

Â

NORTHERN TERRITORY INDUSTRIAL Â   
RELATIONS SOCIETY

ANNUAL CONVENTION Â   
Darwin, 27 August 1999

Â

“IR - MATRIX OR VORTEX”

Â

THE HONOURABLE COLIN 
G POLITES Â   
SENIOR DEPUTY PRESIDENT

Â

Your organisers have selected the topic “IR - Matrix or Vortex”. 
They have then  posed the question “Have the reforms of the 
last 3-4 years produced an ordered evolutionary series of changes? Or 
Conversely, has IR become a whirlpool with no end in sight!”.

Presumably one function of an address called the “  Keynote Address ” 
is to introduce the topic and pose some questions about it. So, I thought 
I would start with the definitions of “  matrix ” and “  vortex ”.

Vortex is defined in the Shorter Oxford English Dictionary 
as follows:

“ . . . eddy, whirlpool, whirlwind . . .   1.a   
In older theories of the universe (esp. that of Descartes), a supposed 
rotatory movement of cosmic matter round a center or axis, regarded 
as accounting for the origin or phenomena of the terrestrial and other 
systems; a body of such matter rapidly carried round in a continuous 
whirl 1653.   b.  
In mod. scientific use: A rapid movement of particles of matter round 
an axis; a whirl of atoms, fluid, or vapour 1847.   2.  An eddying of whirling mass of fire or flame 1652.   3.  A whirl 
or swirling mass of water; a strong eddy or whirlpool 1704.   4.  A violent eddy or whirl of the air; a whirlwind or cyclone, 
or the central portion of this 1700.   5.  fig. A state or condition of human affairs or interests 
comparable to a whirl or eddy by reason of rush or excitement, rapid 
change, or absorbing effect 1761.   b.  A constant round of excitement or pleasure 1792.   c.  A situation into which persons or things are steadily drawn, 
or from which they cannot escape 1779.

5.   To be drawn into the v. of New York politics W. IRVING   b.  She .. lived in a v. of gaiety 1877.   c.  Whirled round again in the v. of dissipation and gaming 
1779.

attrib.   v. 
turbine  or   wheel , a turbine in which the water enters tangentially at 
the circumference and is discharged at the centre.”

Presumably it is from the reference to whirl pool that the sub-theme 
is derived. Industrial relations going round and round in circles. The 
thought put me in mind of the old parody of the beatitudes “  blessed are they who go around in circles, they become known as big 
wheels” - perhaps an accurate description of IR, ER and HR practitioners 
and their theories.

Matrix is defined in the Shorter Oxford English Dictionary 
as follows:

“. . . female used for breeding, parent stem, 
(later) womb, register, roll, f. mater, matr- MOTHER, with ending of 
fem. agent-  nouns.]   1.  
The uterus or womb. Also occas. used for OVARY.   2.  A place or medium in which something is bred, produced, 
or developed 1555.   b.  A place or point of origin and growth 1605.   c.  The formative part of an animal organ, e.g. the pulp and 
capsule of the mammalian tooth 1835.   d.  Bot.   The body on which a fungus or a lichen grows 1857.   3.  An embedding or enclosing mass; esp. the rock-mass surrounding 
metal (see GANGUE), fossils, gems and the like 1641.   b.  Biol. The substance situation between animal or vegetable 
cells 1802.   4.  
Type-founding. A piece of metal, usu. copper, by means of which the 
face of a type is cast, having the letter stamped on it in intaglio 
with a punch. Also in stereotyping, the mould of plaster, etc. into 
which sterotypers’ metal is case. 1626.   b.  Antiq. The bed in a slab in which a monumental brass is 
fixed 1861.   5.  
Math. A rectangular arrangement of quantities or symbols 1858.”

I must say I was intrigued by the relevance of most of these definitions 
to the sub theme and I wonder if p erhaps matrix had a different 
more Australianised connotation in which it was being used by your conference 
planners, so I consulted the Macquarie Dictionary. The Macquarie defines 
matrix as follows:

“  1.   that which gives origin or form to a thing, or which serves to enclose 
it.   2.  
Anatomy a formative part, as the corium beneath a fingernail.   3.  Biology the intercellular substance of a tissue.   4.  the rock in which a crystallised mineral is embedded.   5.  Mining - 
gangue.   6.  
Printing   a.  
a mould for casting typefaces . . .   7.  a positive or negative copy of an original disc recording, 
used in reproducing other copies.   8.  in a punching machine, a perforated block upon which the 
object to be punched is rested.   9.  Mathematics, Computers a rectangular array of numbers.   10.  Computers 
a rectangular array of logical elements acting as a selection system.   11.  Geology 
the smaller grainsize material in a sedimentary rock containing material 
of two distinct grainsizes.   12.  Also, mother-of-opal. Mining partially porous grey or brown 
low-grand rocky material with thin streaks of opal though it . . .   Usage:  This 
word has variant plural forms, matrixes being the English plural, and 
matrices being derived from the Latin plural. Either form is acceptable.”

Not a material difference in Australian usage there.

Perhaps however the use of the word is intended to convey that the 
changes of the last four or five years have produced a feeling that 
industrial relations or workplace relations is now a nice rectangula r 
box. Or perhaps it is intended to paraphrase an expression common in 
industrial relations a few years ago. Does the topic suggest that one 
is surrounded with a warm and fuzzy feeling about industrial relations 
change?

I will return to such definitional issues at the conclusion 
of this paper.

I would however wish to start a Keynote speech in 
relation to this topic, despite my difficulty in understanding it, with 
an historical overview. Those of you who know me well and who have had 
the misfortune to hear me speak before know that I am very fond of a 
saying attributed to Winston Churchill to this effect “  those who ignore the lessons of history are destined to repeat its 
mistakes ”.

I think therefore in laying the background it is proper 
that I should put a number of propositions to you in relation to the 
current position.

Firstly, I argue that one cannot source the changes 
in our industrial relations system to only the last three or four years. 
It is true that those years mark the period of the Howard Government 
and the significant changes in our industrial relations system brought 
about by the   Workplace 
Relations and Other Legislation Amendment Act 1996  but in my 
opinion, it is wrong to believe that change started there. In my view, 
the foundation for change can be found in the inability of the Fraser 
Government to deal with the unions during the late 1970’s and early 
1980’s. I add to this the perceived role of the Australian Conciliation 
and Arbitration Commission as it then was, in preserving a system with 
which the Government of the day was not satisfied. Time does not permit 
me to go into all of the factors which in my view justify this conclusion 
but let me just highlight a few:

Â·  The inability of the Government to persuade the Commission 
in 1976 to abandon full wage indexation and the role of the Commission 
in perpetuating the indexation system beyond its “use by” date.

Â·  High levels of industrial disputation with the ability of 
unions in key sectors such as oil and electricity to secure increases 
outside the system.

Â·  The inability of the union movement to deliver a full commitment 
to the “indexation system”.

Â·  The refusal of the unions to accept decisions of the Commission 
in key cases.

Â·  The spreading of the 1981 Metal Trades Settlement throughout 
the economy.

There is no doubt, in my view, that these factors 
were instrumental in persuading a number of key figures in the present 
Government that the conciliation and arbitration system which had essentially 
achieved bipartisan support no longer deserved that support.

These sentiments led to the growth of groups such 
as the HR Nicholls Society and a sustained attack on the system by right-wing 
bureaucrats and commentators such as John Stone, Des Moore, PP McGuinness, 
Michael Stutchbury and Alan Wood.

This was not the only factor. Labor also changed its 
view about the conciliation and arbitration system following its election 
to Government in 1983. Following the deregulation of the financial markets 
and the lowering of tariffs a number of key figures within the Labour 
Government and especially the Treasurer and subsequently Prime Minister, 
Paul Keating, accepted what I might call Treasury orthodoxy about wages 
policy. That acceptance is made clear in a passage from a speech by 
the then Prime Minister to the IIRA Convention in Sydney in 1992. In 
that speech Mr Keating said:

“It was a system which served Australia quite 
well I think, but the news I have to deliver today to those of our visitors 
who still think Australian industrial relations is run this way, is 
th  at 
it is finished. Not only is the old system finished, but we are rapidly 
phasing out its replacement, and have now begun to do things in a new 
way.

When we arrived in office in 1983 the old system was clearly on its 
last legs. Inflation was running at 11.5 per cent. We were exhausted 
by industrial warfare. The profit share had been squeezed down. Manufacturing 
was being obliterated. Unemployment was still rising, and of course 
the economy was in the trough of a recession.

All this was happening behind high tariff barriers 
and a fixed exchange rate, with a current account deficit in the early 
eighties nearly twice the size as a proportion of GDP it is today, and 
the starting point deficit we inherited for our first budget he  ading towards 5 per 
cent GDP.

So it was a rough time.

The Arbitration Commission was doing its best but it had just about 
run out of possibilities. Every principle had got a run at one time 
or another - basic wage, total wage, relativities, work value, absorption, 
non absorption, flow ons, no flow ons, indexation, no indexation, minimums 
and maximums, industry decisions and national decisions.

Every principle, except the simple and straightforward principle of 
working together to find outcomes which left us all better off.”

Mr Keating was as good as his word. In 1993 the   Industrial Relations Reform Act  was introduced. That Act, as 
much as the WROLA Act, made significant changes to the operation of 
the industrial relations system as a whole and the Commission in particular.

The changes which took place in accordance with the 
1993 Act can be summarised as follows:

Â·  The change in the functions of awards to act as a minimum 
safety net with a statutory responsibility to refrain from varying an 
award if a certified agreement or enterprise flexibility agreement was 
more appropriate.

Â·  The introduction of a no disadvantage 
test for agreements, a review of awards each three years to ensure consistent 
and relevant minimum wages.

Â·  The introduction for the first time of certified agreements 
without a public interest test and with statutory obligations on the 
Commission to either certify or not certify agreements depending on 
compliance with the statutory tests.

Â·  Introduction of enterprise flexibility agreements. These 
provided for the first time for the certification of agreements between 
employers and non unionists and relied on the corporations power.

Â·  The introduction of a strict separation between minimum 
rates and paid rates provisions with special statutory provisions to 
apply to paid rates awards.

Â·  The introduction into the Act for the first time of protected 
industrial action in conjunction with the negotiation of agreements.

Â·  The introduction of specific unlawful termination provisions.

In this respect it is important to note that in a 
general way for the first time the foreign affairs power and the corporations 
power were used to give the Commission general jurisdiction. Whilst 
other heads of constitutional power and particularly the Public Service 
power, defence power and the trade and commerce power have been used 
over the years from time to time in limited areas, the 1993 Act marked 
the first time that a significant general use of what were then called 
the exotic powers to give the Commission broad based jurisdiction.

Some of those changes did not survive the WROLA Act 
but the change in focus from awards to enterprise agreements certainly 
did. Indeed, the change was enhanced by the effective prohibition on 
paid rates awards. To it was added of course, the limitation on the 
arbitral power of the Commission to allowable award matters and the 
dramatic strengthening of the freedom of association provisions. Changes 
brought about by the WROLA Act include:

Â·  The introduction of s.89A into the Act with its notion of 
allowable matters for inclusion in awards (in essence underlying the 
role of awards as minima only).

Â·  The introduction into the Act of s.127 in relation to industrial 
action.

Â·  Alterations to the provisions in relation to certified agreements 
to provide for both union certified agreements - s.170LJ, non union 
certified agreements - s.170LK and greenfield agreements - s.170LL.

Â·  The introduction of the freedom of association provisions 
including the removal of the Commission’s power to award preference.

Â·  Limitations on the Commission’s power to make demarcation 
orders or exclusive representation orders.

Â·  Introduction of Australian Workplace Agreements.

Â·  The creation of the Office of the Employment Advocate.

Whilst some of the changes especially in relation 
to the limitation of the role of unions in connection with certified 
agreements would I suspect, not have been contemplated by the Labor 
Government. There is much in the 1996 legislation which simply builds 
upon the 1993 Act and was at least sought by the Labor Government by 
way of Commission decisions in cases under the 1993 Act. So called core 
award conditions contented for by the government in the September 1994 
safety net review. They were identified as minimum wage, key leave elements, 
hours of work, TCR, superannuation (as per the test case), public holidays 
(as per the test case), mode of employment, union right of entry, dispute 
settlement procedure, support of the principle for equal pay for equal 
work and   “industry 
specific conditions identified on an award by award basis reflecting 
widely accepted standards justified by important industry and other 
specific circumstances” . Given that rather limited approach 
to the scope of the award system it is not difficult to argue that the 
WROLA Act merely reflected a prescriptive but evolutionary change as 
to the matters to be included in awards. The alternative perspective 
being conservative rather than a Labour Government in power.

What are the effects of those changes? Let me illustrate some. There 
has been a clear shift of focus to agreement making for example in 1994-1995 
there were 2,859 applications to approve agreements under the then existing 
provisions of the Act. In 1998-199 9 the figure was 9,001. But 
dispute settlement continues to form a significant part of the Commission’s 
work. For example in 1994-1995 there were 3,588 s.99 notifications. 
In 1998-1999 there were 2,841 such applications, however, in addition 
there were 288 applications under sections of the Act relating to dispute 
settling procedures in agreements.

The legislative changes have meant additional work 
for the Commission in a number of areas, for example there were 335 
applications under s.127 of the Act in 1998-1999. This compared with 
39 applications for bans clauses in 1994-1995. In relation to termination 
of employment applications there were 7,514 such notifications in 1994-1995 
and there were 8,130 application in 1998-1999. It is true that in the 
years 1995-1996 and 1996-1997 the number of unfair termination applications 
was considerably higher at 13,643 and 10,621 respectively. However, 
the position over the last two years has stabilised with the 1997-1998 
figure being at 8,092.

The above figures do not reflect any of the vast amount 
of work undertaken in connection with award simplification.

Full Bench work over the period has remained relatively 
stable. For example, in 1994-1995 there were 477 matters, in 1996-1997 
there were 355, in 1997-1998 411 matters and in 1998-1999 379 matters.

These figures I suggest do not support suggestions 
that there has been any drop off in the workload of the Commission. 
Whether it be a fashionable institution or not it remains a very busy 
institution in relation to workplace and industrial issues in this country. 
The most that can be said is that there has been some change in the 
emphasis of the work with more time necessarily being devoted to agreement 
certification and to conciliation both in relation to agreements and 
in respect of industrial disputes. A lesser time has been devoted to 
lengthy arbitrations in relation to award matters. There has been an 
enhanced area of activity in relation to industrial action and a relatively 
constant flow of Full Bench work. These figures of course do not reflect 
the work of the Commission in connection with registered organisations. 
The other factor that cannot be ignored is that the number of primary 
appointments to the Commission has fallen from 55 in 1996 (at 30 June 
1996) to 43 in 1999.

The changes have meant some consequential alterations 
in the way the Commission operates.

Â·  The panels have become larger and more State orientated.

Â·  Presidential members are doing more single member work.

Â·  There has been an increase in the use of dual appointees 
especially in South Australia where there is now no resident member 
with a primary appointment to the Commission.

Â·  An increased amount of time is spent in attempting to assist 
parties to reach agreement compared with formal arbitration.

One area I will single out for comment is the difficulty 
in dealing with disputes about travelling and amenities. Such disputes 
are often notified to the Commission (usually under s.99) but they are 
now more difficult of resolution as a result of s.89A. Those difficulties 
will be exacerbated following the decision of the Federal Court in   Gordonstone Coal 
Management Pty Ltd v Australian Industrial Relations Commission  
[Unreported (1999) FCA 797 18 June 1999] which has taken the view that 
despite s.170LW the Commission only has power to settle a dispute over 
the application of a certified agreement by arbitration in relation 
to allowable matters. Thus the power of the Commission to deal with 
disputes arising under an agreement in relation to such matters is similarly 
limited to conciliation notwithstanding any power in the grievance clause 
of the agreement.

The Government now has before the Parliament a further 
Bill to amend the industrial relations power. Key aspects of which include:

Â·  Further curtailing the definition of allowable matters.

Â·  Further limiting incidental and necessary 
matters which may be included in an award.

Â·  Confining the Commission’s compulsory conciliation jurisdiction 
to allowable matters.

Â·  Providing for voluntary mediation as an alternative to the 
Commission and providing the Commission must charge for voluntary conciliation.

Â·  Virtual removal of the powers of the Commission in relation 
to the certification of agreements.

Â·  Further confining of right of entry provisions.

Â·  Further strengthening the so called freedom of association 
provisions to inter alia preclude employers from entering into agreements 
to encourage union membership.

Â·  Providing term appointments to the Commission.

It is, of course, not proper for me, though it will 
be for you, to canvass the merits of those proposals. I will, however, 
make an exception. I will say I am opposed to term appointments for 
Commission members for the same reasons as I am opposed to term appointments 
for Judges. With the best will in the world it is impossible, if the 
term is renewable, to maintain the perception of independence especially 
when the Government is a regular litigant before the Court or Tribunal.

I would also make one other observation. There seems 
to have been a distinction drawn in some literature between mediation 
and conciliation and what those terms mean. I again turn to the Macquarie. 
Mediate is there defined as:

“  1.   to bring about (an agreement, peace, etc.) between parties by acting 
as mediator.   2.  
to settle (disputes, etc.) by mediation; reconcile.   3.  to effect (a result), convey (a gift), etc., as or by an 
intermediary or medium . . .   4.  to act between parties to effect an agreement, compromise, 
or reconciliation.   5.  to occupy an intermediate place or position . . .   6.  acting through, dependent on, or involving an intermediate 
agency; not direct or immediate.”

and conciliate is defined as follows:

“  1.   to overcome the distrust or hostility of, by soothing or pacifying 
means; placate; win over.   2.  to win or gain (regard or favour).   3.  to render compatible; reconcile.

The Macquarie has a further definition of conciliation which inter 
alia includes the process through which a neutral third party attempts   without seeking 
to impose his or her own terms of settlement , to persuade the 
parties in an industrial dispute to settle their differences and is 
generally carried on in camera and is in the Australian industrial relations 
system regarded as the initial formal stage in dispute settlement which 
may be followed by arbitration.

On the other hand certain American literature I have 
seen indicates as follows:

“Mediation . . . stresses that mediators 
(as opposed to conciliators) as neutral third parties facilitate and 
control the process by being an assistant to the negotiating parties; 
that the mediator generally does   not intervene or interfere in parties’ considering the issues in 
dispute, options and alternatives, or in the development of the consensual 
outcome . . . or the outcome itself . . .”

On the other hand the International Labour Organisation publication 
“  Conciliation 
and Arbitration Procedures in Labour Disputes ” treats conciliation 
and mediation as identical and I quote:

“Conciliation and mediation

These are procedures whereby a third party provides assistance to 
the parties in the course of negotiations, or when negotiations have 
reached an impasse, with a view to helping them to reach an agreement. 
While in many countries these terms are interchangeable, in some countries 
a distinction is made between them according to the degree of initiative 
taken by the third party. Such distinction reflects the etymological 
origins of these terms: ‘conciliation’ is derived from the Latin 
conciliare, meaning ‘to bring together’ or ‘to unite in thought’, 
while ‘mediation’ is derived from the Late Latin mediare, meaning 
‘to occupy a middle position’. Thus, some systems of disputes settlement 
distinguish between conciliation as a procedure whereby the third party 
brings the parties together, encourages them to discuss their differences 
and assists them in developing their own proposed solutions, and mediation 
as a procedure in which the third party is more active in assisting 
the parties to find an acceptable solution, going so far as to submit 
his own proposals for settlement to the parties. For the purpose of 
the present study, such distinctions are considered to be differences 
of degree, not differences in kind, since in both cases settlement of 
the dispute depends upon the agreement of the parties. For this reason, 
and also because such distinctions between the two methods of settlement 
have tended to disappear in industrial relations practice, with conciliators 
and mediators intervening in the discussions more or less actively according 
to the particular circumstances of the dispute, conciliation and mediation 
are here discussed together as one type of procedure.”

Can I be practical just for a moment. There will be such occasions 
when it will be inappropriate for the mediator or conciliator (call 
him or her what you will) to do other than play a passive role as the 
parties seek to work out their differences. The per son will simply 
be a conduit for discussion.

However, the occasion may arise where parties either 
seek a more active role of the mediator and it becomes apparent to the 
mediator that the issues can be resolved if he or she moves to a more 
active participation (e.g. by expressing a view on some point or other). 
It will do the public interest no good if these functions are excluded 
by reference to some sterile definition.

I return to the theme for the convention.

If one regards what has occurred in the last three 
years as the natural progression of development in Australian industrial 
relations away from the conciliation and arbitration system we knew 
up until say the end of the 1960’s then one would agree that we are 
not in a vortex. That is, we are not whirling around in circles.

However, if a matrix is described as a rectangular 
box, encasing things, presumably things of certainty, we aren’t there 
either. The proposed legislation of itself is predicated on the view 
that the present system is in a process of evolution from collectivism 
to the position of employers and employees being able to take absolute 
responsibility for workplace arrangements without interference from 
a third party at all.

So, the question for you participants will be taking 
the outline I have given and given what you will be told by the other 
speakers this weekend, whether you will opt for either of those definitions 
or whether neither really fits what is occurring.

Can I finish by returning to my historical theme, 
just briefly.

It may be I think fairly said, that the conciliation 
and arbitration system which we have known, despite its ups and downs 
throughout the century owed its origins to what in large part could 
be described as either the excesses of or the breakdown of the labour 
market in the early 1890’s and in particular the social costs associated 
with that breakdown. The architects of our present emerging industrial 
relations system, whoever they be into the future, must always bear 
that in mind. If they don’t and the market again fails by inducing 
unacceptable social costs then those architects will be guilty of having 
failed to learn the lessons of history.

I leave you then in the light of this background paper 
to be informed by the papers as to your view of   “matrix”  or   “vortex” .

The Hon. C G Polites Â   
Senior Deputy President

27 August 1999

