Lazarus Rising

by John Howard

  The truth is the removal of Aboriginal children and the breaking up of Aboriginal families is a history of complexity and great variety. People were stolen, people were rescued; people were brought in chains, people were brought by their parents; mixed blood children were in danger from their tribal stepfathers, while others were loved and treated as their own; people were in danger from whites, and people were protected by whites. The motivations and actions of those whites involved in this history — governments and missions — ranged from cruel to caring, malign to loving, well-intentioned to evil.4

  Later Noel Pearson praised the impact of the formal apology on Indigenous communities.

  26

  ON THE WATERFRONT

  The most bitterly fought domestic issue of my whole time as Prime Minister was waterfront reform in 1998. It was violent, divisive and produced ugliness of a type absent from other intensely debated changes. AFP sources told me that the violence by demonstrators against the Workplace Relations Minister, Peter Reith, was far worse than directed against any other member of the Government, myself included. But it was worth the effort, as the Australian waterfront emerged profoundly more efficient.

  A lot was at stake; Australia’s wharves were notoriously inefficient. Rogue behaviour on the waterfront was almost part of the popular culture. At the 1983 Economic Summit, Charlie Fitzgibbon, federal secretary of the Waterside Workers’ Federation (WWF), now the Maritime Union of Australia (MUA), told the story of a lady in Mackay who was asked by the local police to leave her home because a cyclone was coming. Her reply was, ‘You needn’t worry, the wharfies won’t unload it.’1 Apocryphal or otherwise, and amusing as it was, the story tapped a sentiment in the community.

  Reform of the waterfront had been at the heart of Coalition transport and industrial relations policies for many years. Our policy for the 1996 election noted that crane loading rates were at the same abysmal level as obtained when the Hawke Government’s so-called reform process started. Yet that process had cost waterfront users and taxpayers $420 million. It quoted one operator rating Melbourne as only 39.9 per cent as efficient as Antwerp and only 66 per cent as efficient as Auckland.

  That policy promised that the Australian waterfront would be brought into line with international competitive standards. It demanded an end to compulsory unionism; operators were to be given power to manage their own enterprises; the monopoly stranglehold of the MUA was to be terminated.

  The rorts and inefficiencies on the wharves damaged our export performance. To illustrate, in 1997 working days lost in stevedoring per thousand employees was 12 times the national average. Australia had 2 per cent of world trade, but 25 per cent of dock disputations. Container movements per hour were 17.6, abysmal by world standards. Despite this ‘the wharfies’ had remained untouchable.

  This was due in part to the well-earned reputation for militancy of the waterfront unions. It was also because successive reform attempts by different governments always took place within the traditional tripartite process — government, business and unions — with the criterion for a successful outcome being agreement between the three parties, not greater productivity on the waterfront. The Crawford Inquiry, commissioned by the Fraser Government, and the Waterfront Industry Reform Authority (WIRA), established by the Hawke Government, were prime examples of this approach. The goal of these inquiries was to moderate an outcome which all parties could live with, not confront the restrictive practices which were the core of the problem. This suited the MUA; its leaders were tough and patient negotiators.

  There was a cycle of mistrust. Governments felt that in any confrontation with the unions, once the shoe pinched, business would fold and sue for peace. Likewise, business knew from past experience that once a stand-off on the waterfront caused general dislocation in the economy, there would be pressure from the Government to settle the dispute so ‘the nation could get back to work’. The MUA sensed this mutual mistrust and cynically and brilliantly exploited it.

  The Workplace Relations reforms put through the parliament by Peter Reith in 1996 were very important to the course of the waterfront dispute. Paradoxically, the basis of the MUA application to the Federal Court in April 1998 to have the workforce of Patrick, the stevedoring company, reinstated was the Freedom of Association provisions of Reith’s Workplace Relations Act. That act restored the secondary-boycott sections to the Trade Practices Act, and this was to prove pivotal to a successful outcome to the waterfront dispute in April–May 1998.

  After its election, the Government commissioned ACIL Economics to advise it on waterfront reform. Its confidential report of October 1997 contained a telling analysis of the forces which had been at work during earlier attempts to achieve waterfront reform. It found that initially there had been some improvements following the much-lauded agreement in 1989 negotiated through WIRA, which heavily involved the PM, Bob Hawke, albeit at the considerable cost mentioned earlier. This, regrettably, did not last. According to ACIL, not only did the rate of cargo handling fall, but the remaining workforce benefited substantially in terms and conditions; thus the benefits of reform had not flowed principally to trade participants via such things as reduced prices and greater reliability, which had been the original intention.

  In ACIL’s opinion, the MUA retreated from offering concessions because of both perceived weakness on the part of the Hawke Government and political credit later earned through its energetic support of the re-election of the Keating Government in 1993. At a crucial stage of the 1989 negotiations, the WWF (later MUA) secretary, Tas Bull, deduced that Hawke would not insist on union concessions, so he toughened his stance. Having strongly supported the ALP in 1993, the WWF no longer felt obliged to honour any commitment to the WIRA process. Not only did it feel it had earned its political keep, but it is widely believed that the Industrial Relations Minister, Laurie Brereton, prevailed on the Australian Industrial Relations Commission (AIRC), at the behest of the WWF, to reverse an intended authorisation of some dismissals of employees at Darling Harbour caught up in an industrial dispute.

  Perceptions of this kind were widely held in the industry; little wonder therefore that few believed that any government might be serious about real reform. Also the AIRC was not seen as much interested in waterfront reform. To add to this the secondary-boycott provisions had languished within the remit of the AIRC for some years and had only recently been restored to the Trade Practices Act, courtesy of the Workplace Relations Act of 1996.

  I was conscious of this legacy, and the psychological ascendency enjoyed by the MUA, when my Government was elected. From early on I had discussions with John Sharp, the Transport Minister, and Peter Reith about the need to develop a strategic plan to reform the waterfront. Fortunately both Sharp and Reith were determined to achieve reform. They were of a different stripe from many previous ministers in this area. They knew what the problem was and were committed to finding a solution.

  Part of that plan was to give negotiation a chance, notwithstanding the long, failed history of which we were all painfully aware. Accordingly, Peter Reith held some four or five meetings with the leadership of the MUA, ACTU officials also being in attendance. Reith visited the various port facilities accompanied by MUA officials. He put to them the desirability of reaching the Government’s productivity goal of 25 container movements per hour (against the then level of 17.6). He was bluntly told that this was unrealistic and unattainable. The union movement sent a clear message that it was not for turning. It no doubt calculated that my Government would go the way of previous government flesh on this subject. The important point is that Reith tried the path of negotiation. If the MUA had been more responsive, the course of history on the waterfront would have been different.

  It was idle to pretend that a big change on the Australian waterfront could be achieved without a potentially explosive face-off with the MUA. The consensus approach had been tried ad nauseam in the past. No one wanted a major strike, and I readily understood the distaste
many employers felt for any kind of action that would produce a nationwide stoppage. On the other hand, I had grown tired over the years of receiving lectures from business figures about the need for the Government to stand up to union militancy on the waterfront, only to witness those same lecturers running for cover when the possibility of firm action threatened, however temporarily, their companies’ livelihoods.

  I also knew that to achieve the outcome the Government wanted, there must be a carefully built public campaign reinforcing in the minds of Australians the case for reform on the waterfront. Poor performance on the waterfront was an economic reality. There was a disposition amongst people to believe this, but it had to be reinforced. That was one of the reasons why we commissioned the detailed investigation and strategy outline from the economic consultant ACIL.

  The Productivity Commission released two reports on 28 April 1997 which provided strong factual support for reform. One found that poor performance, especially delays and unreliability, imposed significant costs on exporters and importers. The other report indicated that the workplace arrangements on the Australian waterfront were complex, inflexible and prescriptive; they added weight to the arguments in favour of reform. The Productivity Commission found that charges were higher and services less reliable on Australian wharves than overseas ones.

  For a reform initiative to have good prospects of success, it was essential that the Government talk on a regular basis with those involved in the industry, particularly the two stevedoring companies, Patrick and P&O. The only way in which reform could be achieved was to break the grip of the MUA on work practices on the Australian waterfront. The stevedoring companies had intimate knowledge of those practices.

  Commonsense told us that properly trained non-union employees would be essential to the successful implementation of a reform strategy. In any confrontation, the existing union workforce would inevitably stop working, and replacement labour would be required to keep the wharves going, otherwise the country could be held to ransom. The MUA knew this, and that is why it and its supporters reacted with such hostility to suggestions that an alternative workforce should be trained. The plan struck directly at the monopoly it held on the supply of labour for the waterfront. That was the essence of its power.

  A key part of the solution to the waterfront problem was a waterfront employer willing to take on the unions. The Government found that employer in the person of Chris Corrigan, the managing director of Patrick. Corrigan agreed with the Government, not only about the need to reform the waterfront but what reform entailed. He knew that the past process had failed and that at some point, after a carefully prepared plan had been implemented, a confrontation with the MUA would occur.

  From the beginning we knew that the confrontation, when it came, would be difficult; indeed unpleasant and ugly. For decades the unions had been able to bluff governments and employers out of a defining moment on the waterfront. The threat of industrial stoppages and union anarchy on our wharves was always strong enough to overcome the desire for reform. The dispute, when it ultimately came in the first half of 1998, was to demonstrate that there were still many within the ranks of employers, and even Coalition governments around Australia, who baulked at taking on the union movement to achieve the outcome they all thought desirable in the long-term interest of the Australian economy.

  Another essential item of a reform strategy was government help with redundancies. Reform would entail a reduction in the stevedoring workforce and neither P&O nor Patrick would be able or willing to meet the cost involved. In mid-December 1997 Peter Reith announced that the Government would support, financially, reform-related redundancies. Preparations began immediately to give effect to this decision, so that when matters came to a climax the following April the Government was able to move instantly on redundancies, and this proved crucial in achieving the historic changes on the waterfront.

  Peter Reith and I met Chris Corrigan in my office in Canberra during the latter half of 1997. Corrigan outlined the action which he believed would be necessary on his company’s behalf if reform were to be realised. He was careful, providing little detail. I told him that the Government would support what he had in mind, provided that at all times it was within the law. When he had left, I was not certain that he would initiate reform.

  On 23 September 1997, the affairs of the Patrick group of companies were reorganised. This involved returning to shareholders what was deemed to be surplus capital, action that was to attract fierce criticism when the dispute reached its climax in April 1998. The essence of the reorganisation was that the capital left in the business was enough to keep it going only if the workforce met its obligations under enterprise agreements between the union and the employing company. If this did not occur then the company could be placed in administration, which in turn would justify the dismissal of the workforce.

  The reorganisation reflected Corrigan’s belief that in any industrial relations situation, both labour and capital had obligations. Labour had an obligation to make services available in accordance with agreements, thus contributing to the realisation of a reasonable profit. Capital should be available to support the operation in achieving that profitability. It was therefore fair to argue that, in any given situation, excess capital should be taken away and used elsewhere.

  The MUA attacked Patrick for not informing the union or the workforce of the restructuring. Corrigan’s retort was that as the restructuring did not alter the obligations of the employees under their employment agreements, there was no onus on the company, under the Stevedoring Industry Act, to provide details of the restructuring. The employees and the MUA did not become aware of the restructuring until 8 April 1998.

  The restructuring would in time facilitate the action taken by Patrick to terminate the employment of its workforce on 7 April 1998, but only because the workforce had not met its commitments under the enterprise agreements. If it had, then the company would not have gone into administration, and there would have been no basis on which to retrench the workers. This was the position which Corrigan consistently maintained.

  The counter to this from the union was that Corrigan had taken a lot of money out of the company. Corrigan replied that if the workforce had fulfilled its obligations, then the company would have traded with sufficient profitability to remain out of administration. Corrigan’s position is supported in the Report to Creditors dated 16 May 1998, written by Grant Thornton. It said, ‘… the companies could expect to earn reasonable profits under the labour supply agreements on the basis that the enterprise agreements negotiated could have been fully implemented’.2 To use Corrigan’s words in an address to the Sydney Institute in 2000, ‘… the companies were viable, they were not shells waiting to crack. It was the fact that the employees and their union reneged on the Enterprise Agreements that had been negotiated that brought the companies down. That fact is frequently and conveniently overlooked but it’s there as large as life in the Report to Creditors dated 16 May 1998.’3

  It was always asserted by Corrigan that the rearrangement of September 1997 was a sensible corporate restructuring which, amongst other things, effectively removed excess capital in the labour-employing companies. In that same address to the Sydney Institute, he put his powerful argument in these terms:

  First, it’s apparently quite acceptable for employees to withdraw their resources, namely labour, from a company and in the process send it into insolvency but it’s not acceptable for directors to withdraw capital resources which may, because of subsequent events beyond their control, contribute to the same result. What an amazing set of double standards. I have always believed it was one of a director’s duties to protect and manage shareholders’ capital. Apparently not — it’s a one-way street. If you put capital in, you cannot take it out without the risk of being judged to have contributed to possible insolvency …

  Secondly, had the capital not been withdrawn and had work practices continued as they were, not as they had been negotia
ted, I estimate that those Companies would be facing insolvency about now in any event. The $40 million of capital would have been expended. The companies would be in administration. The workers would have no jobs.4

  To many people Corrigan had advanced a technical, legal defence of what was an asset-stripping operation. That argument had emotional appeal, yet there was compelling logic to Corrigan’s case. His key point was that if the union had kept its end of the bargain, the company would have made enough money to have remained out of administration.

  The problem he had in winning acceptance of his line was that the restructuring occurred in the build-up to the events of April 1998. It plainly facilitated the plan he implemented at that time, and was open to the rather superficial allegation of a conspiracy. Yet the facts, when viewed in the cold light of day, indicated that there was a lot of validity in what Corrigan asserted. In effect, the union adopted the attitude that no matter how outrageous its behaviour might be, money should always be available to keep the company going, thus ensuring continuity of employment for its members. Corrigan’s position was that the only money that would be available was the amount needed to keep the company profitable, provided that the members fulfilled their side of the bargain. He had a strong case but it was not widely accepted at the time.

  In his 2000 address Corrigan pointed out that if extra money had been left in the company and it had survived until the year 2000, before going into administration, then the generous redundancy arrangements put in place by the federal government in April 1998 would not have been available for the workers retrenched in 2000, as a consequence of the company falling into administration. Clearly this would have been bad for the workers.