Back to the Waterfront

Back to the Waterfront: The New I.R. Bill

Peter H Costello, MP

The Industrial Relations Legislation Amendment Bill 1990 ('the Bill') was introduced into the Senate on 23 August 1990. It amends the Industrial Relations Act 1988 ('the Act') which commenced operation on 1 March 1989 and which involved a substantial overhaul of the old Conciliation and Arbitration Act. The amending Bill proposes four principal changes to current industrial legislation. First, it enhances the role of Peak Councils; secondly, it amplifies the powers of the Industrial Relations Commission (IRC) to grant preference to union members; thirdly, it requires unions seeking registration under the Act to have 20,000, rather than 1,000, members; and fourthly, it provides a procedure to make union amalgamation easier.

The 1988 Act was brought forward after years of gestation and a full enquiry into Australia's industrial relations system. Some might wonder why it is necessary to amend it so soon. The answer lies in a document issued by the ACTU in 1987, entitled: 'Australia Reconstructed'. The general thrust of that document was that if unions are to survive in the future they need to amalgamate, become larger, and more relevant, and offer more services to their members. Of course, there is nothing to prevent unions amalgamating at present. All that is required is for one-quarter of the members to vote and more than one-half of those voting to vote in favour. In other words, one-eighth of the membership can secure an amalgamation.

Indeed, where a declaration is made by the IRC that an amalgamation would further the objects of the Act, it is not even necessary to get one-quarter of the members to vote. All that is required is for more than half the votes cast to be in favour of the amalgamation.

Given these generous provisions one would be excused for thinking, that if members really wished their unions to amalgamate, there would be no difficulty in doing so. The fact is that in recent ballots some major amalgamation proposals have gone badly for officials. Union members have voted against amalgamation. The authors of 'Australia Reconstructured' do not want the members to frustrate their plans in the future. As a result, Parliament is being asked to intervene to make union amalgamation more attractive. The purpose of the Bill is to secure by legislation what union leaders have been unable to secure through member support.

The Role of Peak Councils

A Peak Council is defined in the Act as a national council or federation that is effectively representative of a significant number of organisations representing employers or employees in a range of industries. When the definition was introduced it was thought that 'Peak Council' would mean the CAI and the ACTU.

With recent membership losses it is doubtful whether it still includes the CAI. It certainly includes the ACTU.

The Bill proposes, that when the Commission is exercising powers in relation to a demarcation dispute, it 'must consider whether it should consult with appropriate peak councils', which, in this case, means the ACTU. After considering this, it is up to the Commission whether it does consult or not. Of course, the ACTU is not a union and would not ordinarily be directly concerned in demarcation disputes. The parties are the unions concerned. The Commission is the arbiter. The Bill is designed to constitute the ACTU as some kind of Board of Reference for the arbiter. Clearly, it is no longer solely the role of the Commission to determine these matters. The ACTU will be available to give a guiding hand.

The object of this amendment is to enshrine the centrality of the ACTU to the union amalgamation process. The ACTU has a role even though the unions involved may not be constituents. Its role is to be enhanced as against individual unions. Unions themselves are being legislatively collectivised under ACTU auspices.

Extension of Preference

The Commission does not have the power to order employees to join a union. What it does have is the power to award 'preference'. This means that union members can be given preference in employment as against non-union members. In reality, through judicious use of preference clauses, the Commission can ensure all employees are union members by ensuring that only union members get jobs. This runs counter to opinion polls showing 89 percent support for voluntary unionism.

Under the Bill the areas where preference can be given to union members are specifically amplified for the first time and set out as:

engagement in employment, promotion, regrading, transfer, retention in employment, taking annual leave, overtime, vocational training

It is clear that, if union members are given preference in all or a significant number of these areas, few rational people would fail to join a union. Of course, the preference power also allows preference for members of one union over members of another union. The amendment enhances the power of the Commission to effectively direct which unions employees 'choose' to join.

Minimum Membership

In order to register a trade union under the Act, it is necessary to have 1,000 members. (However, this requirement has only existed since March 1989. Previously it was necessary to have only 100 members). The proposed amendments require an association to have 20,000 members to register under the Act. Effectively, this prevents any new unions coming into existence. It is hard enough to garner 1,000 members before registration as a trade union. Before registration there is no recognition of the union and it has no capacity to represent members or deliver benefits. Garnering 20,000 members without the capacity to deliver benefits on the hope of eventual registration will be next to impossible. This flies in the face of opinion polls which show over 60 percent support for the right to form a new union. Democrat voters are the strongest supporters of that right, with 69 percent in favour.

Of course, even if one signs up 20,000 members one still cannot have the union registered if there is already a registered union to which those members could 'conveniently belong'. The effect of this statutory provision has been to keep new entrants out of the market. The requirement that a new entrant have 20,000 members before it can apply for registration merely consolidates the barriers to entry.

To form a company one needs five subscribers, or, where the company is a proprietary company, two subscribers. It is relatively easy to form a new company and to have it registered. Imagine the difficulty if it were necessary to have 20,000 subscribers before a new company could be formed. Imagine the advantages to existing companies if new companies could not be formed unless they could show there was no existing company to which potential subscribers could conveniently belong. The market for new companies would dry up. The advantages to existing companies would be enormous. This, of course, is the intention of the legislation: to enshrine advantages for existing unions and, of course, those who are their officials.

Union Amalgamation

The Bill proposes a two-stage process to force existing registered unions into amalgamation until such time as they have 20,000 members. It works on the premise that 'big is beautiful', which, of course is the theme of 'Australia Reconstructed'.

Stage 1 begins on 1 March 1992, and ends on 28 February 1993. During Stage 1 unions which have fewer than 1,000 members need to prove there are special circumstances that justify their continued registration in the public interest. If the Commission is not satisfied that special circumstances exist, a precedential member must cancel the registration of the union. Small unions have to justify their existence. If they don't, state appointees will extinguish them. This says a lot about the Labor Government and the labour movement's respect for trade union rights and the right to form and join a union of one's choice.

If the small union survives Stage 1, it has a three-year breather. But every three years, whenever a presidential member of the Commission considers it appropriate, it can be asked to prove that special circumstances in the public interest justify its right to existence. If it fails to convince the presidential member its registration is cancelled. The process can be repeated at three-year intervals.

• Stage 2 begins on 1 March 1994 and ends on 28 February 1995. In Stage 2 any union with less than 20,000 members must establish there are special circumstances that justify its continuance in the public interest. Failure to do so will mean the cancellation of its registration. Again a presidential member can conduct an enquiry into the union's right to registration every three years. Failure to show that there are special circumstances in the public interest which justify its continuation means cancellation of registration.

Given the fact that the Government and the ACTU clearly consider unions with less than 20,000 members not to be in the public interest, it is doubtful how many, if any, of these unions will survive. This is the stick. The carrot is easy amalgamation.

There are some real incentives to amalgamate provided by the Bill, and some are dearly notorious.

If one union wishes to amalgamate with another a quarter of its size, it can apply for an exemption from holding a ballot of its members. A presidential member of the Commission is required to grant such an exemption unless he considers that 'in the special circumstances of the case' the exemption should be refused. The purpose of this proposal is to allow the large to swallow the small, without the members getting in the way. The Commission is prima facie obliged to deny members the right to vote. One wonders why such a provision is necessary. It is hard to imagine the members of a large union voting against the absorption of a small union. The probability is that it would take some time or cost to ballot the members of the large organisations and large organisations are to be relieved of this onerous chore. Democracy can sometimes be time-consuming and expensive. The Bill apparently is designed to do away with the cost and delay of members' rights. This is simply done by doing away with the democratic right to vote.

To overcome any doubt, the legislation will, for the first time, expressly authorise unions to use members' funds to campaign in support of amalgamation. There is, of course, no requirement to allow equal funds to opponents to campaign against amalgamation. Nor is there any provision for a union to use members' funds to campaign against amalgamation. Members' funds can only be used one way. They can be used to secure amalgamation whether the members like it or not.

The Act has hitherto required elected officials to face election every four years. The amendments allow for those holding office in an amalgamated organisation to continue to hold office without the necessity of a new election, and to hold that office for up to four years after the amalgamation takes effect. If, during those four years, another amalgamation can be effected, those holding office can hold office, without election, for four years after the next amalgamation. If a union were able to secure three amalgamations in twelve years, its federal secretary would not have to face election for more than a decade! This is a real incentive to amalgamate! If the organisation kept amalgamating with organisations a quarter of its size, it would never have to hold a ballot of its members on amalgamation. If it did have to hold a ballot, it could spend members' funds campaigning for the amalgamation. Under the current law a minimum of 250 members can have a 'no' case circulated with the ballot. The Bill will increase this minimum to 1,000. More people are now required if the 'no' case is to be heard but very few are required to actually vote for amalgamation! If it is determined by the Commission that there is a community of interest between unions proposing amalgamation, all that is required would be half of those voting to vote in favour. This means amalgamation could be secured in a union with 20,000 members by two votes out of three! Nothing is to be left to chance on amalgamation!

The stick is the on-going necessity for small unions to justify their existence. The carrot for the large unions is that officials not only get additional members and additional finance but can avoid elections whilst they keep amalgamating with small unions. Even though members who have voted in amalgamation ballots in recent years have, on significant occasions, rejected amalgamation, this legislation has been drawn so cleverly and with such a combination of incentives and burdens, that it is almost impossible to conceive amalgamations failing in the future. The Bill is designed to produce fewer, larger unions, regardless of the views of the members.

Some argue that fewer unions will mean fewer demarcation disputes. However, this is very unlikely. The great majority of demarcation disputes occur between large unions, most of which will continue to exist. Companies with multiple unions will continue to be faced with the consequential problems of that phenomenon. What it will mean, however, is that where demarcation disputes occur they will occur between larger organisations with larger memberships and greater industrial muscle. Even if disputes occur less frequently, they are likely to occur on a much greater scale with a much greater dislocation to the public.

This amending legislation severely limits and restricts rights to free association for union members. It is regrettable that it does nothing to protect the rights of those who do not wish to join unions at all. It is regrettable that it virtually extinguishes the right of employees to form unions of their choice. It is regrettable that it will extinguish some unions mat members might have voluntarily joined and voluntarily chosen in the past. In the future, the choice of unions will be virtually non-existent. The ACTU and the Commission, through preference, amalgamation, and cancellation will determine what type of employees can belong to which types of unions, and which unions can cover which workplaces.

The centrality of the ACTU to this process should not be overlooked. Although Australia Reconstructed, the genesis of this legislation, posited the necessity for all Australian employees to be classified into 20 big unions, it is now more realistic to see the goal of the ACTU to have one big union (the ACTU) with 20 individual departments. Fitting employees into pre-determined structures with huge mass membership, as directed by appointees of the State guided by 'Peak Councils', is the very essence of corporatism. Big unions with wide powers formed along lines determined by State appointees, may be consistent with the vision of the Labor Government and the ACTU for 'reconstructing' Australia. It is the very antithesis of individual freedom and rights to free association. Australia Reconstructed is unreconstructed corporatism.