Capital and Labour - where to now Australia?
Address to Building Industry 2000
Melbourne, 17 July 1998
Building 2000 is a joint initiative between the employers and the building unions and for some time they have sought to provide a communications bridge between the various branches of business, government, the labour movement, academia and the diplomatic community by arranging a series of forums with the aim of contributing constructively to public awareness of issues which affect Australia and the region's economic and social goals. In the past Building 2000 has been addressed by the Prime Minister of Australia, the Leader of the Opposition, the Ambassador of South Africa, the President and the Secretary of the Australian Council of Trade Unions and a number of other significant figures, like the former Governor of the Reserve Bank of Australia
I thank Building Industry 2000 for the invitation to be your guest speaker today and I congratulate this joint venture of employers and unions in the Building Industry to provide as you put it yourselves "a communications bridge between various branches of business, government, the labour movement, academia and the diplomatic community with the aim of contributing conclusively to public awareness of issues which affect Australia and the region's economic and social goals."
Ladies and gentlemen, I am pleased to inform you that as with most efficient organisations there was a certain, definite, pre-emptoriness about the way Building Industry 2000 organised the topic of today's address. They made up their minds that they wanted me to talk about capital and labour as we go into the next century. Having learned well from my period as Prime Minister the virtues of consultation and consensus they said - "you would like to talk about this wouldn't you?" Being a true believer in my own philosophy, I considered their proposition - and agreed. As with most subjects, I think we are most sensibly able to consider this one if we, briefly, put it into a relevant historical context. The evolution of the Australian nation in this century has, to a very significant degree, been the story of the conflict and accommodation between capital and labour and the rather unique mechanisms and practices we have established to facilitate that accommodation.
A central feature of the debates in the three Federation Conventions of the 1890's was the disastrous industrial conflicts of the early years of that decade, particularly in the shearing and maritime industries. A federal power in respect to conciliation and arbitration was included in the new Constitution at the 1898 Convention. The recent experience persuaded a majority of delegates that some disputes of an interstate character would be incapable of resolution by individual States and that the public interest would not be served by leaving capital and labour to fight out their individual disputes until the exhaustion of their will and resources.
That conciliation and arbitration power soon came to be utilised in a way far beyond the expectation of the great majority of delegates who had reluctantly - 22 votes to 19 - inserted the provision after two previous failures to do so. The famous Harvester case of 1907 presided over by Higgins produced the basic wage which remained an integral part of the Australian industrial scene for well over half a century and indeed the concept of such a wage remains embedded in the present award structure.
It is interesting to note, here in Victoria, that the concept of a "fair and reasonable" wage which has dominated industrial relations in Australia throughout this century had its origin in this State and emerged from a conceptual compact between Victorian employers and the embryonic trade union movement. Those employers wanted protection by tariffs from overseas competition and they solicited the support of labour by arguing that a fair and reasonable wage could only be paid if local enterprise was protected from foreign competition which had the advantage of an exploited labour force.
You can see therefore that a hundred years ago capital and labour, came, in a broad sense, to agree upon and accept an institutional framework and approach to dispute settlement that endured substantially throughout this century. Neither the precise nature of that framework nor certainly the principles of dispute settlement and of the determination of wages and conditions remained static through that period. But it is fair to say that the concept which gave rise to the system of conciliation and arbitration at the beginning of the century i.e. that freedom to pursue industrial objectives should not be equated with licence for either capital or labour to impose its will upon the other without regard to the public interest, has remained a dominant consideration in the ethos of this country.
I have always believed that there is an obligation upon those in a position of leadership not simply to accept existing institutions and practices as if longevity bestows sanctity upon them. The challenge, it always seemed to me, has been to identify the basic principles whose operations are fundamental to the well-being of society and then to see whether, within those principles, there are better ways of going about the achievement of that well-being.
This was the approach I brought to bear on the relationship between capital and labour on becoming Prime Minister in 1983. My fundamental position was that both employers and workers have legitimate aspirations. Employers want to grow their business and to do that by having operations sufficiently profitable to generate funds for further investment and to provide a reasonable return on capital. Workers, for their part, have an equally legitimate aspiration to share in the fruits of that growth through secure employment that will enable them to improve both the standard and the quality of life for themselves and those dependent upon them.
Equally fundamental to my approach was my belief that both employers and workers were more likely to achieve their legitimate objectives if they maximised co-operation rather than confrontation. And may I say parenthetically that I believed that in no sector of the Australian economy was this more evident that in the building industry.
To give substance to these beliefs and to help translate concepts into reality I called the National Summit in April just one month after assuming office. This is not the occasion to go into great detail about the Summit but there are certain points I would make as being directly relevant to our perception of where we would like the capital-labour relationship to be moving in the years ahead of us.
First, the permanent enemy of sensible attitude-formation and decision-making is ignorance of the facts. At the macro-economic level I demanded of my Ministers and bureaucrats that every piece of relevant information about the state and prospects of the economy should be on the table at the summit; and employer and trade union representatives were also given every opportunity to present in written as well as oral form their own assessments of the economic situation. I didn't want declamatory ideology, I wanted facts.
Second, the participants from both sides - as well as others from the States, municipal governments and a wide range of community organisations - responded positively to this approach. There was a common acceptance that neither employers in respect to claims on wages and conditions of employment, nor government in regard to the claims of welfare organisations, had some limitless cornucopia from which to satisfy what, in isolation, may have been regarded as reasonable demands. It was understood that the price of irresponsibility on the part of unions and employers on the one hand, or of government on the other would inevitably be a deterioration in the economy from which, in the end, no-one would secure any lasting benefit.
Third, from these two facts there flowed a commitment, enshrined in a communique which was met at the end of the Summit with standing applause - unanimous except for Sir John Bjelke Petersen - pledging all organisation to work together for the recovery and reconstruction of Australia.
And it is important, for our purposes today, to understand that Australians did live up to the commitment they made at the Summit. They accepted, in practical terms, the truth that every section of the community - workers, business, genuine welfare recipients - had a legitimate claim upon the economic development of the nation's resources; and that the best way of optimising that development was through co-operation, and, as far a possible, consensus rather than confrontation. They recognised that some unions had acted unreasonably, some employers had behaved rapaciously and that some people made unjustifiable demands on the welfare system. But, in general, the demonisation of group by group was out, replaced by a sense of mutual legitimacy.
This new attitude produced remarkable results. Industrial disputes were dramatically reduced to below the OECD average and real wage improvements were restrained as workers accepted improvements to the social wage - particularly in education and hospital and health care - as a substitute for higher increases in money wages. Unemployment came down as more than half a million new jobs were created in the first three years. Work practices improved, competitiveness increased and exports of manufactured goods increased by 16% a year over the period of my time in office.
The vehicle we utilised, within the framework of the conciliation and arbitration system, to secure much of these achievements was the Accord. The underlying principles of the Accord remained unchanged but successive versions were adapted to meeting changing circumstances within the workplace and in the developing economic situation.
I am not arguing necessarily for the resurrection of the Accord but I believe, profoundly, that the basic principles underpinning that approach have been, to a very large extent, prematurely interred by the present Government. I have never argued since the 1996 election - nor do I argue now - that the government can not claim a mandate from that election to make legislative changes in the industrial field.
But I do assert, vigorously, that it can claim no mandate from the Australian people, or the traditional values of this nation, deliberately to demonise one group of Australians and set them against other Australians. That, too often for the future of good relations between capital and labour, has been the approach of this government and of course it has been nowhere better illustrated than in the not-still-concluded dispute between the MUA and Patricks.
I believe it is salutary as we consider today the future of that relationship, between capital and labour, and the role of government in the relationship, to examine in some detail the counter-productive, deleterious nature of this blinkered ideological approach - and in doing so I draw upon a speech I recently made in Adelaide which went in part to this subject
Let me make quite clear that I do not believe the trade union movement in general or the Maritime Union of Australia (or its predecessor on the wharves, the Waterside Workers' Federation) have been without blemish in the conduct of their affairs. Nor, for that matter have employers generally and, in particular, employers on the waterfront.
But I put this simple question - does anyone believe that, if an impartial test was run on how they balance considerations of personal aggrandisement and the national interest, the MUA, would emerge in a worse light than the individuals behind Patricks including the shadowy but substantial Mr Peter Scanlon? I ask that question not to denigrate Mr Scanlon or his colleagues, for that, would serve as little purpose as Mr Reith's constant denigration of the MUA. Rather it is by way of a plea for fairness and sanity in dealing with the legitimate issue of achieving better industrial relations and improved productivity on the Australian waterfront. The simple and indisputable truth is that there has been considerable room for improvement in their practices by both management and union.
The inadequacy of Patrick management had been identified, impeccably, by one of their Melbourne Shift Supervisors. Mr Allan Knight, on his resignation from the company at the end of 1997 received a letter expressing the appreciation of the company for "the 110% effort you have put into your job as a supervisor and the excellent results you have always managed to achieve." On 23rd February Mr Knight publicly cited the reason for his resignation as the continual confrontations instigated by the company with the workforce. He said: "I was fed up with senior management failing to act upon fundamental operational and maintenance matters which caused lengthy delays and reduced productivity. My experience over recent times was that senior management were incapable or unwilling to fix operational problems it's easier to blame others."
Look at the alternative experience in Adelaide. Sealand Australia which operates in eighty-six countries is, along with Patricks and P & O, one of the three major stevedoring companies in Australia. Sealand's general manger, Captain Andy Andrew, interviewed on the 30th January of this year was asked whether "it is possible to run an efficient waterfront business in Australia using MUA labour?" He answered: "Without a doubt, yes." When asked the secret he replied: "we communicate, we build an environment that is conducive to productivity, where people are listened to. And it worked. It didn't happen in the very beginning but it has worked. It has worked over the period of the last three to four years." In a letter to John Coombs on the 21st February, 1998, Captain Andrews confirmed the "marked improvement in the work environment, which has a direct, positive impact on our productivity levels, that have been of great benefit to our customers." He reported this publicly (The Australian, 21st March) saying that the company had not found the MUA a barrier to reforms: "they're very receptive to change."
And consider these comments in regard to Western Australia. On 20th March 1998, Co-operative Bulk Handling Limited's Chairman of Directors, Allan Watson, in publicly welcoming a new agreement negotiated with the MUA said "it will further enhance productivity and efficiency measures for the grain industry in Western Australia." He concluded: "The finalisation of this Agreement recognises that there are benefits in collectively bargaining with the MUA when all parties work towards achieving productivity, efficiency and customer focussed outcomes in the workplace."
These sentiments were confirmed at the same time in a joint statement issued by MUA Branch Secretary, Terry Buck, and Barry Court, President of the WA Pastoralist's and Grazier's Association. Acknowledging significant improvements in container throughput at P & O, and world's best practice at grain terminals, the joint statement asserted: "Past experience had clearly shown that the introduction of companies or organisations based on confrontation and not co-operation were not in the best interest of either (the) maritime community or the farming community."
All of these statements confirm my knowledge from my experience as Prime Minister that Mr Reith's numerous allegations that the process of negotiation in the past had produced nothing of substance are simply false. I had left these processes to my relevant Ministers but when discussions become bogged-down in 1991 I brought all the parties together in Sydney and chaired a session which went through the afternoon and the whole night of May 1st until 7 o'clock the next morning. We secured an agreement of which the P & O representative said: "it was a win for the economy and for the international competitiveness of Australia."
But, most particularly, I ask you to listen carefully to what the former Chief Executive Officer of P & O Containers, David Baker, had to say about that 1989-1992 period of negotiated reform, in the paper he delivered on June 28th 1996: "Just let's pauseand take account of a few facts. Let us acknowledge some of the three year achievements of the waterfront reform processes which were achieved, inter-alia, through the positive approach and co-operation of the unions." He then listed those achievements including "a reduction in the workforce from 8,872 in 1989 to 3,816 in 1992" - ie a reduction of 57% - and "a reduction in industrial disputes, leading to increased productivity and improved ship turnaround times." He then observed : "Some remarkable achievements and changes to a deeply entrenched culture of industry employment."
Then Mr Baker - remember the Chief Executive of P & O Containers - made a declaration that I have said I would like to see put up in bold print in the offices of Peter Reith, the Prime Minister and on the wall of the Cabinet Room. Referring to the possibility of further reform this man spoke in the language of a confident Australia: "I would like to think this can be achieved without conflict. Idealistic this may be, I don't see a lasting solution through Armageddon. This business is all about living and working in a community and as a community to work together as Australians can, so that Australia will deliver to world's best practice. Any conflict, whether of Armageddon or less proportions, will result in a winner and a loser and therefore may be at risk in providing a lasting solution."
David Baker was right. While Peter Reith has demonised, I do not seek to sanctify the wharfies for I think they would readily concede they are not sainthood material. But I do guarantee that like workers and their leaders in other sectors of the economy they will react positively to responsible leadership from government that asks for their co-operation in bringing the Australian waterfront generally, as close as is practicable, to world's best practice.
I make two points in concluding these observations on the Patricks dispute. First there is now the strongest possible evidence, noted at an earlier stage by the Federal Court before further material became publicly available , that the federal government was involved in a conspiracy to provoke a dispute on the waterfront and, in that process, to break its own laws that a worker should not be discriminated against because of membership of union.
And second, when, no thanks to the government, meaningful negotiations did finally get under way my belief that significant improvements in productivity on the waterfront could be achieved by this approach has been entirely vindicated. The tragedy is that an impartial non-ideological involvement by government could have produced the result very much earlier and without the considerable inconvenience caused to many Australian enterprises.
There must surely be a lesson for capital, labour and government in this disastrous experience. There is the Sealand/Captain Andrews/David Baker way or there is the Patricks/Government way - the pragmatic, constructive, co-operative approach which recognises the merits, as well as the faults, of the other party or ideological confrontation which demonises the perceived enemy. Good sense and an intelligent appraisal of our industrial history in this century must come down on the side of the former when we ask the question - capital and labour - where to now Australia?
And I imagine that those of you engaged in the building industry would, from your experience, inevitably come to the same conclusion. For far too many years the capital/labour relationship in your industry was poisoned by an excess of ideology and confrontational animosity. I pay tribute to intelligent leadership on both sides which has transformed the relationship to the benefit of the industry and the community as a whole.
I believe, therefore, that history provides us with very clear lessons on the way to go in the years ahead both for the parties directly concerned in the industrial relationship - capital and labour - and for government. Those lessons are no less compelling because of their relative simplicity.
As to those parties directly concerned I suggest that the optimum, most productive, relationship is most likely to emerge if these four principles are mutually embraced. First, a recognition of the legitimacy of each side's aspirations to improve their position through time and within that framework to understand and accept a simple but absolutely fundamental truth of economics i.e. wages are both a cost and an income; second, a parallel recognition that these aspirations have the best chance of being achieved in an ongoing atmosphere of respect, communication and co-operation; third, to facilitate such an atmosphere both sides should be prepared to put the full facts of the industry or enterprise, as they know them, on the table; fourth, just as capital is organised - shareholders don't run their own individual race - so should the rights of workers to organise not only be recognised but facilitated.
As for the government I believe the position is equally clear. It should, in respect of its own employees, set an example to industry by acting on the principles I have just outlined for the optimum relationship between capital and labour. And it should constantly make available an honest and complete analysis of the national economy and its prospects as a relevant context for negotiations throughout all sectors of industry.
I wish in the final section of my remarks to address this subject within a broader framework. The relationship between capital and labour and where it will go in the future is not something that will occur in an environment hermetically sealed from what is happening in our society as a whole. And I must say to you that never in a long period of study and participation in public life have I been so apprehensive about what is happening to our country.
And I ask you to understand the essential nature of our country. We are a nation of immigrants. At the end of the Second World War we had a population of seven million of whom some 90% were of Anglo-Celtic origin. Under one of the most massive official immigration programs in history, some five and a half million people from more than 140 countries have come here to make Australia their home. In addition to those five and a half million immigrants we opened our doors to more than half a million refugees and other arrivals under humanitarian programs, a combined total almost equivalent to the total population of Australia in 1945.
And it should be remembered that this vast enlargement and enrichment of our population would not have been possible without the full support and involvement of the trade union movement of this country, support which began under my predecessor at the ACTU, Albert Monk, and was continued under governments from both sides of politics - a fact generously acknowledged by Chifley, Menzies and Holt.
This was the finest example of co-operation between capital and labour to advance the interests of this nation. Albert Monk, as President of the ACTU, and then I, sat down with the leading representatives of capital and co-operated with successive governments in laying the basis for the demographic and economic transformation of this country. And together, capital and labour supported one of the most enlightened acts of bi-partisan political co-operation in our history - the abolition of the White Australia policy. Together we had both the confidence and the good sense to abandon a racially discriminatory policy which was morally repugnant and economically insane.
Those who would seek to remake Australia as a purely Ango-Celtic society must understand that they are doomed to failure - not just because their vision is intrinsically offensive, but also because it is a vision that defies contemporary demographic reality. Today something over four out of ten Australians are post-war immigrants or the children of immigrants and half of them come from non-English speaking backgrounds.
And it is a vision which defies economic realities. Australia's economic future has become increasingly enmeshed with the Asian region and we have benefited enormously from the dynamism that characterised their economies until the latter part of last year. More than 60% of our exports go there. Our tourism industry offers greater opportunities for employment growth than any other. Asians have been the most rapidly growing component and had come to comprise more than 50% of our overseas visitors. Income from the education of Asian students in Australia has become a significant factor in our earnings of foreign exchange.
Much of Asia is now in recession but these countries will recover and begin to resume high economic growth paths. Asia will continue in the foreseeable future to be the region of greatest relevance to Australia's economic well-being. It will be the greatest market for our exports and therefore of employment generation; and it will not be open to our exports if we are not open to imports from that region. It will be the major international impetus to our tourism industry and a significant source of income for other service industries. A substantial proportion of our immigrants (just over one-third) comes from Asia, including most of our business migrants.
Australia has been well-regarded in Asia. We do not carry a burden of past oppression and exploitation in the region nor are we seen as a military or economic threat, but rather as a nation of material and human resources able to facilitate their further development.
We have so much of which to be proud. No other country in such a relatively short period, with such a small population, has so completely transformed and uplifted itself with a minimum of social dislocation. We have, immeasurably, increased the capacity and sophistication of the national economy and enriched the way of life available to our citizens. We have enhanced our relevance to and integrity within the region by strengthening bi-lateral relations and by a series of enduring multilateral initiatives including the creation of the Cairns Group and Asia Pacific Economic Co-operation (APEC). And underpinning all of this, central to a transformation into an effective and respected participant in the international and regional community, has been the vision and the reality of Australia's massive immigration program.
But, now, so much of these great achievements are at risk. I repeat - without reservation - that I have never been more concerned about the future of our country - about the cohesion of our society, our capacity to optimise the use of our incomparable material and human resources and our political stability - than I am at the present time.
History is replete with instances of false prophets who arise when people are apprehensive about the changing circumstances in which they are engulfed. These false prophets would dissipate the complexities of life with simple and simplistic formulations and, throughout history, there is one constant in their glib posturings - the identification of scapegoats.
Australia now has its false prophet who is disfiguring our political and social landscape - Pauline Hanson. And like all of her kind in the past she has her scapegoats - for her they are immigrants, particularly Asians, and the Aborigines.
There can be no more appalling indictment of Hanson than her denigration of our Aboriginal people. One does not have to be overcome by guilt to accept that by any relevant social and economic criteria the Aborigines are the most disadvantaged group in our community, who, far from being responsible for the problems of our society, are most deserving of its compassion and special effort.
The paradox of Ms. Hanson's position as she also seeks to denigrate immigrants to this country is that she should, to be consistent, be the champion of the Aboriginal people, for they are the only non-immigrants amongst us.
But policies which are founded in fear and loathing have neither an internal logic of their own nor any vestige of rationality or morality. I make the moral point first, and overwhelmingly, in terms I have used before: In the eyes of the Gods of the world's great religions there is no prejudice of colour or race nor should there be in the eyes of men or women. No person on this earth is intrinsically of greater or lesser merit because of their colour, race or creed - and, I would add, gender (where I think the Gods have not always been as clear as they might have been!).
I turn next to the irrationality of Ms. Hanson's prescriptions. There is not a single reputable economist today who would deny that substantial immigration has been a sine qua non in the strengthening and diversification of the Australian economy to the point where exports of manufactured goods and services have for some time now been the most rapidly growing component of our foreign earnings and creation of job opportunities and that foreign investment and technology have been similarly significant in that achievement.
It is neither moral not does it begin to make sense to accept and live with the benefits provided by people and capital from abroad and then find them retrospectively guilty. And nowhere is this more obvious than in Ms. Hanson's own State of Queensland. In that State the construction and operation of tourist facilities has been an absolutely integral part of its economic growth and employment creation. And that construction and successful operation of these facilities has depended, to a very large degree, on capital and tourists from Asia.
Already in the aftermath of the Queensland State election results, firm indications have emerged, both in regard to tourism and the use of education facilities, that Asians, to the extent they have a perception of being unwelcome there, are going to by-pass Queensland. This means, simply, that Ms. Hanson's contribution to Queensland will be less jobs particularly for the young men and women of that State.
And make no mistake my friends, if this canker in our society is allowed to proceed in any substantial way beyond Queensland, the same fate will befall the rest of Australia. There are other places to invest, there are alternative tourist destinations, there are other places to educate their children, there are alternative sources of imports particularly for the peoples of the Asian region which, as I have said, will within a matter of something like two years resume economic growth paths and rising levels of income.
I know that many people have a sense of insecurity and fear as they are confronted by the most rapid and dramatic changes in history - and I believe it was this more than racist or anti-immigrant sentiment that was reflected in the Queensland vote. The task of leadership, in these times, is to explain that we should not be afraid of the technological genius of mankind in creating the opportunities for a better way of life. The responsibility is to match that technological genius with a like capacity as social engineers - to provide assistance and training and retraining to those who are immediately and adversely affected by the impact of change.
We cannot quarantine or isolate ourselves from the rest of the world; indeed we can benefit, not only from our own talents, but from those of our fellow citizens around the globe.
I believe the overwhelming majority of our fellow Australians, imbued with our national characteristic of the "fair go", understand that we will best be able to do that if we are a cohesive society and not one riven with prejudice, regarding some as second-class citizens, inferior to others because of their colour or the length of the time they have been among us.
The leaders of capital and labour have a responsibility to entrench that understanding. Acting together in the past with a common vision they laid the foundation for a better, fairer and stronger Australia which has, peaceably, become as multiracial and multicultural as any on earth.
I trust that now they will with an equal fervour and commitment take a similar lead in protecting this great society, which they together helped to create, against the threat posed to it by Pauline Hanson and her ilk.
The stakes could not be higher. For if we now fail in that endeavour capital and labour will be conducting their industrial relationships in an economy of reduced capacity and in a society diminished in stature at home and abroad.