The Changing Paradigm: Freedom, Jobs, Prosperity

Presentation of the Charles Copeman Medal

John Stone

Mr Chairman, our guest of honour, the Honourable Peter Reith, other distinguished guests, ladies and gentlemen.

It is an honour, and a privilege, to have been invited back to Melbourne on this occasion to undertake the pleasurable task of presenting to Peter Reith the Charles Copeman Medal for distinguished service in the cause of Australian industrial relations---or workplace relations as they are now, perhaps more fittingly, described.

There are, in that sense, two people to be honoured here this evening---Charles Copeman, after whom this medal is so appropriately named, and its recipient this evening, Peter Reith. But before saying something about each of them, perhaps I may say a few words about why this award, or at any rate the cause which it symbolizes, is so important.

The importance of that cause---essentially, the deregulation of the labour market---can be assessed both at the macro level and at the micro level.

At the macro level, the dead hand of the "Deakinite settlement" has, over the first 90 years or so of federation, been the single most important factor causing Australia to drop some 15-20 places in world rankings of per capita real incomes from the time when, at the beginning of the 20th Century, it vied with Argentina and New Zealand for first place in those rankings.

That is bad enough. Yet to my mind the real crime (and I do not apologize for using that strong word) of our industrial relations system has been its grievous consequences for the lives, and livelihoods, of hundreds of thousands of Australians. Those are the people---unskilled, or otherwise physically or socially disadvantaged---whom our system of setting wage rates and other conditions of employment by fiat, rather than through the "higgling of the market", has effectively locked out of work, to their enduring immiseration.

Nor should we forget, or under-rate the importance of, the corruption of our trade unions, to which their legally enforceable privileges have laid them open, and which, over the past 15 years, this Society has done its small best to drag into the light of day. A tip of that great iceberg is currently showing up at the hearings of the Royal Commission into the building and construction industry. But for every scandal being revealed there, a hundred others proceed under cover of the threats, inducements and general "stand-over" tactics at which our trade unions, backed by their legal privileges (not to mention a number of Federal Court judges!), have become so adept.

It is true that, over the past ten years or so, things have improved. The iron grip of the federal Industrial Relations Commission has been weakened, and one or two State governments (notably the previous Court Government in Western Australia) have also moved to lessen the power of their own State industrial tribunals. It is, I suggest, no mere coincidence that those past ten years or so have seen the Australian economy performing remarkably, and productivity improving faster (albeit from still unsatisfactory levels) than at any previous time in the post-War period.

During that period, too---and even before it---we have seen a steady attrition in the proportion of the private sector workforce maintaining membership of trade unions. Ansett Airlines, one of our two heavily unionized airlines, has gone the way of all such industrial flesh. In its place are, on the one hand, a totally non-unionized Virgin Blue, and on the other hand, a still highly unionized Qantas which, if it is to retain its now enhanced role, will have to reduce the power of those unions to render it uncompetitive.

In thus recalling the advances seen in recent years, I am of course reminded of the man after whom this presentation tonight is named, Charles Copeman. As the President of this Society, Ray Evans, has said, it was Charles Copeman

As it happens, I can add a little, from my own personal experience, to that testament, glowing though it already is. In May 1986, I was invited to join the Board of Peko-Wallsend, of which Charles Copeman had not long previously become the Chief Executive Officer.

Naturally, I am not about to breach the confidentiality of that Board's proceedings (although Peko-Wallsend itself is no more, having been taken over subsequently by Norths, and its then Chairman, Keith Halkerston, is dead). Without doing so, however, I can say that when, at my first Board meeting, we considered the draft Budget for the 1986--87 financial year, it was clear that the company's major operation at Robe River (which it majority owned and wholly managed) was in very deep trouble indeed. Such was the grip that the local trade union organizers had gained over the day-to-day decisions of management that productivity was abysmal; costs were to a considerable extent out of control; and the Board faced a choice between investing huge additional sums in so-called "cost-saving" investment (thereby rendering itself even more vulnerable to trade union extortion) or winding down the operation more or less entirely.

Confronted with this situation, Charles Copeman decided---and sought the Board's approval for his judgment---that the only course realistically open was to stand and fight. And thus the saga of Robe River began.

This is not the occasion to traverse in any detail the unfolding of that saga. Suffice to say that Charles Copeman took a number of actions which, to his fellow Chief Executive Officers in the Australian corporate world of that day, were virtually unprecedented:

• First and foremost, he handled the matter himself, instead of entrusting it to an "Industrial Relations Manager" or some other such flunkey.
• Second, he appealed directly to the Robe River workers. That is, he committed the unforgivable sin (in the eyes of trade union organizers then and since) of treating his employees like adults, with minds of their own, individual powers of decision, and a capacity to see for themselves where their own best interests, and the best future interests of their families, lay.
• Third, he made it clear (and in the eyes of the workforce, was credible in doing so) that he would not back off, or back down, and that those who followed him would not subsequently be deserted. Those who gave their loyalty to him, and to the company, could count on his, and the company's, loyalty to them.
• Fourth, although at all times adhering strictly to the law---including the almost unendurable pettiness of Western Australia's then industrial relations law---he made it clear that the battle would be fought to a conclusion; and that he was not interested in "deals" of the kind to which the arbitration system was so corruptly habituated.
• Fifth, and very importantly, he took the almost unheard of step of reverting, when necessary, to the real Courts---in this case, the Supreme Court of Western Australia, where at that time fortunately there were still to be found judges prepared to be true to their oaths to "do right according to law". To his union opponents, accustomed as they were to the semi-corrupt processes of wheeling and dealing with Industrial Relations Commissioners, many of whom were themselves ex-trade union trusties, this was, to say the least, perplexing.

Meanwhile, of course, the politicians were not idle, either in Perth (where the Burke Government was then presiding) or in Canberra. While the former sought to persuade the Japanese minority shareholders (and customers) to "lean" on Mr Copeman, their Canberra counterparts resorted to public abuse and private pressure on certain members of Peko's Board. It was at this time that the then Prime Minister, Mr Hawke, bestowed on the H.R. Nicholls Society his badge of honour, calling us "economic lunatics" and "political troglodytes". The fact that, as the founding, and then still, President of the Society, I was a member of the Peko-Wallsend board, excited the usual conspiracy theories, as did the fact that Charles Copeman had attended the Society's inaugural conference in Melbourne only a few months before the Robe River saga began.

The initial strike mounted in July, 1986 failed to achieve its organizers' objectives. Production at the mine (and profitability) suffered considerably; but the mine kept working; the ore-trains kept running; the ships kept on being loaded; and productivity per man-hour actually rose significantly. The second, and more serious strike began in late January, 1987 and ran into February. It was marked by some actual violence, and a good deal more threats of violence, including threats against the wives and children of those employees still operating the mine. But to cut short the story, in the end Charles Copeman won, and the rest, as they say, is history. Industrial relations in Australia, and particularly in our mining industry, would never be the same again.

Robe River, with productivity more than doubling, came to be the jewel in North's crown, and is now one of a number of such jewels in the crown of Rio Tinto. Charles Copeman himself received the usual reward of anyone in corporate Australia who, by their courage and outstanding leadership, has the effect of shining a revealing light on the manifest inadequacies of their corporate peers---the kind of people who used to run, say, Norths itself, or BHP as it then was. Tonight, I can only salute him, and say that all Australians are in his debt.

Another man to whom all Australians are also in debt is our guest of honour this evening, Peter Reith. I have already noted the marked change in Australia's national productivity performance over the last ten years or so, to which Mr Reith's Workplace Relations legislation contributed significantly

from 1997 onwards. At that time, if I recall correctly, this Society was not uncritical of Mr Reith for what it saw as his failure to push harder for much greater reforms in the face of a hostile Senate. I did not agree with that view at the time, and it is only fair to say, I think, that the Minister's judgment---that it was better to achieve the good than to fail while seeking to achieve the best---has been proven correct.

Important though that workplace reform legislation was, however, in the overall scheme of things, I doubt whether, if that were all, we would be meeting here tonight to honour Peter Reith in the name of Charles Copeman. I suggest that it was, rather, his performance in the great waterfront dispute of 1998. Again, to invoke the words of Ray Evans:

It would be otiose on my part to seek to describe those events, of which we shall shortly have some account from Mr Reith's own lips. Nevertheless, just as in Mrs Thatcher's Britain the great coal strike in the 1980s marked a truly significant watershed in that country's industrial relations (and hence national productivity performance) generally, so in our case the 1998 dispute with the Maritime Union of Australia marked a similar watershed. In deciding, in that dispute, to give his backing, and that of the Government, to another unusual Chief Executive in the person of Mr Chris Corrigan, Peter Reith displayed the same qualities of judgment, fortitude and coolness under fire which he had earlier displayed during his political career. (I remember in particular his sterling performance in 1988 when, as Shadow Attorney-General in the federal Opposition of that time, he led a brilliantly executed campaign against the four referendums then put to the Australian people. They were defeated, as I recall, with the largest votes against them ever recorded in the history of Australia's referendums.)

And so, in the end, it was to be with the waterfront ten years later. In the teeth of a bitterly hostile media led, as usual, by "our own" ABC; of a trade union movement which rightly saw the waterfront dispute as a potential turning point in its national power and influence; of a Federal Court whose judges persistently took it upon themselves to thwart the national interest; and not least, in the face of a Victorian police force which largely failed to maintain law and order at a number of critical moments, notably by failing to enforce several injunctions of the Victorian Supreme Court---in the face of all these obstacles, the Maritime Union of Australia was ultimately forced to sue for peace. And the rest, to quote once again that aphorism, is history: container lifting rates now achieved which had been declared unattainable; an Australian waterfront which is no longer seen around the world as a kind of thieves' kitchen of industrial relations extortionists; costs to our major export industries greatly reduced; and so on.

So that triumph, ladies and gentlemen, is why we are here tonight, and why I now have great pleasure in presenting Peter Reith with the Charles Copeman Medal, and calling upon him to address us.