Light on the Hill: Industrial Relations Reform in Australia

The Queensland Industrial (Commercial Practices) Act

The Honourable Paul Clauson, MLA

I welcome the opportunity afforded by this Conference to examine recent Queensland Government initiatives, specifically the Industrial (Commercial Practices) Act, aimed at redressing the balance of power in industrial relationships.

There has been considerable misinformed and unsubstantiated comment about the Queensland Act over recent months, and this address will allow me to place the legislation in its proper context.

The comments made today are of particular pertinence in the context of the fierce community debate about the Commonwealth's Industrial Relations Bill. It would now seem that political events and perceived electoral considerations have caused the Commonwealth Government to defer this legislation, with a view to holding further discussions with employer organisations and the ACTU. In announcing the deferral of the Bill, however, Mr Willis made it clear that the Commonwealth Government still believed that it should override the Queensland Act.

While targeted at Queensland, the Commonwealth Bill in its present form has implications for all State laws covering industrial relations. I make no further comment on this attempt to interfere with the sovereign rights of a State to make laws covering irresponsible union conduct towards industry and commerce. If the Bill becomes law, Queensland will of course use every avenue to resist what would amount to attempted constitutional piracy.

By traversing the history of the Industrial (Commercial Practices) Act, we may gain a more thorough understanding of its necessity and purpose.

The Act was introduced in late 1984 to deal with conduct injurious to trade and commerce through interference with the supply of goods and services. Viewed in retrospect, it has proven a most effective remedy to many forms of industrial action which adversely affect the community.

At that time decisive action by the Queensland Government was deemed necessary because of the Federal Labor Government's plans to repeal sections 45D and E of the Trade Practices Act.

The Queensland Act was intended to preserve the operation in Queensland of sections 45D and E and extend their operation to those areas in which the Commonwealth had no power to legislate, namely intrastate trade and the protection of non-corporate victims of secondary boycott. Fortunately for the rest of Australia the Senate rejected the proposed repeal of sections 45D and E, thus leaving employers a cause of action against secondary boycotts, such as the one imposed by the Australasian Meat Industry Employees Union against the Mudginberri Abattoirs in the Northern Territory.

As the Queensland Act was originally designed to reflect the secondary boycott provisions of the Trade Practices Act, it is instructive to consider further the experience of that legislation.

The need for statutory remedies dealing with secondary boycotts was highlighted by the Trade Practices Act Review Committee (the Swanson Committee) in 1976. The Committee noted community concern about union-imposed boycotts, and concluded that:

'...no section of the community should be entitled to be the judge in its own cause on matters directly aimed at interfering with the competitive process between firms'

The Committee also stated that 'in the usual case, secondary boycotts do not involve a dispute between an employer and employees which could be brought before the Australian Conciliation and Arbitration Commission'. Further, '...the employer may not choose to bring the matter before the relevant body, even if he wished to do so, for fear of widening the 'dispute' and being shut down'. On the matter of recourse for the employer, the Report found that '...there are some common law actions in tort which might, in theory, be available but these are in most cases dead letters in practice' The strict accuracy of this statement might well be questioned in the light of recent developments, particularly the Dollar Sweets case.

But it is fair to say that the causes of action are complex and were not well known in Australia at the time.

The Committee's conclusion, however, remains apposite, and may be considered in relation to both the Trade Practices Act (which was amended following the Report) and the Queensland legislation: 'We believe the trader who is the object of the employees' action should not simply have the choice of toeing the line or suffering substantial damage or in some cases going out of business. He too is entitled to have his 'day in court''.

Section 45D of the Trade Practices Act, as originally enacted, was designed to take an even-handed approach to the problem of secondary boycotts, in that it applied to both employers and employees. In practice, however, most litigation involving this section has been against unions and unionists. Following the Leon Laidely case in 1980, these provisions were strengthened by the inclusion of section 45E.

Injunctions under the Trade Practices Act have been granted by the Federal Court in relation to such examples of trade union action as refusals to load and unload petroleum products; refusals to slaughter meat for particular butcheries; refusals to load and unload ships; refusals to deliver liquor to clubs; bans on construction sites.

In many cases the granting of an injunction has in itself been sufficient to effectively end the boycott action, bringing about a return to industrial normality.

Despite---or indeed very probably because of---the effectiveness of these Trade Practices Act provisions as a counter to illegitimate union action, the Commonwealth Government proposed in 1984 to repeal sections 45D and E.

The Commonwealth's view was expressed by the Minister for Employment and Industrial Relations, Mr Ralph Willis, in introducing the Bill to repeal these provisions:

'...the Government does not believe that (secondary boycott) action is so different in nature to other forms of union and employee action in support of their industrial claims that it should be singled out to be dealt with under the Trade Practices Act rather than through the established industrial channels. The principal objective of any regulation in this area must be the speedy, fair and effective resolution of the underlying dispute. The Government believes that this will not be achieved by the legislative prohibition of secondary boycott activity. . . .The special characteristics of industrial disputes demand that they be handled by expert bodies under our industrial machinery rather than under trade practices legislation which is not designed to resolve the underlying issues which give rise to the boycott activity'.

The introduction of the Industrial Relations Bill last month demonstrates that Mr Willis still holds similar naive views. Such arguments can be quickly demolished by brief reference to the actual use of sections 45D and E. This is equally pertinent to the philosophy behind the Queensland Act.

First, it is obvious that not all disputes can be resolved by industrial tribunals either because of their social or political nature, or because of a union's sheer determination to bring an employer to his knees financially.

It is not unusual for businesses to be confronted by boycotts arising from non-industrial issues. The value of sections 45D and 45E in dealing with such non-industrial situations, and the difficulties which an industrial tribunal would face, were demonstrated by the granting of an interim injunction by the Federal Court of Australia against the Seamen's Union of Australia on 6 November 1981.

The matter involved the export of uranium concentrate through the Port of Brisbane by Mary Kathleen Uranium Limited. The uranium concentrate was produced at Mary Kathleen by the company employing 500 persons at its mine and treatment plant. No industrial problems were encountered by the company in the transport of that uranium concentrate from Mary Kathleen to Brisbane on the Queensland railways or on Queensland roads.

In April 1981 it became apparent to the shipping agents that there was likely to be trouble in getting members of the Seamen's Union to handle ships carrying future cargoes of uranium concentrates. In June the 'Act 4' could not be moved in the Port of Brisbane for several days because of bans imposed by the unions. In July the Seamen's Union of Australia imposed a ban on the 'Paralla' because it had carried uranium concentrate.

This resulted in heavy losses to MKU. More importantly, however, it resulted in a refusal by shipping companies to accept further bookings from MKU until there was a change in union policy. In his decision, Mr Justice Morling declared that MKU was suffering grievous loss running into hundreds of thousands of dollars; it was incurring operating costs at its mine and treatment plant of about $1m per week and the company's inability to ship uranium concentrates had cut off its income. Accordingly, he granted an interlocutory injunction, indicating there was no evidence that the unions had taken any decision to cease their protest action which was denying tug services to ships carrying uranium from Australia. His Honour found a prima facie case had been established that the unions had engaged in behaviour calculated to prevent or hinder MKU from engaging in commerce between Australia and overseas and that on the balance of convenience there was an overwhelming case in favour of granting the relief sought.

Clearly this was a case of unions engaging in activity to further a social or political cause. It was a non-industrial activity outside the legitimate role of unions and of a nature outside the scope and capacity of an industrial tribunal to resolve.

The effectiveness of the Trade Practices legislation in these matters was, ironically and no doubt unintentionally, acknowledged by a Labor member of Federal Parliament and former South Australian Attorney-General, Mr Peter Duncan, on 19 November 1985. Mr Duncan said:

'If these sections had been in force in the early 1970's the green bans which were so successful in stopping socially disruptive development would never have succeeded. These sections not only prevent the trade union movement from supporting other unions, but also prevent it from supporting other community movements. There can be no direct trade union action in support of the Daintree campaign, there can be no direct trade union action in support of consumer protection, there can be no trade union action in support of moves against anti-social developments while sections 45D and 45E remain in force'.

Regardless of any merits the issues listed by Mr Duncan might have, it is quite clear that there is no place for trade unions to take industrial action in connection with those issues, which are quite unrelated to the working conditions of employees and to the legitimate role of unions in contemporary society.

The plan to repeal sections 45D and E also relied upon the argument that the principal objective of any regulation in this area must be the speedy, fair and effective resolution of the underlying dispute. This theme is again evident in the current Commonwealth Industrial Relations Bill. The speedy, fair and effective resolution of disputes of an industrial nature, whilst a principal objective of Australian industrial tribunals, has not always been achievable. Some industrial disputes have not been capable of speedy resolution however much the Commission may have desired that result. Indeed the appropriate proceedings before the Commission (applications for bans clauses) have rarely been used in recent times due to hostility to them on the part of the Commission.

It is wishful thinking to believe that either the Australian Conciliation and Arbitration Commission or its planned successor will have the ability to apply speedy, fair and effective resolutions to non-industrial disputes involving social and political questions

More likely the investing of the Arbitration Commission with such jurisdiction will create a public forum for unions to advance the views of officials on political questions whether they represent the views of the members or not.

In the meantime, businesses subjected to union boycotts, with their owners having no other means of asserting their legal rights, will slowly wither on the vine.

Perhaps the major value of the boycott provisions of the Trade Practices Act (and indeed of the Queensland legislation) lies in their deterrent value. The provisions have been effective in curtailing unjustified attacks on business, and have resulted in numerous industrial actions being brought to a quick and equitable conclusion.

Opponents of sections 45D and E often proclaim that statistics indicate that these provisions are scarcely used and therefore industrially unnecessary. In fact it was reported in Federal Parliament last month that there have been 129 actions taken under sections 45D and E, resulting in the granting of 66 injunctions. There is no evidence to suggest that actions not proceeded with did not have the effect of inspiring a return to work. In any case, statistics are hardly a measure of the effectiveness of legislation. The mere existence of those sections is in itself a useful deterrent to irresponsible union action.

I return now to the Queensland legislation.

The Industrial (Commercial Practices) Act provides protection against substantial loss or damage to employers and businesses affected directly or indirectly by strikes. A lesser known fact, but one equally important, is that it also provides protection against industrial action that has the effect of causing a substantial lessening of competition in any market in which the target of that action acquires goods or services.

Additionally, the Act prohibits a contract, arrangement or understanding between a union and another person that prevents or hinders the supply of, or the acquisition of, goods or services to or from a third person. Many of us here have heard of the Leon Laidely case. It is the Government's intention that arrangements such as existed in that matter to the detriment of small business do not develop in Queensland.

The Act was further strengthened by amendment during the electricity dispute early in 1985 when primary boycotts covering demarcation disputes and preference in employment for union members were made actionable. It was at this time also that the obligation to give seven days' notice of a strike was introduced into the Act.

Since then evidence has shown that this legislation has been extremely effective in bringing about speedy resolutions of industrial disputes. Often the mere threat of its use seems to have been enough to deter irresponsible union leaders from taking hasty strike action.

Examples of the cases where the Act has been used are:

• the granting of a Supreme Court injunction in September 1985 against the Meatworkers Union convinced them not to proceed with a threatened strike over the Mudginberri issue. It is significant to note that the strike still proceeded on that occasion in New South Wales and Tasmania;
• an application for injunctions against the Plumbers and Gasfitters Employees Union restraining it from harassment of employers in order to coerce them into providing superannuation benefits under the BUS scheme; and
• earlier this year the Government initiated legal proceedings under the Act against the various coal industry unions over a snap 48-hour strike which began at midnight on 5 February 1987.

This latter action was taken in the interests of industrial peace and continued production in an export industry vital to the State and national economy. That strike alone prevented extraction of 1.2 million tonnes of coal valued at $65m---at the very time a trade delegation from Japan was visiting Australia.

The industrial disputes record of coal miners is a particularly sorry one. Recent statistics indicate that it is approximately 50 times greater than the average of all Australian industries. In Queensland during 1986, the coal industry accounted for 60 per cent of the working days lost due to industrial disputes (104,200 out of 173,400) despite the fact that less than 11,000 employees are involved.

This disruption in the coal industry forms part of the essential background to the most recent amendments to the Act made in April this year.

Those amendments have drawn very emotive and, as I said at the beginning of this address, very misinformed comments from a diverse number of people.

The amendments mainly focus upon, firstly, industry involved in the production and supply of goods for export, and secondly, the carrying out of research and development by industry.

Australia's current precarious economic circumstances are well known. The potential for recovery will depend on this country's ability to become a stronger trading nation. This in turn requires a strategy aimed at substantial export growth and import replacement, in order to capitalise on the dramatic fall in the value of the Australian dollar.

Australia's position compared with that of our major trading partners in terms of industrial disputation, inflation and productivity requires substantial improvement if we are to lift the overall standard of living in this country:

• our industrial disputes record is far worse than that of our major trading partners;
• our inflation rate is up to three times that of our major trading partners;
• Australia has recently experienced negative growth in productivity while other economies have recorded strong growth.

Against this background, the Queensland Government concluded that it was necessary to provide the maximum protection for exports and research and development activities from unwarranted industrial disruption.

Accordingly, the legislation now applies to primary boycotts affecting interstate and overseas trade, and research and development. Australia's reputation as a reliable trading nation has been under a cloud for far too long. In these days of strong competition from overseas countries, particularly developing countries, Australia must maintain its export markets. Those markets should not be put at risk by unfulfilled or delayed contracts brought about by irresponsible strike action.

Australia's response to the challenges posed by the current economic situation calls for an ability to adapt speedily and flexibly to changing market demands. This in turn depends on applied research and the development of new technology and new industrial processes.

Vital research and development work must be allowed to proceed unhampered by unthinking and irresponsible union action motivated by a Luddite mentality.

By extending the requirement to give seven days' notice of a strike to include, not only the immediate employer, but also the Minister and any other person who is likely to suffer loss or damage in his business, the potential for loss by those not directly involved in the dispute is minimised. Because of misinformed comment in the media. I emphasise that this notification provision applies to those people who have previously given notice of their wish to be notified of strike action: in other words, those with a valid interest. I would venture to say that most Queenslanders would support the giving of notice of a strike which also allows a cooling off period when saner counsel may prevail and conciliation is given a chance to work.

The new evidentiary provisions contained in the amendments have drawn criticism but are not all that new, having existed in this State's Industrial Conciliation and Arbitration Act since 1985 and are very similar to those contained in the Essential Services Act of 1979. It has been said that these evidentiary aids amount to a 'media muzzle' and will prevent employers and unions from commenting on industrial issues.

I can say without hesitation that this amendment is not aimed at impeding the media; and if the other two statutes can be used as gauges for stifling comment in the past, I am not aware that they have, in fact, had that effect within the community. The provisions simply enable evidence of what was said to newspaper reporters to be received without the necessity of requiring the reporters themselves to give evidence.

The trade union movement, supported by the Federal Labor Government, is claiming that this legislation has 'turned the clock back 100 years'. This is just not so. The introduction of this legislation in 1984 marked the turning-point in this State in the return to sanity in industrial relations.

The one-sided balance of power enjoyed by the union movement has been brought back to a state of equilibrium through employers now being given the means to seek redress for the misuse of industrial muscle directed against them.

The Act does not interfere with the normal industrial relations process. Disputes are still to be notified to the Industrial Commission for resolution, and Award matters such as penalty rates and hours of work etc. may still be determined by conciliation or arbitration as the case may be. To this extent the essential rubric of Queensland industrial law remains the same.

But we have seen time and again, throughout the country, unions 'thumbing their noses' at arbitration tribunals whose decisions have gone against them. The community at large is sick of being the pawns in this type of irresponsible behaviour and has been calling for a stop to it for a long time now. The Queensland Government has heeded that call and the results are there for all to see.

It has been further claimed that the recent amendments to the legislation prevent employees exercising their inalienable right to strike. I am not aware of any country where there is an unfettered right to strike. It should be remembered that every employee enters into a contract with an employer when joining the workforce and that a refusal by that employee to work amounts to a breach of contract with the consequent possibility of some action being taken against him---for example, the mass dismissals from SEQEB in the electricity dispute of 1985.

Even the most extreme protagonists of this doctrine of the right to strike recognise that it is limited particularly where essential services and the well-being and security of the community are involved. Often it would seem that 'freedom of association' is confused with this so-called right to strike. In this context it is worth citing a pertinent Canadian judgment of 1984. In upholding an Act which prohibited strikes and lock-outs in dairies, the Saskatchewan Court or Queen's Bench declared that: 'The right to strike is not a fundamental freedom. It is applicable in a particular context, in particular types of association and under certain circumstances. It is expressly limited by laws in cases of national emergency, essential services, national security and when at times irreconcilable labour disputes arise'.

It can in fact be argued that any right or necessity to take industrial action is contrary to the philosophy behind a system of compulsory arbitration. This was certainly the view held by many of the Australian system's 'founding fathers', including H B Higgins himself, whose famous phrase describing the system as 'a new province for law and order' has unfortunately acquired an ironic sense today. In Queensland, persons as dear to the Labor Party as T J Ryan and E G Theodore frequently stated that the provisions of an effective arbitration system rendered strikes completely unnecessary.

It must be remembered that the system furnishes trade unions with a procedure by which they obtain orders that employers provide employees with certain minimum terms and conditions of employment. The system also provides trade unions with a range of benefits, including corporate status, exemption from income tax, and a monopoly of representation of certain employees. In return, trade unions are expected to use the processes of the system in preference to direct action. Where trade unions systematically choose direct action, provisions must be available to enable those injured by that industrial action to recover their losses from those who cause them.

Absolute claims to 'the right to strike' were criticised in 1978 by a respected senior British judge Lord Denning. In a lecture at Birmingham University he said:

'I would declare at once that there is no such right known to the law, not at any rate when it is used so as to inflict harm on innocent bystanders, or disrupt essential services or to bring the country to a halt. So far as the law is concerned, those who do such things are exercising not a right but a great power, the power to strike'

It is the abuse of this power to strike which the Queensland legislative initiative was designed to curb.

The main thrust of the Queensland legislation is by no means at odds with developments elsewhere in the world. In fact, it is very much in keeping with responses in other countries to the emerging demands of the economy for stability in industrial relations.

Recent overseas trends in industrial relations have aimed broadly in two mutually compatible directions: first, to provide greater flexibility to the labour market by removing some of the constraints on the organisation of work; second, to modify the legal framework of collective bargaining especially by reducing trade union immunities from accountability.

Thus in Great Britain the coercive power of trade unions has been limited by the Employment Acts of 1980 and 1982 and the Trade Union Act of 1984. Legislative changes include restrictions on secondary industrial action and a narrowing of the definition of lawful industrial action.

Provisions in US law also have their parallels in the Queensland legislation, despite the differences between the basic Australian and American systems of industrial relations. The US National Labor Relations Act includes notice requirements before industrial action, time periods when strikes are forbidden, and restrictions on boycotts and on action aimed at securing union recognition.

It might also be mentioned that New Zealand law requires up to 14 days' notice of strikes in specified industries.

Much of the ill-informed comment about the Queensland Act has failed to place it in the context of the Government's overall legislative package for industrial relations and associated matters.

I would here make only brief mention of two aspects of this package.

One initiative was the Government's response when the trade union campaign for occupational superannuation gathered impetus in 1984, spear-headed by the building unions. It will be recalled that there was considerable concern expressed about the potential for economic damage and distortion of financial markets caused by huge union dominated funds. Despite the time this has been an issue, the Commonwealth Government, in a display of protracted tardiness, took until May 1987 to introduce a Bill dealing with operational standards for occupational superannuation. In Queensland, however, the legislature enacted the Superannuation Trust Funds (Protection of Employees' Entitlements) Act, which lays down certain requirements designed to avoid the objectionable features of the ACTUcontrolled, coercive and union-dominated schemes. It has been successful in meeting this objective. It is relevant here to note that the Industrial (Commercial Practices) Act also applies to conduct designed to induce an employer to adopt or contribute to a particular superannuation fund in preference to an equivalent one.

Second, there has been little attempt in public comment to acknowledge and rationally examine the opportunities afforded by the recent proposal to enable voluntary employment agreements to be made between employers and employees.

On 8 April this year a Bill to amend the Industrial Conciliation and Arbitration Act to provide for such agreements was introduced into the Queensland Parliament. It will lie on the Table until debate resumes during the August Parliamentary Session.

Two types of voluntary employment agreements are envisaged:

• agreements between unions of employees or employee associations and employers or employer associations; and
• agreements directly between employers and employees. These would be possible only if at least 60 per cent of employees agree to make the agreement.

Relevant standards of the State industrial system are to be retained as minimum conditions.

This is not a revolutionary step that is intended to demolish the existing award system. It allows an evolutionary process whereby consenting employers and employees can vary award conditions in the context of preservation of certain basic award provisions as to ordinary pay and leave.

It is hoped that all parties in the industrial system will approach this initiative constructively with a view to the opportunities it provides for the more productive use of labour, the development of mutually acceptable work patterns, and increased productivity.

In discussing the Queensland Act today, I have attempted to place it in its proper historical, social and industrial context. It does not displace the established system and structures governing industrial affairs in this State. It should not be regarded as a panacea for all industrial ills nor is it intended for use in every situation. It is, however, in similar fashion to the provisions of the Trade Practices Act, a substantive measure which provides statutory rights and remedies for people and business adversely affected by illegitimate trade union action. It is a decided and deliberate deterrent to strikes which cause damage to the community and the economy.

Whilst some strikes are of little consequence, others can and do inflict great hardship on the community and economic loss on businesses and innocent bystanders alike, including the families of the strikers. While much has been said about the perceived rights of unions and employees to engage in strikes, very little has been said about the rights of the majority of people who are adversely affected by them. They, too, have rights and the Queensland Government is committed to ensuring that they are observed.

Few would deny that recent years have witnessed many instances of the blatant abuse of union power in the quest for unjustified, selfish gains for minority groups with no regard for the wider public welfare. In the light of these developments, the Queensland Government has taken effective steps to ensure the restoration of a sane balance of power in industrial relations in this State.