The Changing Paradigm: Freedom, Jobs, Prosperity

Remarks to the HR Nicholls Society

The Hon. Peter Reith

I am genuinely honoured to receive the Charles Copeman Medal for 2002 and I express my thanks to the Society for its hospitality tonight. I also thank John Stone for his kind words. I worked in the parliament with John and for quite a time we were on the front-bench together. He is a person of remarkable talent but also has a lot of commonsense and I admire him greatly.

Julie also appreciates the invitation to be here. In some ways, wives of people in public life are the silent sufferers because they cop the barbs and certainly feel them as much if not more than the direct recipient, but never have the chance to reply to the critics.

There have been some famous recipients of this Medal but I also pay tribute to the thousands of employers and employees who have fought their own battles for a better deal at work. As a Minister I was lucky to meet a lot of them.

I should say that to the extent that the reform of the waterfront was taken into account by the Society in deciding to make this award, then the efforts of Mr Chris Corrigan should be mentioned. He is a person of exceptional character and ability and to him must go a lot of the credit for the huge improvements in productivity and reliability in the performance of Patrick Stevedores and the industry generally.

Like many reformers, he has had to wear a lot of vindictive and personal criticism. He was described in 1998 (when Lang's share price was $2.05) by the Fairfax press as "Australia's most reviled employer". I won't repeat what some unionists said about him. He has many fine personal characteristics and two should be mentioned. He is unpretentious. He once said "If you have some huge office with magnificent views over the city you tend to think there is something special about you." I went to his office once and he is true to his word, it was nothing special. Secondly, he has a healthy skepticism of governments and once said that "We ascribe to the government a role as benefactor which I think really has its roots in socialist ideas". Consistent with that view, he is a strong supporter of deregulation and privatization and, like many of us, he believes that the benefits of economically rational policies are irrefutable. He likes competition, which is a trait that marks him out from some business leaders.

It is good also to give my first speech in Australia since leaving federal politics at the last election. It was time for me to move on and so I have no regrets. I feel that I was lucky to have the chance to be involved in so many things that were worth doing. Of course I had my ups and downs, but who doesn't? If you are just a time-server then you won't get into any trouble, but then again you won't achieve anything either.

Now I speak as an ordinary citizen. I will be able to say what I really think of politicians. And sling off at pollies for their inadequacies. The ALP ones will keep me busy for a while so I will try to avoid doing a "Malcolm'.

In his press release for this conference, Ray Evans said the press was disgraceful in the waterfront dispute. Some were, some weren't. Having been through Wapping, it was surprising that the Murdoch press were not more on side. I have never commented a lot about the media and I have never sued or gone off to the Press Council. I have known that if you comment adversely on journalistic standards, your comments will be disregarded and instead you will be painted as sour and bitter.

I like the work of some journalists but not of others. They are certainly not all independent. Many of them make up "facts" or put a slant on a story because they have been told to do so. No-one in newspapers takes responsibility for false headlines. The press expects politicians to apologise or own up to mistakes, but securing an apology from an editor is harder than winning Tatts. I know, I have tried both. In a free society, there is nothing anybody can or should do about it but it is the reason that many people hold journalists in lower esteem than politicians. In some cases, that judgment is well deserved.

It is now no longer compulsory for me to read the papers or listen to "A.M." I now fetch my own cup of tea at functions. We have a grey car not a white one. I check my own telephone accounts and I am fast becoming computer literate. I have taught myself even to receive and print my own e-mails---with or without attached photos. Despite these distractions of a more normal existence, I still feel strongly about things that need to be done.

The need for public advocacy for labor market reform is as great as ever. That is not in anyway downplaying the benefits of the reforms already introduced, but rather to emphasize that reform is not a thing you do once and then forget. Reform is more like footy training. You need to do it three times a week but if you stop then you will soon be so out of condition that your team will not win another game in the season and then it will be relegated from the competition altogether.

The most persuasive and most comprehensive presentation of the case for a more flexible labor market was put by Des Moore in a paper he prepared for the Labor Ministers Council. That paper should be updated. Not for the reason that its arguments have been somehow made less persuasive by the passage of time, in fact the contrary is the case, but rather to demonstrate how relevant they remain and how feeble has been the intellectual response to the paper's first edition.

I don't think that the opponents of reform could put up a respectable response even if they tried, but this issue is so important that I believe reform should be promoted for public debate as much as possible. Des would relish the challenge and perhaps with a series of public meetings and opportunities for public consultation then the national benefit of more reform would be more widely understood.

We still have a lot of reform ahead of us in Australia. One reason the government was returned at the last election was its strong economic performance. The latest GDP figures are testament to the dividends of an economic reform programme. Whether you call it 'Fightback' or something else, the bottom line is a simple political message, namely, good reform equals higher living standards, more jobs and a much better deal for low-income earners.

Only in the last week or so, the economic commentators have been making the point that economic reforms, including enterprise bargaining, had lowered the natural rate of unemployment and in recent times Australia has not had the old problem of wage inflation. There are many reasons for this, including more product-market competition, but there can be no doubt that the workplace reforms of the Howard Government have been a big factor in our improved performance. Now we need more reform if the government is to be re-elected at the next election.

Of course, the government, so far, has faced blind opposition in the Senate. For the whole of the Howard Government's second term, the Labor- and Democrat-controlled Senate prevented the implementation of the policy announced at the 1998 election. This was the most obstructionist Senate on workplace relations since the 1950s.Their stated reason was explained in the slogan "Just say No". This must go down in political history in Australia as one of the dumbest, most nonsensical policy positions ever advanced. Their attitude was that no matter how beneficial for workers or anybody else, it was better (and presumably in the national interest) to say "no" regardless. No wonder Kim lost the 2001 election.

Hopefully, even an ex-ACTU boss can see that this sort of mindless opposition is not in his political interest, let alone the national interest. How many people would be out of work today if our reforms had not passed the Senate? And how many disadvantaged job-seekers is Labor prepared to sacrifice just to keep the ACTU leadership ideologically happy?

My guess is that Simon Crean is only likely to be half-sensible if there is a lot of public pressure on him for more reform. In this regard the business community has an important role.

The Business Council of Australia has a place in this debate. Compared to the Business Roundtable in New Zealand, the BCA does not have an activist record. There is a lot of unjustified complacency in the business community. There are many firms who have taken up the reforms now available under the Workplace Relations Act. But there are also a lot of firms hiding in the IR systems---both the federal system as well as the archaic State systems.

These systems need to be simplified further to lower transaction costs. There are too many firms that let the system "manage" their workplace relations and the community pays a price in poorer productivity because these firms rely too heavily on the crutches built into the old system. Workers lose in this situation as well.

I noted the other day that the BCA outlined its priorities for the year ahead and it left out not just fiscal policy but also workplace relations. I looked at their Website under the title "New Directions". I was disappointed to find that the new directions had been kept to a paltry five generalities. Ever optimistic, I turned to the separate page on workplace relations. According to the site as at last Wednesday, no member CEO of the BCA was prepared to chair the committee, and worse still, throughout the whole of calendar year 2001, despite numerous important debates raging about workplace relations, the BCA could not find one issue of such importance to their members that they felt compelled to issue a press release, make a submission or publish a paper. The last speech on the subject was nearly two years earlier in July 2000.

Maybe this reflects well on the Government but the BCA would surely not want the government to do everything for it!

What a contrast! Bill Shorten, a more progressive union leader, can see there is an argument for a national system. The unions want to re-regulate under the banner of harmonization and Simon Crean will do their bidding---but at least they are thinking about the issues.

I was grateful that the BCA showed a little interest in the discussion papers on the use of the corporations power. But it needs to do a lot more. Of course the Democrats could sink the concept by demanding a re-regulation of the labour market as the price of their support for a national system. That could not be acceptable to the Coalition. And it is hard to talk to the Democrats because, with the exception of Andrew Murray, they know basically nothing about workplace relations, and so you can't discuss anything with them because they can only respond in meaningless generalities. Maybe the new Senator John Cherry could pursue the issue. There are a lot of benefits for genuinely disadvantaged low-income workers in having a better system. Whatever the difficulties of dealing with the Democrats, a genuine effort needs to be made and the BCA should be taking a lead instead of pretending that workplace relations are not relevant to members of the Council.

I could not sit down without reference to the waterfront dispute. Four points are worth making.

First, the central objective behind the government's policy was simple: higher productivity. And it came very quickly. Based on Patrick figures released publicly in September 1998, the productivity improvements from just before the dispute (that is, in 1997) to just after (that is, in September 1998) were huge. For example, in Melbourne, moves per man per shift went from 9.3 to 20.5. This was an increase of 120 per cent. The figure for Fremantle was 65 per cent, Brisbane 113 per cent and Sydney 140 per cent.

The work practices would never have been tolerated in any other industry in Australia and the over-manning was infamous. All that has gone and crane rate records have been consistently broken in the time since.

The MUA will never admit it but I know that privately a lot of the members knew that the old system could not last because it was indefensible. And many who took the package know they got a very good deal. I have been playing a bit of golf. On one course recently I was to play on my own but the professional asked me to join a threesome ahead of me. They were three good blokes and one said "I am now retired. I took the package in '98 and it was the best thing I have ever done".

Second, if I had my time again, there is very little I would do differently. It is easy to be wise after the event but as I think back to the issues I faced at the time I have no regrets about any of the decisions I took then.

Of course it was difficult, but does anyone seriously think you could support and achieve reform without a lot of flak? The MUA yelled conspiracy every time their monopoly was threatened. They always took industrial action at the drop of a hat. Every problem on the waterfront was the employers' fault.

I spent hours with the MUA well before the dispute and their claim was that productivity was as good as it gets. I had meeting after meeting with Messrs Coombs and Combet and it was like talking to a brick wall. We had agendas, papers were prepared and minutes were kept. I toured the docks and talked to the workers, partly because John Coombs said that my calls for reform were ill-informed and that I needed to see firsthand what was happening.

Employers had tried talking to the MUA for years. The talks were never fair dinkum. P&O had even introduced a productivity employment plan (known as PEP) which resulted in no improvements in productivity but instead an increase in labour costs of 37 per cent.

According to the MUA (AFR, 27 April 1998) a crane rate of 25 lifts per hour was "unattainable". They had an academic from the ANU, Dr Clive Hamilton, produce a report that concluded that Australian terminals were very close to international benchmarks and in the case of Adelaide and Fremantle were significantly ahead of a realistic benchmark. I would be interested to hear that explained today. It should be the last public comment on this subject from the embarrassed Dr Hamilton. In fact I think the press should stop quoting this person altogether. Today he is quoted on John Howard's leadership. If Dr Hamilton is so "expert" I know a lot of people who are entitled to equal space.

The "egg on your face" award should also be shared by the editorial writers at the Financial Review. They slammed the settlement of the dispute "as another great lost opportunity to fundamentally reform Australia's wharves". The AFR published a series of articles on the dispute, all of which seemed intent on portraying the Government in the worst possible light, so there was no surprise in the tone of their editorial opinion.

Third, various accusations levelled against the Government and me were brought to the courts and came to nought.

The media reports of the legal proceedings were often confused or just inexcusably wrong. Perhaps it was just ignorance that prevented the media from running the other big story in the dispute, namely, the failure of the Victorian Police to enforce the law, although that is a separate subject for another day.

The media reports were written as if the Government was a party to the interlocutory proceedings when we were not. The Government lost not one case. In fact, it won two later cases. Mr Justice North saw it another way according to the one public comment he has ever made (to my knowledge) on his role in the dispute. He gave an interview to The Australian newspaper. It was published on 7 April 1999. He put the case for the courts to be more open to the media. Let me give you a full quote so you can make of it as you will. It reads:

You will not be surprised to hear that I did not see things the same way as His Honour. He would have been thrilled to have received an even more effusive letter from his judicial colleague after the Tampa ruling.

The interim judgments were all portrayed as "losses" for the Government when, in reality, in the end the High Court gave leave to appeal and crucially varied a key aspect of the judgment at first instance. All this was far too complicated for the media, many of whom relish being judge and jury without worrying too much about the facts.

There were no findings or decisions against the Commonwealth. The only time legal issues came before the courts in a substantial way was when the ex-NFF workers initiated claims in the Federal Court separately in Melbourne and Brisbane. In two judgments by two different judges the claims against me and the Commonwealth were struck out or dismissed and the applicants were required to pay the Commonwealth's costs.

One claim of negligence was described by a judge as "wholly disjointed". Another judge, in referring to the pleadings of the applicants, said "Although the shadow of a conspiracy is cast by references to 'strategies', 'objectives' and agreements to implement them, it is nowhere suggested that the Minister took part in plans for the Dubai representations".

In layman's language, when the issues were litigated, it seems that the claims were so without foundation that they did not even get to first base. Basically these two judgments were ignored by the press. Why spoil the impression of a good conspiracy claim which was repeated regularly in the press for months and for which one reporter got a Walkley award? No-one in the media could see the point of reporting that such a conspiracy claim was thrown out of court by a real judge after giving the applicants the right to present their best case.

The last point to be made is that no-one should rest on their laurels. There is still a duopoly, employers are entitled to act rationally and the union will always try to claw back the reforms. I also think that, in the past, P&O were part of the problem, so I don't think the government should take its eye off the waterfront. When PEP was introduced P&O was rumoured to have tried to obtain agreement for a benchmark of 28 lifts an hour. Benchmarks for productivity, safety, reliability etc., are all important and they should be regularly updated. The reform process should continue.

I could say more and there were times when I wanted to give a more detailed statement of what happened. But the Commonwealth's lawyers advised against further comments whilst legal proceedings were afoot. One book was written on the subject and I thought there was a certain justice in the fact that the publishers agreed to it being shredded for reasons unrelated to the dispute. Now it is all history and life has moved on for all the participants. So it is not my current intention to write a book on the issue. I prefer to look forward not back. It is a chapter now closed but I will hang the Charles Copeman medal on my wall with pride.