbarous processes of strike and lockout’, either in the year 2000, or over the last 100 years. Does this mean that the system has failed?
Measured against the standard set by Higgins in 1915, the answer clearly must be ‘yes’. However, as indicated, the system could never realistically have been expected entirely to have eliminated all industrial disputation, even that which was purely interstate in character. Furthermore, for the reasons outlined above, respect for fundamental democratic principles requires that it should not have been expected to do so, even assuming that it were possible.
A more nuanced analysis suggests that even in its own terms the system was not entirely unsuccessful. Over the last 100 years Australia has seen few of the prolonged, violent disputes which so affected liberal opinion in the 1890s. Those long drawn out disputes that have occurred, have generally fallen within the jurisdiction of the States, rather than the federal tribunal.[69] Even in the State sphere, such disputes have been few and far between. Instead, the typical industrial dispute in Australia is of short duration, and involves a relatively small number of participants. This held true even in the ‘strike-prone’ era of the 1960s and 1970s: in absolute terms there were large numbers of disputes, but they rarely lasted for very long, and they were generally small-scale and localised.
It does not seem fanciful to suggest that this pattern of disputation can be attributed to a significant degree to the existence of the federal tribunal and its State counterparts. Under the traditional system, a dispute would typically arise at a particular work-site or in a particular geographical area. This might occur in response to some initiative on the part of management, or in support of some demand that was being pursued by the workers and their union. Workers would walk off the job. After a fairly short interval one or both parties would refer the dispute to the tribunal, or the tribunal would intervene of its own initiative. The issues in dispute would be agitated before the tribunal, and the matter would be resolved by conciliation and occasionally by arbitration. In many instances reference to the tribunal would lead to a more or less immediate return to work — and in general the tribunals would refuse to arbitrate whilst industrial action remained on foot. In other words industrial action enabled the parties to let off steam, and then served as a trigger for the operation of the institutionalised processes of dispute resolution.
All of this industrial action was by its very nature unlawful. It would invariably involve the commission of one or more of the so-called industrial torts.[70] It would almost invariably have involved breach of contract by the participants. And it would have been unlawful in terms of express proscriptions in the legislation and/or bans clauses inserted in awards by the tribunal.[71] Yet legal sanctions were very rarely invoked in practice.
The author is not aware of any recorded instance of a tort action by an employer against a trade union in respect of an industrial dispute between the end of World War I and the early 1970s. Even after that time, tort actions have been few and far between, and very rarely proceed beyond the point of an application for an interlocutory injunction.[72] Employers would almost never seek relief for breach of contract arising out of industrial action,[73] and would very rarely elect to treat industrial action by employees as repudiatory breach of contract.[74]
Employers have, from time to time, sought to invoke statutory prohibitions on industrial action. This reached its peak in the late 1950s and the 1960s, when they frequently secured the insertion of bans clauses in awards of the tribunal and then sought injunctions to enforce those provisions, together with penalties for contempt of court where (as was commonly the case) the injunctions were disregarded.[75] This strategy finally came undone in 1969 when an official of the Victorian Branch of the Australian Tramway and Motor Omnibus Employees’ Association, Clarrie O’Shea, was sent to prison for contempt of court in consequence of his refusal to co-operate in the collection of fines that had been imposed upon the Association. This provoked widespread industrial dislocation, and the threat of a general strike. The outstanding fines were paid by an anonymous benefactor, and O’Shea was released from prison without having purged his contempt.[76]
This incident served finally to discredit the so-called penal clauses in the federal legislation, and they have largely been dead letters in practice ever since. This in turn contributed to a phenomenon which the present author in 1991 described as the ‘distinctively Australian paradox’ of
a system of industrial regulation which is in practice reasonably tolerant of industrial disputation, but which in principle purports entirely to proscribe it, and which is also seriously out of step with internationally recognised standards relating to the protection of fundamental human rights.[77]
It is only in the context of the shift away from conciliation and arbitration in favour of formalised enterprise bargaining that the system has even begun to come to grips with the enforcement paradox — although there is most assuredly a long way to go before the issue can be said to have been addressed in a fair and equitable manner.
With the shift to enterprise bargaining as the principal means of regulating terms and conditions of employment in the 1990s, it became more and more difficult to persist with a regulatory regime that was, ostensibly at least, entirely intolerant of industrial disputation. A necessary incident of any formalised system of collective bargaining is that at some point in the process workers must have the right to withdraw their labour — albeit ‘as a weapon of last resort’. This is reflected in Niland’s proposition that ‘where disagreement over settlement persists, the parties themselves determine how to resolve the impasse’.[78]
This logic was accorded formal recognition in the Industrial Relations Reform Act 1993 (Cth), which for the first time in the federal sphere conferred a measure of protection against tort (and other) liability in respect of industrial action that was taken in the context of negotiations for a certified agreement under the Act. The legislation also conferred a measure of protection upon individuals in respect of victimisation on the ground of participation in industrial action.[79]
These protections have been retained, albeit in a modified form, in the Workplace Relations Act 1996 (Cth).[80] They still fall a significant way short of what is necessary to demonstrate compliance with Australia’s international obligations in this area.[81] But in formal terms at least, they mark a fundamental shift away from the logic of the traditional system of conciliation and arbitration, and its total intolerance of industrial disputation. On the other hand, it is important to bear in mind that even the traditional system did tolerate industrial disputation in fact if not in form — as must any system of industrial regulation in a democratic society, especially if it incorporates (expressly or by default) any meaningful element of collective bargaining.
The role of the state in the federal system of conciliation and arbitration has always been both controversial and ambivalent.
At one level the role of the state is axiomatic. It is the state, in the form of the Commonwealth Parliament, that puts in place the relevant legislative framework, and provides the institutional structure (courts, tribunals, etc) through which the legislation can be given effect.[82] This the state has done on a continuing basis since 1904 — indeed, it has been so assiduous in its attempts to fine-tune the legislative framework that both the original Conciliation and Arbitration Act 1904 (Cth) and its successors have been amended on a scale probably exceeded only by the Income Tax Assessment Act 1936 (Cth).
The key issue in the present context is whether the state can or should do more than this. Should it, for example, play the role of industrial police force? Should it have the capacity, directly or indirectly (through some state-sponsored institution), to initiate enforcement proceedings against participants in the system who fail to adhere to the norms of the system?
In general, Australian governments have adopted an ambivalent approach to this issue. Since the early 1930s there has been an inspectorate with responsibility for ensuring compliance with the awards of the tribunal and (more recently) certified agreements.[83] In practice, the inspectorate has concentrated its energies upon trying to ensure that employers observe award terms and conditions, with industrial issues being left to the parties themselves.[84] This in turn is indicative of a general reluctance on the part of the state to put in place mechanisms whereby it, or its instrumentalities, could take action to enforce the industrial norms of the system.
An ostensible exception was in the period 1977–83 when the Industrial Relations Bureau was not only entrusted with the enforcement powers formerly vested in the Arbitration Inspectorate, but was also given the capacity to initiate a range of proceedings to ensure compliance with the norms of the system of conciliation and arbitration. The establishment of the Bureau generated considerable controversy, but it proved to be something of a damp squib in practice — adopting a non-interventionist approach to its ‘industrial’ functions, which confounded both the fears of its opponents and the hopes of its proponents.[85] It was abolished by the Hawke Government in 1983.[86]
There are some parallels between the role of the Bureau and that of the Employment Advocate under the Workplace Relations Act 1996 (Cth). For example, the Employment Advocate has a range of investigatory functions in relation to AWAs,[87] can investigate breaches of the freedom of association provisions of the Act[88] and can provide ‘free legal representation to a party in a proceeding under Part VID [AWAs] or Part XA [freedom of association], if the Employment Advocate considers this would promote the enforcement of the provisions of those parts.’[89] However, the focus in the 1996 provisions is very much upon vindication of the rights of individuals rather than upon enforcement of the norms of the system of collective regulation.[90] This latter is, as in the past, left to the participants in the system themselves.
Although the state has generally adopted a fairly passive role in relation to enforcement of the collective norms of the system, it is important to bear in mind that the state also plays a major role as a direct participant in the system.
First, the Commonwealth is, and has been since the early days of federation, a major employer in its own right. This means that it has an obvious and direct interest in the outcomes of the system — for example, in the context of safety net outcomes. It also means that it would have a direct interest in ensuring conformity to the norms of the system. However, as indicated, the Commonwealth has never played an active role in this latter context. Certainly successive (especially conservative) governments have amended the legislation at regular intervals in order to ‘enhance’ its enforcement mechanisms, and have enthusiastically embraced the rhetoric of industrial law and order. The fact remains, however, that they have shown little inclination to invoke the enforcement provisions of the 1904 Act and its successors, or the enforcement options available under other measures such as the Public Service Arbitration Act 1920 (Cth) and the Public Service Act 1922 (Cth).[91]
The Commonwealth has been a rather more active participant in the system as representative of the public interest. The role of the state in this respect finds express recognition in a number of places in the current legislative arrangements. These include: the capacity to notify a dispute to the Commission;[92] the capacity to seek leave to intervene in relation to any proceedings before the Commission, and to do so as of right in Full Bench matters;[93] and the right to seek review by a Full Bench of a decision relating to ‘an award or order, or a decision relating to the making of an award or order’ where ‘it appears to the Minister [for Employment, Workplace Relations and Small Business] that the award, order or decision is contrary to the public interest.’[94]
The power to intervene is exercised as a matter of course in major test cases, and in safety net adjustment cases. It is also exercised in relation to any case in which the government of the day considers that it has a particular interest — for example, because of its implications for government policy[95] or (which will often be the same thing) because the government considers that a particular matter bears upon the public interest.
It seems reasonable to suppose that intervention in Commission proceedings in the public interest is not quite what Higgins had in mind when he wrote of ‘the might of the State’ enforcing peace between industrial combatants. It seems more likely that he envisaged a rather more robust role for the state as enforcer of the norms of the system. However, the role of the state as intervener is fully consistent with the final limb of Higgins’ prescription for a new province, the fact that the entire undertaking is ‘all in the public interest.’
In a sense it is true that any properly functioning regulatory regime in a democratic society must operate to protect and to promote the public interest. After all, the elected representatives of the people enact legislation to establish the regulatory framework, provide funds to enable the system to operate, and make changes to the enabling legislation and its administration as and when required in order to ensure that the system can continue to operate in the public interest. Nevertheless, the protection of the public interest has had a particular resonance for the conciliation and arbitration system since its inception. Indeed, in many respects the greatest achievement of the traditional system could be said to be the moderation of the outcomes of the industrial relations process by reference to the public interest.
The great industrial disputes of the 1890s were particularly unpleasant manifestations of industrial warfare. The employers had used all means at their disposal — economic, social, political and legal — in order to vindicate the principle of ‘freedom of contract’. Self-evidently, such behaviour was enormously destructive in both social and economic terms. Liberal opinion could have legitimate concerns that industrial warfare conducted on these terms could easily degenerate into open class warfare.
Clearly, there was a public interest in ensuring that this did not happen — hence the rhetoric which advocated substitution of conciliation with arbitration in the background for the rude and barbarous processes of strike and lockout, the displacement of force by reason. To be effective, the processes of conciliation and arbitration had to strike a fair balance between the interests of capital and labour. Neither could be allowed to achieve or to maintain the level of dominance attained by the employers in the 1890s.
This balance required that workers have the right to form and join trade unions to represent their industrial interests, and that those unions have the right to represent them in negotiations with employers in relation to terms and conditions of employment. Where negotiation failed — for example, because employers refused to recognise the unions to which their employees belonged — then unions had to have access to an independent tribunal which could impose an outcome upon the disputing parties. To be legitimate, that arbitrated outcome had to take account of the public interest.
Similarly, the concept of the basic wage as it emerged from the Harvester judgment was based in part at least upon the public interest in ensuring that employees were paid a ‘fair and reasonable’ wage. But just as employers could not be allowed to exploit their market dominance by refusing to negotiate with unions and paying starvation wages, so also unions could not be allowed to use their capacity to inflict economic pain through industrial action, or to exploit favourable market conditions, in order to obtain an unfair advantage vis-à-vis employers. Furthermore, the outcomes of the industrial relations process may need to be moderated in the public interest even where those outcomes constitute a fair outcome as concerns the interest of the immediate parties. This may arise, for example, where an industrial settlement has the potential to damage the broader public interest because of its impact upon national economic policy.
Considerations of this character help explain the emphasis upon protection of the public interest which has been a constant feature of the system since its inception. For example, in Federated Seamen’s Union of Australia v Commonwealth Steamship Owners’ Association Higgins J observed:
I conceive it to be my duty to consider the interests of the public as well as of the seamen. It may be that wages boards constituted of employers and employees are not under this duty; but this Court [of Conciliation and Arbitration], which is neither an employer nor an employee, but an instrument created by the public to protect the public from the evils of industrial warfare, is under such a duty.[96]
Interestingly, however, it is only in comparatively recent times that the legislation has made express reference to the public interest as a consideration in the operation of the system. Nevertheless, as Isaac and McCallum point out, ‘the politicians, the industrial relations protagonists, and the general public all recognised that the Court had been established to embody the public interest in eradicating strikes and creating fair and equitable wage structures.’[97]
This was made explicit in provisions such as s 3(c) of the Industrial Relations Act 1988 (Cth), which stipulated that one of the objects of the Act was:
To ensure that, in the prevention and settlement of industrial disputes, proper regard is had to the interests of the parties immediately concerned and to the interests (including the economic interests) of the Australian community as a whole.[98]
This important affirmation of principle has not been retained in the current version of the legislation. Nevertheless, the Workplace Relations Act 1996 (Cth) does clearly proceed from the assumption that a major purpose of the system is to promote and to protect the public interest. This is borne out by the fact that s 90 of the Act requires that the Commission take account of the public interest in the exercise of its functions under the Act. It also finds expression in provisions such as s 111(1)(g)(iii), which enables the Commission to dismiss all or part of a matter, or refrain from further hearing a matter, where it considers that ‘further proceedings are not necessary or desirable in the public interest’, and in s 45(2), which requires a Full Bench of the Commission to grant leave to appeal against decisions of single members of the Commission where, in the opinion of the Full Bench ‘the matter is of such importance that, in the public interest, leave should be granted.’
The omission of reference to the public interest in the objects of the current version of the federal legislation can be attributed to the Howard Government’s desire to ensure that ‘the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level.’[99] On this logic, if the parties wish to act in a manner that is contrary to the public interest, they should be free to do so — so long as they do not contravene any other relevant rule of law. This reasoning is also reflected in the fact that the Commission does not have discretion to refuse to certify an agreement on the grounds that it is contrary to the public interest.[100]
On the other hand, before it can certify an agreement, the Commission must be satisfied that the agreement meets the no-disadvantage test set out in Part VIE of the Act.[101] This is not a public interest test as such, but it clearly reflects a continuing perception that it would be contrary to the public interest for employees to be deprived of the benefits of an otherwise applicable award without some compensating benefit which is of such a character as to ensure that the agreement does not ‘result, on balance, in a reduction in the overall terms and conditions’ of the employees concerned.[102] This in turn bears witness to the proposition that the need to promote and to protect the public interest continues to permeate the regulatory mechanisms and policy assumptions embodied in the 1996 Act.
All of that said, it is clear that the shift to enterprise-based regulation of terms and conditions of employment has profound implications for the role of the public interest in the federal system of industrial regulation. The legislation now clearly contemplates that parties can negotiate for outcomes that are not consistent with the public interest — for example, as embodied in government policy as articulated from time to time, or in any principles laid down by the Commission.[103] On the other hand, it is important to keep even these changes in perspective. The no-disadvantage test means that it is still not open to parties to either an AWA or a certified agreement to agree upon terms that would, on balance, disadvantage employees relative to any otherwise applicable award. At the upper end of the spectrum, it is true that parties can agree on whatsoever terms they choose, irrespective of government policy or any principles enunciated by the Commission. On the other hand, the parties have always had the capacity to do this through over-award bargaining, even in the face of the disapproval of the tribunal.[104] The point is that they now have express legislative licence to do so.
The system of conciliation and arbitration put in place by the Conciliation and Arbitration Act 1904 (Cth) never achieved the objectives articulated by Higgins in 1915. In a democratic society, populated by mere mortals, it never could have done so. It is unrealistic to suppose that conciliation with arbitration in the background could ever truly have been substituted for strikes and lockouts — however ‘rude and barbarous’ they may be. In an economic system driven by the pursuit of profit, reason could never be expected entirely to displace ‘force’. However carefully crafted a legislative framework might be, ‘the might of the State’ could never effectually enforce peace between industrial combatants — at least not while paying even lip-service to the principles of liberal democracy.
Does it follow that the system must be accounted a failure? Almost certainly not. It is true that levels of industrial disputation in Australia have generally been quite high by international standards. On the other hand, they have never been as bad in relative terms as conservative politicians and newspaper leader writers have suggested. Indeed, it is quite possible that the distinctive character of Australian disputation may have been symptomatic of a healthy rather than a sick system. It is true that there were large numbers of disputes, but typically they were of short duration, were of limited extent, and involved relatively small numbers of workers. Arguably, they served as a useful means of letting off steam, and as a catalyst for reference of the matters in dispute to an industrial tribunal where they were usually resolved without undue delay. Levels of disputation have declined in recent years in step with trends in other countries. Ironically, this has occurred at a time when, for the first time, the system has openly evinced a preparedness to tolerate strikes and lockouts in certain circumstances.
The long-standing de facto tolerance of industrial disputation cannot be permitted to disguise the fact that the system has consistently struggled to come to terms with enforcement of its norms. The unrealistic expectation that conciliation and arbitration, with its associated benefits for unions, could entirely displace industrial disputation may in turn have fuelled an unrealistic approach to enforcement at the collective level. A system that is entirely intolerant of the reality of industrial disputation must inevitably become discredited. That is clearly what happened in the lead-up to, and in the aftermath of, the O’Shea incident. As indicated, this gave rise to a paradoxical situation where a system that was overburdened with enforcement provisions lacked any effective means of enforcing its norms. To some extent even this problem may have been more apparent than real. Large-scale, protracted disputes were few and far between. The more commonplace localised disputes were generally resolved by one or both of direct negotiation and the intervention of the tribunal — even though the involvement of the tribunal rarely conformed to the model of intervention envisaged by the framers of the system, or by the structure of the legislation. Nevertheless, the fact remains that the long-term credibility of any regulatory system must inevitably be compromised by a lack of a fair and effective means of enforcing its norms.
Reason did not displace force. To some extent this can be attributed to the same factors that prevented conciliation and arbitration effectively substituting for strikes and lockouts. But the effectiveness of the system was also compromised by the fact that it became excessively complex and inflexible. This can in part be attributed to the fact that the constitutional validity of the legislation rested upon a single head of power which envisaged the use of just two techniques for the prevention and settlement of one particular kind of dispute, and which required the existence of the very thing they were intended to prevent (an ‘industrial dispute’) to be able to operate. These difficulties were compounded by constant tinkering with the legislative framework by the Parliament, and by interpretations of the legislation and/or s 51(xxxv) by the High Court, which for many years were consistent only in being inconsistent. These were both cause and effect of an excessive formalism in the proceedings of the tribunal, and in the development of what is in many respects an absurdly over-elaborate legislative regime.[105]
For all that, the conciliation and arbitration system played a profoundly significant role in the development of the federation. It was one of the three pillars of social and economic policy throughout much of the 20th century. The others were the White Australia Policy and tariff protection. The first of these was finally and belatedly abandoned only in the 1960s. The second has not yet been entirely abandoned, but has been very much under threat since the early 1980s. In a sense, conciliation and arbitration is the sole survivor.
There are those who would argue that it retains some marginal relevance only by the skin of its teeth: that it has been fatally wounded by a combination of interrelated factors, including the increasing individualisation of industrial and social life, the decline of trade unionism, the changing character of the economy, and the shift to an enterprise focus for industrial regulation.[106] There are others who lament that it has not been, but urge that it should be, consigned to the same oblivion as the White Australia Policy.[107]
As ever, the truth lies somewhere between these extremes. The system has changed irrevocably. The forces of globalisation, technological change, and social and economic restructuring mean that the traditional model is gone forever. But it is important not to lose sight of the real strengths of that system in terms of helping to maintain social cohesion, to prevent large-scale industrial disruption and, above all, to ensure that the operation of the labour market was moderated by reference to the public interest. These are very real achievements, and it would be unwise to assume that there is no continuing role for a system that has delivered benefits of this character.[108] Interestingly, despite the distortions in the original template which have been noted in this paper, these outcomes are not far removed from what Higgins had in mind for the system he did so much to foster.
[*] LLB (Belfast), LLB (Hons) (Melb), PhD (Cantab); Partner, Corrs Chambers Westgarth Lawyers, Melbourne; Professorial Fellow, Law School, The University of Melbourne. The author wishes to thank John O’Sullivan for research assistance in the preparation of this article. He also wishes to thank the Review’s anonymous referee for a number of helpful comments. Responsibility for the final product is entirely that of the author.
[1] Justice Henry Bournes Higgins, ‘A New Province for Law and Order’ (1915) 29 Harvard Law Review 13, 13–14.
[2] See J A La Nauze, The Making of the Australian Constitution (1972) 128, 152–3, 192, 206–8.
[3] See further John Rickard, H B Higgins: The Rebel as Judge (1984). One of the most vociferous critics of the conciliation and arbitration system in recent years has been the H R Nicholls Society. It is so-called in honour of an editor of the Hobart Mercury, who was unsuccessfully prosecuted for contempt of court in publishing a newspaper article which was critical of Higgins: see further, Rickard, 186–8. For an indication of the Society’s views on Higgins’ heritage, see
H R Nicholls Society, Arbitration in Contempt (1986).
[4] For a brief summary of the disputes, see J J Macken, Australian Industrial Laws: The Constitutional Basis (2nd ed, 1980) 6–10.
[5] The origins of conciliation and arbitration have spawned an extensive literature. Of particular interest are: Stuart Macintyre and Richard Mitchell, ‘Introduction’ in Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration (1989) 1; David Plowman, ‘Forced March: The Employers and Arbitration’ in Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration (1989) 135; Ray Markey, ‘Trade Unions, the Labor Party and the Introduction of Arbitration in New South Wales and the Commonwealth’ in Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration (1989) 156; Stuart Macintyre, ‘Neither Capital nor Labour: The Politics of the Establishment of Arbitration’ in Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration (1989) 178; Greg Patmore, Australian Labour History (1991) ch 5; Laura Bennett, Making Labour Law in Australia (1994) 9–21.
[6] In their developed form the various conciliation and arbitration systems operated through independent tribunals with the power to attempt to secure a conciliated resolution of the matters before them, and with the capacity to impose an arbitrated outcome in the event of continuing disagreement. Wages boards comprised equal numbers of employer and employee representatives, with an independent chair. In the event of disagreement between the employer and employee groups, the chair could opt for either the employer or the employee position, but could not impose their own outcome. Most jurisdictions toyed with wages boards at some point, but only in Victoria and Tasmania did they survive into the modern era. See further Breen Creighton and Andrew Stewart, Labour Law: An Introduction (3rd ed, 2000) 36–9.
[8] See Rickard, above n 3, 98.
[9] According to Plowman, there were 570 federal agreements in force at that time, as compared to 96 awards: Plowman, above n 5, 152.
[10] For a detailed analysis of this issue, see Ronald McCallum and Graham Smith, ‘Opting Out from Within: Industrial Agreements under the Conciliation and Arbitration Act 1904’ (1986) 28 Journal of Industrial Relations 57.
[11] At the time of their repeal the agreement provisions were located in pt X of the 1904 Act, and were almost entirely unused in practice.
[12] Committee of Review into Australian Industrial Relations Law and Systems (1985) vol 2, Recommendation 21. For discussion, see vol 2, 367–70.
[13] See further below nn 42–48 and accompanying text.
[14] This reasoning finds expression in the objects clause of the Workplace Relations Act 1996 (Cth), which places principal emphasis upon ‘ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level’ (s 3(b)); upon ‘enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances’ (s 3(c)); and upon providing the means whereby wages and conditions of employment can be determined ‘as far as possible by the agreement of employers and employees at the workplace or enterprise level, upon a foundation of minimum standards’ (s 3(d)(i)). Only at s 3(h) is there any (somewhat grudging) recognition of a continuing role for conciliation and arbitration: ‘enabling the [Australian Industrial Relations] Commission to prevent and settle industrial disputes as far as possible by conciliation and, where appropriate and within specified limits, by arbitration’.
[15] See, eg, Des Moore, The Case for Further Deregulation of the Labour Market (1998); Des Moore, ‘Better Than the Australian Industrial Relations Commission’ (1999) 15(4) Policy 11.
[17] Richard Mitchell, ‘State Systems of Conciliation and Arbitration: The Legal Origins of the Australasian Model’ in Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration (1989) 74, 88.
[18] Nevertheless, elements of the Australian system can be found in the most unlikely places: see, eg, Paul Omojo Omaji, ‘Legal Transplantation: A Case Study of the Migration of the Australian Collective Labour Law to Nigeria’ (1993) 11 Law in Context 34.
[19] Referenda in 1910 and 1912 proposed that the Commonwealth Parliament should have general powers to make laws in relation to employment and/or industrial disputes. A further referendum in 1912 would have given the Commonwealth power to make laws in relation to disputes involving state railways. A 1919 proposal would have given the Commonwealth comprehensive industrial power on a temporary basis. There were further unsuccessful attempts to extend the Commonwealth’s industrial power in 1926, 1944 and 1946. For a helpful summary of these initiatives, see Enid Campbell, ‘Changing the Constitution — Past and Future’ [1989] MelbULawRw 1; (1989) 17 Melbourne University Law Review 1, 18–23.
[20] It is important to note that the system is not, and never has been, compulsory in the sense that parties are legally obliged to bring their disputes before the tribunal. However, once the system has been activated, then it is ‘compulsory’ in the sense that the parties must participate in Commission proceedings if summoned to do so, and are bound by valid awards of the Commission in accordance with s 149(1) of the Workplace Relations Act 1996 (Cth). See further, Breen Creighton, ‘Enforcement in the Federal Industrial Relations System: An Australian Paradox’ (1991) 4 Australian Journal of Labour Law 197, 206–8.
[22] See further the discussion of the logic of enforcement, below Part IV.
[23] W B Creighton, W J Ford and R J Mitchell, Labour Law: Text and Materials (1983) 890. The figure for 1941 represented 49.3% of the workforce, who were grouped in 374 unions. The percentages for the other years quoted were 1891 — 4.1%; 1901 — 6.1%; 1906 — not available; 1911 — 27.9%: ibid.
[24] As in most other developed countries, there has been a marked decline in levels of union membership in Australia over the last 10 years. As at August 1999, 26% of Australia’s 7.3 million employees aged 15 years and over were trade union members in their main job. This continues the steady decline in trade union membership from 46% in 1986. For an interesting analysis of whether Australian unions were too dependent upon the conciliation and arbitration system, see Peter Gahan, ‘Did Arbitration Make for Dependent Unionism? Evidence from Historical Case Studies’ (1996) 38 Journal of Industrial Relations 648.
[25] It also seems clear that the emerging system played an important role in stimulating the growth of employer organisations: see, eg, Plowman, above n 5, 136–7; Patmore, above n 5, 121.
[26] See Australasian Meat Industry Employees Union v Meat and Allied Trades Federation of Australia [1969] CthArbRp 278; (1969) 127 CAR 1142 (‘Equal Pay Case 1969’); Administrative and Clerical Officers’ Association, Commonwealth Public Service v Postmaster-General [1972] CthArbRp 1420; (1972) 147 CAR 172 (‘Equal Pay Case 1972’); cf Re Private Hospitals’ and Doctors’ Nurses (ACT) Award 1972 (1986) 13 IR 108.
[27] See, eg, Federated Miscellaneous Workers Union of Australia v ACT Employers Federation (1979) 21 AILR 88; Federated Miscellaneous Workers’ Union of Australia v ACT Employers Federation (1979) 21 AILR 199; Parental Leave Case (1990) 36 IR 1; Parental Leave Case [No 2] (1990) 39 IR 344.
[28] See Termination, Change and Redundancy Case [1984] CthArbRp 284; (1984) 8 IR 34; Termination, Change and Redundancy Case (1984) 9 IR 115.
[29] [1907] CthArbRp 12; (1907) 2 CAR 1.
[30] This legislation was declared to be unconstitutional in R v Barger [1908] HCA 43; (1908) 6 CLR 41. However, the principles enunciated by Higgins J in relation to ‘fair and reasonable’ wages were not affected by the decision in R v Barger.
[31] The fact that this case was decided under the Excise Tariff Act 1906 (Cth) serves to highlight the close interrelationship between the conciliation and arbitration system and tariff protection: see below Part VI.
[32] [1907] CthArbRp 12; (1907) 2 CAR 1, 3.
[33] Ibid 4.
[34] Ibid.
[35] For a summary of wage fixing under the federal legislation, see Creighton and Stewart, above n 6, 41–4. For more detailed treatment, see K J Hancock, ‘The First Half Century of Australian Wage Policy’ (Pt 1) (1979) 21 Journal of Industrial Relations 1; K J Hancock, ‘The First Half Century of Australian Wage Policy’ (Pt 2) (1979) 21 Journal of Industrial Relations 129; John Niland (ed), Wage Fixation in Australia (1986); Creighton, Ford and Mitchell, above n 23, 705–28; Ronald McCallum and Marilyn Pittard, Australian Labour Law: Cases and Materials (3rd ed, 1995) ch 5.
[36] Section 3(d)(i). According to s 3, the principal object of the Workplace Relations Act 1996 (Cth) is to provide ‘a framework for co-operative workplace relations which promotes the economic prosperity and welfare of the people of Australia’.
[37] See John Niland, Collective Bargaining and Compulsory Arbitration in Australia (1978) 17.
[38] The Australian Industrial Relations Commission retains the capacity to make such awards by force of s 111(1)(b) of the Workplace Relations Act 1996 (Cth), but the practice is much less common than formerly. Presumably this can be attributed to the fact that the principal emphasis under the Act is now upon the regulation of terms and conditions of employment by means of agreements under Part VIB, so if the parties have reached agreement it would now normally be certified as such, rather than ratified as a consent award.
[39] Mark Short, Alison Preston and David Peetz, The Spread and Impact of Workplace Bargaining: Evidence from the Workplace Bargaining Research Project (1993) 4–6.
[40] See, eg, Kenneth Walker, Australian Industrial Relations Systems (1970) ch 9; Kevin Hince, ‘Utah and the Mining Unions: A Case Study of Collective Negotiation at the Company Level’ (1980) 22 Journal of Industrial Relations 149. For ‘opting out’ in less remote areas, see Frank De Vyver, ‘The Melbourne Building Industry Agreement: A Re-Examination’ (1970) 12 Journal of Industrial Relations 166.
[41] Braham Dabscheck, ‘In Search of the Holy Grail: Proposals for the Reform of Australian Industrial Relations’ in Richard Blandy and John Niland (eds), Alternatives to Arbitration (1986) 163, 166–7.
[42] See, eg, Industrial Relations Study Commission, Enterprise-Based Bargaining Units: A Better Way of Working (1989) vol 1; H R Nicholls Society, above n 3.
[43] See W J Ford, ‘The Constitution and the Reform of Australian Industrial Relations’ (1994) 7 Australian Journal of Labour Law 105, 111–17. For the first time, the 1993 amendments also drew part of their constitutionality from the external affairs power in s 51(xxix) of the Constitution. As to the validity of these provisions, see Victoria v Commonwealth (1996) 187 CLR 416 (‘Industrial Relations Act Case’).
[44] Whilst Minister for Employment, Workplace Relations and Small Business Peter Reith was a strong advocate of use of the corporations power as the basis for federal industrial regulation: see Peter Reith, Department of Employment, Workplace Relations and Small Business, Breaking the Gridlock: Towards a Simpler National Workplace Relations System — The Case for Change, Discussion Paper No 1 (2000) and Peter Reith, Department of Employment, Workplace Relations and Small Business, Gridlock: Towards a Simpler National Workplace Relations System — A New Structure, Discussion Paper No 2 (2000). See also Colin Thatcher, ‘Towards a Unitary National Workplace Relations System’ (2000) 2(2) BCA Papers 15, 21–2.
[45] See further Marilyn Pittard, ‘Collective Employment Relationships: Reforms to Arbitrated Awards and Certified Agreements’ (1997) 10 Australian Journal of Labour Law 62; Greg McCarry, ‘From Industry to Enterprise, from Award to Agreement: Federal Laws and Workplace Change in Australia’ in Dennis Nolan (ed), The Australasian Labour Law Reforms (1998) 52, 52–71; Creighton and Stewart, above n 6, 148–74.
[46] See further Ronald McCallum, ‘Australian Workplace Agreements: An Analysis’ (1997) 10 Australian Journal of Labour Law 50; Andrew Stewart, ‘The Legal Framework for Individual Employment Agreements in Australia’ in Stephen Deery and Richard Mitchell (eds), Employment Relations: Individualisation and Union Exclusion (1999) 18; Creighton and Stewart, above n 6, 174–87.
[47] As at 31 October 2000, a total of 134 854 AWAs had been approved since the legislation became operative in March 1997: Office of the Employment Advocate, Statistics (2000) <http://www.oea.gov.au/WhatsNew/WhatsStats.html> at 31 December 2000 (copy on file with author).
[48] See further Creighton and Stewart, above n 6, 135–9.
[50] See Creighton, Ford and Mitchell, above n 23, chh 34–6, 38; McCallum and Pittard, above n 35, ch 14; James Macken, Paul O’Grady and Carolyn Sappideen, Macken, McCarry and Sappideen’s The Law of Employment (4th ed, 1997) 392–457; Creighton and Stewart, above n 6, 402–11.
[51] For an isolated prosecution under s 6, see Stemp v Australian Glass Manufacturers Co Ltd [1917] HCA 29; (1917) 23 CLR 226.
[52] For a detailed discussion of deregistration as an enforcement technique, see Creighton, Ford and Mitchell, above n 23, 843–51.
[53] See Workplace Relations Act 1996 (Cth) pt X. For comment, see Creighton and Stewart, above n 6, 350–2. For a detailed analysis of the only recent instance of deregistration of a trade union for industrial reasons, see Laura Bennett, ‘Legislative Policy and Design: Federal Deregistration and the “Destruction” of the Builders’ Labourers’ Federation’ (1991) 4 Australian Journal of Labour Law 18. It is interesting to note that this deregistration was effected on the basis of special federal and state legislation, rather than in reliance upon the deregistration provisions of the (then) Conciliation and Arbitration Act 1904 (Cth).
[54] See Australian Workers’ Union v Pastoralists’ Federal Council of Australia [1907] CthArbRp 10; (1907) 1 CAR 62, 98.
[55] Seamen’s Union of Australia v Commonwealth Steamship Owners’ Association [1936] HCA 8; (1936) 54 CLR 626. See also R v Spicer; Ex parte Seamen’s Union of Australia [1957] HCA 16; (1957) 96 CLR 341.
[56] For a detailed discussion of bans clauses, and their downfall, see Creighton, Ford and Mitchell, above n 23, 833–40, and the sources cited therein.
[57] See further A Jacobs, ‘The Law of Strikes and Lock-Outs’ in R Blanpain and C Engels (eds), Comparative Labour Law and Industrial Relations in Industrialized Market Economies (6th ed, 1998) 461.
[58] Opened for signature 19 December 1966, 993 UNTS 3, 6 ILM 360 (entered into force 3 January 1976) (‘ICESCR’).
[59] Interestingly, neither the ICESCR, nor the jurisprudence of the ILO, makes any reference to the lockout as a corollary of the right to strike. This presumably reflects the perception that the right to strike is meant to help redress the power imbalance between capital and individual, with the consequence that employers do not need a legally sanctioned right to lockout. Be that as it may, the proscriptions in s 6 of the 1904 Act applied equally to lockouts and to strikes, whilst the protections now set out in Part VIB (certified agreements) and Part VID (AWAs) of the Workplace Relations Act 1996 (Cth) extend to both strikes and lockouts.
[60] Committee of Experts on the Application of Conventions and Recommendations, Freedom of Association and Collective Bargaining (81st Session, International Labour Conference, 1994) Report No III (Part 4B) 65 (footnote added).
[61] Although the 1904 Act was unusual it was not unique: several of its antipodean forebears contained provisions to the same effect. See further Mitchell, ‘State Systems of Conciliation and Arbitration’, above n 17, 91.
[62] Trade Disputes Act 1906 (UK) 6 Edw 7, c 47. For background on this legislation, see Alan Fox, History and Heritage (1985) 179–86; Henry Phelps Brown, The Origins of Trade Union Power (1983) 33–5; J V Orth, Combination and Conspiracy: A Legal History of Trade Unionism 1721–1906 (1991) 147–52.
[64] Ibid.
[65] ILO, Freedom of Association, Studies and Reports, Series A (Industrial Relations) No 32 (1930) vol 5, 316.
[66] Ibid 317.
[67] See, eg, the figures cited in Stephen Creigh, ‘Australia’s Strike Record: The International Perspective’ in Richard Blandy and John Niland (eds), Alternatives to Arbitration (1986) 29,
36–7; John Beggs and Bruce Chapman, ‘Australian Strike Activity in an International Context: 1964–85’ (1987) 29 Journal of Industrial Relations 137.
[68] For example, in the 12 months to July 2000 there were 748 industrial disputes in Australia, involving the loss of 100 working days per 1000 employees: Australian Bureau of Statistics (‘ABS’), Industrial Disputes Australia July 2000, ABS Catalogue No 6321.0 (2000). In contrast, in calendar year 1990 there were 1 193 disputes, involving the loss of 217 working days per 1000 employees: ABS, Industrial Disputes Australia 1990, ABS Catalogue No 6322.0 (1990).
[69] See, eg, the disputes described in Douglas Blackmur, Strikes: Causes, Conduct and Consequences (1993).
[70] See the sources cited in above n 50.
[71] For a brief overview of the nature and extent of liability for industrial action prior to the enactment of the Industrial Relations Act 1988 (Cth), see W B Creighton, ‘Legal Enforcement and the Industrial Relations Process’ in Don Rawson and Chris Fisher (eds), Changing Industrial Law (1988) 120.
[72] See further the table in Creighton, Ford and Mitchell, above n 23, 1166–71.
[73] For rare (British) exceptions, see Ebbw Vale Steel Iron & Coal Co v Tew (1935) 79 Sol Jo 593; National Coal Board v Galley [1958] 1 All ER 91.
[74] But see, eg, Hall v General Motors-Holden’s Ltd (1979) 45 FLR 272.
[75] See further Creighton, Ford and Mitchell, above n 23, 833–40.
[76] For more detailed accounts of the O’Shea incident, see Blanche d’Alpuget, Mediator: A Biography of Sir Richard Kirby (1977) 232–5; Jack Hutson, Penal Colony to Penal Powers (revised ed, 1983) 266–80.
[77] Creighton, ‘Enforcement in the Federal Industrial Relations System’, above n 20, 225.
[79] See further Greg McCarry, ‘Sanctions and Industrial Action: The Impact of the Industrial Relations Reform Act’ (1994) 7 Australian Journal of Labour Law 198, 199–213, 214–17.
[80] See Greg McCarry, ‘Industrial Action under the Workplace Relations Act 1996 (Cth)’ (1997) 10 Australian Journal of Labour Law 133, 133–42; Creighton and Stewart, above n 6, 156–62.
[81] See further Breen Creighton, ‘The Workplace Relations Act in International Perspective’ (1997) 10 Australian Journal of Labour Law 31, 43–6; Breen Creighton, ‘The ILO and the Protection of Fundamental Human Rights in Australia’ [1998] MelbULawRw 12; (1998) 22 Melbourne University Law Review 239, 264–75. See also Committee of Experts on the Application of Conventions and Recommendations, Report of the Committee of Experts on the Application of Conventions and Recommendations (87th Session, International Labour Conference, 1999) Report No III (Part 1A) 204–7.
[82] Prior to the decision in R v Kirby; Ex parte Boilermakers’ Society of Australia [1956] HCA 10; (1956) 94 CLR 254, arbitral and judicial powers under the 1904 Act were vested in a single entity. This was no longer permissible after the High Court and Judicial Committee of the Privy Council (R v Kirby; Ex parte Boilermakers’ Society of Australia [1956] HCA 10; (1956) 94 CLR 254 sub nom A-G (Cth) v The Queen [1957] HCA 12; (1956) 95 CLR 529) affirmed that the doctrine of separation of powers was impliedly incorporated in the Constitution. In consequence, since that time, conciliation and arbitration powers have been vested in a separate tribunal, variously styled the Commonwealth Conciliation and Arbitration Commission, the Australian Conciliation and Arbitration Commission, and (since 1988) the Australian Industrial Relations Commission. Judicial functions have been vested in a variety of courts: presently State courts of competent jurisdiction and the Federal Court of Australia. The Industrial Relations Court of Australia was established only in 1993, but was stripped of the capacity to hear new matters by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth).
[83] The 1904 Act was amended in 1928 to make provision for the establishment of an inspectorate, but this did not actually occur until 1934. See Bennett, Making Labour Law in Australia, above n 5, 146.
[84] See further Marilyn Pittard, ‘The Conciliation and Arbitration Act — The Prevention of Strikes and the Recovery of Wages’ in Monash University Faculty of Law (ed), Australian Conciliation and Arbitration after 75 Years: The Federal Arbitration Process, Present Problems and Future Trends (1979) 17, 17–32; Bennett, Making Labour Law in Australia, above n 5, ch 6; Ron McCallum, ‘The Imperfect Safety-Net: The Enforcement of Federal Awards and Agreements’ in Ron McCallum, Greg McCarry and Paul Ronfeldt (eds), Employment Security (1994) 201.
[85] For a detailed account of the establishment and powers of the Bureau, see Richard Mitchell, ‘Industrial Relations under a Conservative Government: The Coalition’s Labour Law Programme 1975 to 1978’ (1979) 21 Journal of Industrial Relations 435. See also Colin Wood, ‘The Establishment and Operations of the Industrial Relations Bureau’ in Monash University Faculty of Law (ed), Australian Conciliation and Arbitration after 75 Years: The Federal Arbitration Process, Present Problems and Future Trends (1979) 33, 33–46.
[86] See Bennett, Making Labour Law in Australia, above n 5, 149.
[87] Workplace Relations Act 1996 (Cth) s 83BB(1)(e).
[88] Workplace Relations Act 1996 (Cth) s 83BB(1)(f).
[89] Workplace Relations Act 1996 (Cth) s 83BB(1)(g).
[90] See further Creighton and Stewart, above n 6, 108–9.
[91] The 1922 Act was repealed and replaced by the Public Service Act 1999 (Cth).
[92] Workplace Relations Act 1996 (Cth) s 99(2).
[93] Respectively, Workplace Relations Act 1996 (Cth) ss 43(1), 44(1).
[94] Workplace Relations Act 1996 (Cth) s 109(1).
[95] See, eg, Section 109 Application for Review of Awards (1998) 44 AILR 3–905, where the Minister (successfully) sought review of a number of award-simplification decisions by the Commission because of concerns that the Commission had not taken adequate account of the purposes of the review process.
[96] [1991] CthArbRp 425; (1911) 5 CAR 147, 160.
[97] Joseph Isaac and Ronald McCallum, ‘The Neutral and Public Interests in Resolving Disputes in Australia’ (1992) 13 Comparative Labor Law Journal 380, 383.
[98] For more detailed consideration of the public interest concept under the 1988 Act, see ibid; John Benson, Gerard Griffin and Graham Smith, ‘The Public Interest and the Industrial Relations Act 1988’ (1992) 3 Public Law Review 113.
[99] Workplace Relations Act 1996 (Cth) s 3(b).
[100] Under s 115 of the Industrial Relations Act 1988 (Cth) the Commission was obliged to certify any agreement that satisfied the other requirements of s 115, ‘unless it is of the opinion that it would be contrary to the public interest to certify the agreement.’ Dissatisfaction with the (allegedly) restrictive approach adopted by the Commission in relation to this matter caused the Keating Government to introduce revised provisions relating to certified agreements which did not make express reference to the public interest. As indicated, this initially took the form of Division 3A of Part VI of the Act and later of Part VIB.
[101] Workplace Relations Act 1996 (Cth) s 170LT(2).
[102] Workplace Relations Act 1996 (Cth) s 170XA (2). According to s 170LT(3), if the only reason the Commission must refuse to certify an agreement is because it does not satisfy the no-disadvantage test, then the Commission may certify the agreement if it is satisfied that it would not be contrary to the public interest to do so.
[103] Even s 115(5) of the Industrial Relations Act 1988 (Cth) provided that certifying an agreement was not to be taken to be contrary to the public interest ‘merely because the agreement is inconsistent with general Full Bench principles.’
[104] During the Accord period from 1983 to 1996, the Commission adopted more effective means of ensuring adherence to National Wage Principles than had generally been the case in the past — see further Creighton, Ford and Mitchell, above n 23, 709–28; McCallum and Pittard, above n 35, 610–56. Despite this, the practice of over-award bargaining remained commonplace throughout this period. Even paid rates awards (ie, awards that purport to lay down actual rates, rather than minima) were often used as the basis of over-award bargaining. (Section 89A(3) of the Workplace Relations Act 1996 (Cth) has the effect that the Commission cannot make any new paid rates awards, whilst items 49(5) and (6) and 51(4) and (5) of sch 5 to the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) require the conversion of existing paid rates awards to minimum rates awards.)
[105] See further Creighton, Ford and Mitchell, above n 23, chh 14–20; McCallum and Pittard, above n 35, chh 5–8; Creighton and Stewart, above n 6, 65–82.
[106] See further Richard Mitchell and Malcolm Rimmer, ‘Labour Law, Deregulation, and Flexibility in Australian Industrial Relations’ (1990) 12 Comparative Labor Law Journal 1; Richard Mitchell and Richard Naughton, ‘Australian Compulsory Arbitration: Will It Survive into the Twenty-First Century?’ (1993) 31 Osgoode Hall Law Journal 265; Martin Vranken, ‘Demise of the Australasian Model of Labour Law in the 1990s’ (1994) 16 Comparative Labor Law Journal 1.
[107] For contrasting views on the efficiency, and continuing role, of conciliation and arbitration, see Keith Hancock, ‘Fiction of Labour Market Deregulation’, The Australian Financial Review (Sydney), 8 January 2001, 27 and Des Moore, ‘Arbitration and the Task at Hand’, The Australian Financial Review (Sydney), 9 January 2001, 39.
[108] See further Breen Creighton, ‘The Role of the State in Regulating Employment Relations: An Australian Perspective’ (1997) 2 Flinders Journal of Law Reform 103, 108–15.
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