The Waterfront Dispute: from High Court to Settlement-Summary and Comment


Current Issues Brief 1 1998-99

Stephen O'Neill
Economics, Commerce and Industrial Relations Group
14 September 1998

Contents

Introduction

A secret conspiracy?

Commercial Restoration

Industrial Developments

Conditions of settlement

Redundancy deal between PCS and its employees

Delay to the settlement

Some Conclusions

Endnotes

Appendix

Media comment on the dispute
Some academic and practitioner views

Introduction

This Current Issues Brief provides an update to the earlier Outline of the Waterfront Dispute(1). That paper reported on events of the waterfront dispute up to the High Court's decision (4 May 1998), which dismissed appeals against Federal Court orders of Justice North. Those orders required restoration of the commercial and industrial situations which applied at the four labour hire companies of Patrick Stevedoring prior to 7 April (the date when the labour hire companies were placed under administration and some 1400 Patrick employees were locked out). While it is prudent to regard the waterfront dispute as not being finalised until the settlement is certified by the Australian Industrial Relations Commission, and this and other agreements are presented to Justice Tony North, this paper reports on events since the High Court's decision (4 May 1998) on the waterfront up to the time of the terms of settlement of the dispute in September 1998.

The waterfront dispute has been an extraordinary event in Australian industrial relations and there have been many components to its settlement. Among these have been:

  • a settlement of working issues between Patrick and the Maritime Union of Australia (MUA) in a framework industrial agreement and subsidiary local agreements
  • certification of these agreements by the Australian Industrial Relations Commission
  • legal action by the Australian Consumer and Competition Commission against the MUA for alleged boycott activity being settled
  • action by the Melbourne Port Corporation against the MUA to be withdrawn
  • MUA legal action against the Minister for Workplace Relations and Small Business, the Hon. Peter Reith MP (and others) to be withdrawn
  • redundancy funds released by the Minister to pay out redundant wharf labour (withheld until legal action against the minister was withdrawn).

Since 4 May there have been four primary features of the dispute with which this paper deals:

  1. Government involvement in the dispute. Since 4 May, certain Government documents highlighting strategies of achieving waterfront reform have appeared in the media. They were used by the Federal Opposition in Parliament in June 1998 to substantiate claims that the Government had orchestrated key events of the dispute and that it had sought to identify the issues and context which would provoke a national waterfront strike and canvassed mass sackings of a workforce. Much planning appeared to have had largely taken place by July 1997. A sequence of events might lead to the replacement of the current workforce with a non-union, or at least non-MUA workforce, thus bringing about waterfront reform. The documents would be of considerable value in assisting to prove the conspiracy charges brought by the MUA against Patrick Stevedores and the Minister for Workplace Relations and Small Business, the Hon. Peter Reith MP (and others).

  2. Restoration of the commercial positions of the Patrick labour hire companies. The finesse required of all parties-employer, union, Government, the banks and others-to facilitate restoration (rather than liquidation) should not be underestimated. It has to be appreciated both in the context of the High Court's variation orders which allowed the administrators greater freedom to manage the companies, against the demands of creditors (primarily demands of the group of banks) to continue the process of liquidating the labour hire companies. One element of this restoration is implementation of the stevedoring levy by federal legislation, which will finance redundancies in the stevedoring and maritime industries and thus reduce stevedoring costs.

  3. The industrial developments flowing from the 4 May decision, which have also played a part in moulding the outcome. These include some early proposals of the non-union labour hire firm, Producer and Consumer Stevedores (PCS), to operate out of a number of ports so that there would be 'union' ports and 'non-union' ports. As well, there have been the industrial responses to the use of non-union labour, which have had serious financial consequences for shipping users.

The paper also outlines the terms of settlement, the principal framework agreement between Patrick and the MUA. As the Government, employer and unions make conflicting claims about 'winners and losers' in this dispute, it is too early to draw conclusions about its outcome. The paper therefore concludes by canvassing a number of industrial implications of the dispute now that dust from the dispute is beginning to settle. These implications follow from and build on those considered in the earlier CIB. The paper also contains an appendix of media comment on the dispute, including comment by industrial practitioners and academics, and further considers the industrial implications which are coming to light.

A secret conspiracy?

Four Government documents, two of which have been made public since the High Court's decision, have been used by the Federal Opposition to allege complicity of the Government in orchestrating the waterfront dispute. The documents were prepared in 1997. Briefly, they reveal:

10 March 1997: Departmental officers outlined circumstances in a memorandum by which employees could be terminated for illegal strike action:

stevedores would need to activate well-prepared strategies to dismiss their workforce and replace them with another quickly... a dispute would not, of itself, remove or alter MUA coverage, remove or suspend registration, or cancel the award or terminate any agreement ... What would be needed for the MUA's influence on the waterfront to be significantly weakened would be for a range of affected service users and providers to take decisive action to protect or advance their interests.(2)

14 April 1997: The Government is advised again by departmental advice that Patrick is considering corporate restructuring and the wholesale termination of its workforce. Interestingly, P&O Ports did not choose the same option. It had sought independent legal advice. By June 1997, according to The Age, P&O Ports had decided not to participate in removing the MUA from wharves.(3) Its advice compared the secondary boycott reforms of former British Prime Minister Thatcher to the boycott provisions now restored to the Trade Practices Act 1974 (Cwlth). This advice appears to have found that the secondary boycott provisions were inferior to those introduced by the Thatcher Government and cautioned against over-reliance on the new legislation.

21 April 1997: Advice from the Prime Minister, the Hon. John Howard, to the Hon. John Sharp, Minister for Transport and Regional Development which read:

I refer to our recent discussions on maritime reform. I support the interventionist strategy you have outlined. It would be appreciated if you and the Minister for Industrial Relations could proceed expeditiously to establish a contingency planning group. Funding issues will be addressed by Cabinet in due course. ERC has been informed of the need to provide funding for this purpose.

7 July 1997: This Cabinet Submission showed that Cabinet endorsed an 'activist' strategy proposed by Ministers Sharp and Reith for waterfront reform in preference to the alternative evolutionary approach. The submission suggested that the Government would assist in beating any resulting dock strike by facilitating the use of foreign skilled labour and the use of foreign registered tugs. Cabinet agreed with the proposal and formed a four-minister sub-committee, which could authorise spending for the purposes.

The process of tracing an underlying strategy for waterfront reform was assisted with information provided in response to a question on notice. On 13 February 1997 Mr Laurie Ferguson MP asked the Minister for Transport and Regional Development (the Hon. John Sharp) how many consultancies had been let by the Department at a value of $5000 or more since 1 April 1996. The Department's response identified a contract undertaken by ACIL Economics and Policy Pty Ltd for the purpose of providing policy advice to the Minister and the department regarding an industrial relations strategy for the implementation of waterfront reform. Further questions regarding consultancies and the waterfront strategy followed, particularly at Senate Estimates hearings.(4) However, the Government has been reluctant to make documentation available.(5) Yet, as early as August 1997, the Australian Financial Review was able to report:

A radical plan to crack the power of the Maritime Union of Australia has been secretly drafted by the Federal Government in readiness for the next time the union shuts down the docks.

Those who have helped draft the proposals over the past year include David Trebeck, a director of the consultancy firm ACIL and a former senior economist at the National Farmers Federation, and Paul Houlihan, an industrial relations consultant and former industrial director of the NFF....

The ministers for Transport, John Sharp, and Workplace Relations, Peter Reith, have worked quietly for a year on strategies to manage confrontation on the waterfront and reduce what the Government and the stevedores regard as the Maritime Union's stranglehold on the business of the wharves...

The linchpin of this strategy to confront the union are the Government's controversial laws which promote the use of non-union labour and re-introduce bans on secondary boycotts...

The plan includes provisions dealing with the legalities of forcing strikers to return to work, as well as the hiring of new workers on the docks.

Work has been done to determine what union assets could be seized in the event of fines and to assess which unions would support the wharfies.

Other plans involve how to keep some cargo moving during a strike and what specialised non-union labour would be needed to operate computer equipment and to drive the massive cranes on the docks...

Already at least one stevedore has indicated to Government that it is prepared to fight hard to achieve a permanent routing of the union's power...

It is understood P&O has warned the Federal Government that in the event of a major industrial dispute the company would seek financial assistance to help meet any legal costs with sackings and rehiring...

(But) Richard Setchell (P&O) is not optimistic about the prospects without government support. He believes Australia still needs explicit legislation to open up dockyard employment.(6)

On 23 September the same newspaper reported that senior ministers had criticised stevedore employers for their unwillingness to use avenues, under the industrial relations legislation, for making non-union agreements with their employees. Canvassing the possibility of major industrial confrontation, Mr Corrigan (CEO of Patrick Stevedoring) responded to the alleged criticisms:

If they are talking about things on that scale, they would have to do more than point to industrial legislation reforms of a fairly modest nature ... Things that have led to confrontation in the past have tended to involve some kind of Government support in one form or another. If the Government was really keen on going down that path, there are no doubt avenues they could use to go down it, but instead of that they are really encouraging us to take on the unions. One needs to tread very carefully in taking such encouragement too enthusiastically because at the end of the day we wear the responsibility for anything that happens.(7)

At the same time (September 1997), P&O Australia managing director, Richard Hein, also responded to the allegations of inactivity on the employers' behalf:

(The Government) had no proper understanding of the whole subject. I don't think they can blame us for the current state of inaction of reform of the waterfront ... and there needs to be a plan in place which can see it solved.(8)

September 1997 is also the month in which the two key ministers apparently agreed to the idea of a new stevedore entering the waterfront and the National Farmers Federation was consulted. Reports of these meetings appeared in December 1997, at about the time that the Dubai training plan unravelled. Writing in The Australian Financial Review, Pamela Williams deduced that there was however a new development, namely a labour supplier having an ongoing role on the waterfront, rather than providing a replacement workforce in the event of a major dispute:

The revelation of the NFF's talks with the Government throws a different light on the mystery training operation for stevedores in Dubai. The project has been assumed to be part of a plan to provide strike breakers to the existing stevedores in a major dispute.

If a new stevedore were to emerge, the Dubai trainees could provide a workforce for recruitment.(9)

By June 1998, Pamela Williams ascertained that Mr Corrigan had also attended the meeting with Ministers Reith and Sharp and officials of the National Farmers Federation on 18 September 1997(10). Nevertheless, most of the detail of the reform strategy was public knowledge by December 1997. By then it was clear which of the two major stevedores was interested in following through with the reform strategy. P&O Ports had already discounted the likelihood of a reform action (that is a dispute, leading to a strike, leading to termination of the permanent workforce) withstanding legal contest.

The first trigger that Patrick would use to initiate its reform strategy would be the settlement of its legal action against the Melbourne Port Corporation. The MPC agreed to Patrick accessing a new area of Appleton Dock which, in turn, allowed the freeing up of Patrick's Webb Dock No. 5 (in late January 1998). This space was leased to the newly registered company PCS, allowing the training of a stevedoring workforce after the cancellation of the Dubai training exercise in mid-December 1997.

The second trigger was exercised on 7 April 1998. This was the clause in contracts between Patrick Stevedores and its four labour supply companies, which allowed the principal to terminate the contract for any halt to the supply of labour. Various forms of industrial action followed both the arrival of the PCS workforce at Webb Dock, and following the notification of bargaining processes to secure enterprise agreement/s. Such action formed the evidence needed for those contracts to be terminated.

The tabling of certain documents in Parliament, particularly the Cabinet Submission (tabled on 4 June 1998), have had an important bearing in inducing the parties to settle the dispute. This is evident in the train of events (reported next section), where the initial inertia preventing settlement lessened after 4 June 1998.

Commercial Restoration

On 11 May 1998, the Federal Government re-activated its pressure to force a resolution of its choosing. It made its offer of redundancy finance conditional upon the MUA agreeing to non-union labour being used in some ports and on the MUA accepting outsourcing and less prescriptive work practices.(11) The Government later sought to have these arrangements accepted by a meeting of Patrick creditors.

On 14 May Justice Beach found the MUA guilty of contempt of charges for failing to promptly notify through newspapers an injunction granted against the Melbourne port pickets. The advertisements which were printed appear to have been made after the High Court's 4 May decision. The decision added to the financial pressure on the MUA to seek a settlement.

The accounting firm Grant Thornton was appointed as administrator of the four Patrick labour hire companies by Patrick Stevedores prior to the 7 April contract termination. On 18 May, an assessment of the state of the Patrick labour hire companies was tabled by the administrators at a meeting of creditors. Called: Report and Plan for the Future of Patrick Labour Companies, it found:

  • No evidence that the corporate restructuring revealed any breach of corporate law.
  • Clauses of the labour hire contracts (between the principal, Patrick Stevedores, and its four labour hire companies) were 'onerous' and probably not a commercial arrangement. This referred to the ability of the principal to terminate the contract due to any cessation in the supply of labour. The administrators noted the possibility of industrial action on the wharves. Thus the clause was considered too onerous, in light of the level of industrial activity on the waterfront.
  • A one-month review period was warranted to assess manning levels and the numbers for redundancy. A business rescue plan would call on the Government's redundancy proposal.(12)

An 'alternative' MUA deed of arrangement, also put to the administrators, proposed that the due creditors meeting be deferred for 60 days to allow negotiations between the MUA and Patrick to resume. Such a meeting is required to take place by the corporations legislation within two months of a company being placed under administration. The union argued that it represented the largest group of creditors-the former employees and, importantly, had their authorisation to represent this block of creditors.

As well, Patrick directors drew up it's survival strategy for the consideration of creditors. It proposed re-hiring 650 of its former workforce and would place another 250 in contract positions (for example, maintenance and cleaning), making redundant about 750 full-time workers. It proposed wage cuts of about 30 per cent in return for a possible $21 500 profit share arrangement.

The deadline for the required meeting of Patrick creditors, to take place by 25 May, was deferred by two weeks, i.e. to 8 June. Nevertheless by the end of May, there seemed little willingness to settle the matters. It appeared to Patrick Stevedores that the MUA would not withdraw its conspiracy charges. On 22 May, Patrick commenced it's conspiracy charges (alleging that the MUA had sought to harm Patrick companies) and commenced deregistration proceedings against the union. The MUA responded by commencing actions to replace the administrators of the four labour hire companies with a court appointed receiver. On 25 May Minister Reith withdrew the Government's offer to fund waterfront redundancies, since commitments were not given by the MUA to agree to government demands for reform.

In hindsight, it can be seen that these actions, if followed through, would have led to the winding up of the Patrick group. Such an outcome presumably would have mainly benefited the secured creditors (the banks), and the Government. Removal of such a large slice of the MUA membership from the waterfront would have facilitated the re-entry of the PCS non-union workforce, and perhaps others. The Government's offer to organise redundancy finance would not have been necessary, and the adverse financial and employment consequences for the MUA's membership in Patrick Stevedoring were fairly obvious. Clearly, a settlement, which would satisfy creditors, Patrick directors and the administrators (and the Government), was vital.

Neither of the protagonists' counter legal strategies was in their best interests. At the same time, the Australian Competition and Consumer Commission (ACCC) commenced its actions against the MUA for secondary boycott actions. The ACCC alleged that the MUA helped organise international bans of ships loaded or unloaded by non-MUA labour in Australia and domestic boycotts of Patrick operations.

It appears that the event that brought the two parties together was the tabling on 4 June 1998 in Parliament of the Cabinet document of 7 July 1997. It prompted contact by Chris Corrigan with Greg Combet of the ACTU:

Corrigan wanted to know one thing: was the union serious about negotiating a settlement. The answer was yes.(13)

On 9 June the once-deferred creditors' meeting was again deferred to 20 July to allow ongoing negotiations between Patrick and the MUA. The option of pursuing restoration (thereby avoiding liquidation) was decided in a close vote of the creditors, with the administrators resolving the impasse.(14) The way was thus open for the settlement (outlined below) to be structured. Given that a draft of the terms of settlement were reported in the media around 13 June, it appears to have taken less than a fortnight to fashion.

One important ingredient of the deed of arrangement revitalising the Patrick companies, was the scheme to finance industry redundancies. It constituted one of the last components of the restoration jigsaw. The mechanism to finance maritime redundancies is a loan secured from the banks by the newly registered Maritime Industry Finance Company. Bills to impose and collect levies on the container and general stevedoring trade (to repay the loan) were referred to the Senate's Rural and Regional Affairs and Transport Legislation Committee, which reported at the end of June. Although the MUA and ACTU supported an industry-wide redundancy scheme, they did not support the structure of this financial arrangement as they perceived that this scheme could be used for financing purposes beyond the scope of the immediate dispute.(15) The Stevedoring Levy (Collection) Bill 1998 and the Stevedoring Levy (Imposition) Bill 1998 nevertheless passed both Houses of Parliament on 30 June 1998.

Industrial Developments

The industrial developments of May and June centre around the efforts to reactivate the Patrick operation using MUA labour, the attempts of the non-union labour supplier, PCS, to establish itself as a waterfront operator, and the industrial activity which took place against Australian exports loaded by non-union labour.

Two disputes in May highlighted the desire for the Patrick workforce to regain some of its lost work. Simsmetal had contracted Patrick to deliver an export load of scrap metal to the USA, but switched the contract at the height of the dispute to P&O Ports. P&O agreed to hand over the loading of Handy Athea to Sea-Land in Adelaide, because P&O was prevented from using its own workforce. After negotiations, Sea-Land agreed to use only Patrick labour for the work.(16)

In another action, the vessel Bay Bonanza was left in the port of Newcastle (NSW) for almost two weeks due to industrial action of P&O Ports employees who had refused to cross picket lines (since 8 May). The ship was under contract to be stevedored by Patrick. Patrick sub-contracted this work to P&O Ports in light of the industrial action it was facing. Injunctions against the MUA were granted on 19 May to stop interference at the Newcastle port. The MUA wanted its Patrick members to do the work. The contract was eventually lost to Newcastle Stevedores who agreed to use Patrick labour on the ship.

These setbacks notwithstanding, progress was made on moving the backlog of containers. By 11 June, Patrick was in a position to honour the release of $4.75 million to pay wages for time worked since the reinstatement. Information as to who was on the Patrick payroll was needed by the administrators, prior to pay being distributed, which added to the delays.

The international response to the use of non-union labour in Australian ports is also a component of the settlement. The Columbus Canada (loaded by non union labour in April) returned to Sydney on 17 June to be relieved of its 'black' cargo. It was also reported that the US ILWU (Longshoremen's union) had struck a deal with the Columbus line to unload all but non-union loaded cargo.(17) Some cargo was to be returned to the USA via the Columbus Star due to arrive in the USA on 11 July. Some containers were to be returned to shippers who had sold their contents elsewhere; other container contents were to be destroyed. Presumably, US waterside workers resented the earlier snub proffered by the NFF's Donald McGauchie that the ITF was a 'paper tiger', given the ILWU's affiliation to the ITF.(18)

Paralleling these actions were the efforts of the labour supply firm PCS to either retain a role on the waterfront or expand its operations. Shortly after the High Court's decision, a director of PCS, Mr Paul Houlihan, proposed a plan to the ACTU to allow non-union operations on to the docks, which, briefly, was: 'they have some ports and we have some ports'. He added:

I think it is beyond dispute that there will be a non-MUA operator somewhere on the Australian docks. And that doesn't mean non-union, it means non-MUA.(19)

This turnaround reflected the now weakened position which PCS was in, arising from the court decisions. It also seemed to be at odds with the position of the Government, which was adamant on a non-union (not just non-MUA) operation in stevedoring. For Mr Houlihan's proposal to be effective, he would need an available host union, although a new enterprise union would also be suitable. A possible candidate would be the Australian Workers Union, given its limited coverage of maritime-related occupations. It was revealed in early June that PCS had approached both the Transport Workers Union and the Australian Workers Union to see if they would 'cover' PCS employees in certain ports.(20)

In any event, the costs of maintaining the 350 PCS workforce which was blocked from working the docks by court orders, apparently forced a change on any further PCS expansion. On 12 June it was reported that PCS would not move into container operations. A split on policy between co-PCS directors Ferguson and Houlihan was mentioned, with Mr Ferguson's view prevailing. This was that if waterfront productivity increased without the need for a third operator, then there had been success. It was also revealed by Mr Ferguson that PCS used financial assistance from the Australian Farmers Fighting Fund to establish it's operations.(21)

Conditions of settlement

The terms of the framework agreement, which settle the dispute between the MUA and Patrick Stevedoring, were reported in the media in mid June. It stipulates:

  • Patrick would retain 645 employees at its terminals.
  • Salaries would range from $42 500 to $62 000 (terminal port) or between $48 000 to $65 000 (general stevedoring, depending on the port being major or regional), based on 35 ordinary hours and 5 hours overtime, in lieu of other arrangements; plus three four per cent (3 x 4 per cent) pay increases each year to 2001. No double header shifts to be worked. Shifts to be eight hours and non-continuous with a single paid break of 45 minutes.
  • Some work (security, cleaning, line marking) to be contracted, but it allows retrenched employees not to be precluded by a new employer. Sub-contractor will employ union labour. Target crane rate would be 25 lifts per hour.
  • Patrick to resume operations in all ports, subject to each port being viable. Patrick would not then be able to sell or sub-lease or close any of its ports for 12 months.
  • Patrick to pay outstanding wages and entitlement liabilities for the period before 7 April, and for the period since the dispute began.
  • MUA agrees to drop all litigation. Agreement to be reached on the terms of a Deed of Company Arrangement for the four Patrick companies under administration. The MUA is seeking the payment of its legal fees by Patrick, as well as two weeks pay lost by its members when Patrick appealed Justice North's order. Legal action against the MUA to be dropped.
  • Patrick employees employed under the four labour hire companies to be transferred to Patrick Stevedore Holdings, with the four labour companies to be wound up.

Stop-work meetings to approve the deal commenced in Melbourne on 23 June, and have approved the deal. Within three weeks of the framework agreement being signed, enterprise agreements at each port operation would be negotiated.

Mr Reith's office claimed that the agreement appears to satisfy the terms spelt out in Seven Benchmarks:

There appears to be a number of reforms which will satisfy the seven benchmark objectives which is very important. (22)

The detail of the settlement compared to previous employment arrangements was reported in the Sydney Morning Herald using a table of comparisons of new and old work arrangements.

 

 

OLD DEAL

NEW DEAL

Wages

$36,000 + shift and overtime penalties

a band of salaries from $42,500 for a general hand to $62,000 for team leaders

3 x 4% pay increases

Productivity

 

$20.00 bonus for crane rates of 20 lifts per hour, up to $120.00 for 27 lifts p.h.

Hours:

Shifts

Per Week

Overtime

 

 

7.5

35

offered to permanent staff regular o/t: 10-25 hours

 

8

40

overtime is limited. casuals can be used instead of paying overtime to permanents

Numbers:

Permanents

Contractors

Casuals

 

1315

0

600

 

687

200

600

Work Practices

up to 10-11 in work teams including 3 crane drivers

 

union controls allocation of individuals to tasks and rigid rules around rosters

no outsourcing

up to 7 in each team including 2 crane drivers. lashing of vessels by casuals

company directs work and runs rosters

 

160 maintenance jobs outsourced on 3 year contract; about 40 security, cleaning and linemarking jobs outsourced

(Source: 'Victory of sorts, but was it really worth the price?' Sydney Morning Herald, 17 June 1998)

Redundancy deal between PCS and its employees

The non-union labour supply firm PCS sacked most of its 350 workforce on 16 June.

PCS proposed a $2000 redundancy offer to its employees and all entitlements to be paid.(23) PCS will assist staff to find new employment. However the grievance aired by PCS employees was that the AWAs entered into with the employees were to last for three years.

On the basis of redundancy standards in awards, certainly in those awards which the Productivity Commission suggested in its waterfront reports provided a 'fair' standard by which to judge waterfront awards, PCS employees should be entitled to:

  • one week's pay ($1000) for notice
  • severance pay is not payable to employees with less than 1 year's employment service; therefore no severance pay
  • two weeks pay for annual leave since PCS workers have been employed for almost half a year, sick leave is not payable upon termination by industry awards unless otherwise provided for elsewhere
  • about $3000 would be a fair termination sum for the equivalent of award entitlements, plus pay for any time worked.

Delay to the settlement

The boycott action brought by the ACCC against the MUA which commenced on 11 June was heard, again, by Justice North. The ACCC sought guarantees about future conduct of the MUA and sought compensation on behalf of those injured by the delays to the transport of containers and goods. Justice North, at a later hearing, suggested that the action be held-over to another date, since evidence to prove the case appeared scant. If the evidence thus far given proved correct, it, according to Justice North:

was an inevitable conclusion that the ACCC is pursuing an injunction application which is of very little practical purpose ... and that could be fairly characterised as a waste of public money.(24)

This view notwithstanding, the ACCC continued its efforts to seek redress and commitments against any future boycott action. This matter was resolved to ACCC's satisfaction on 3 September 1998. The arrangement allows Patrick Stevedores to eventually pay $7.5 million to be used as a compensation fund for those companies financially harmed by the events.(25)

Some Conclusions

As well as the comments of the dispute provided in the previous CIB, additional implications have come to the fore as many commentators have aired their thoughts on the events, allowing more informed views (see appendix). No doubt there will be further reflections on these events. However it might be helpful to consider the following additional implications arising from the 1998 waterfront dispute.

While workplace training is not as fashionable as it used to be, workforce training has been a central element of this dispute. Were stevedores able to be trained outside the industry, the need for the Dubai adventure, and the 'training' period at Webb Dock in February would have been averted. In any case, the costs of training are significant as noted in the course of this dispute:

Despite PCS's training program, there are not enough trained non-union employees able to operate Patrick's Australia-wide container terminals. The cost of having facilities without an operating revenue stream and no return on assets, while training up new 'wharfies' is not something that would bring a cheer to the shareholders of any company considering purchasing Patrick.(26)

From a broader industrial perspective, the dispute is really a key test of the union restructuring moves over the 1980s-1990s which were designed to respond to a potential coalition of hostile employer/government forces. The formation of 20 or so large unions has been strongly espoused by ACTU Secretary Bill Kelty. One needs to go back to 1987 and the Future Directions for Trade Unions strategy of the ACTU to understand the importance of the present outcome.

After the Mudginberri dispute (1986) in which Mr Houlihan (Director of PCS) then represented the NFF, union resources were mobilised and amalgamated into larger organisations, such as the MUA. The purpose was in part to better use union resources, and in part, to prepare them for financial challenges arising from protracted disputes. In practical terms this waterfront dispute has been brought on within 12 months of the new industrial legislation taking effect. In this dispute there has been little or no reference to the Waterside Workers Federation, nor the Seamen's Union of Australia - the main constituents of the MUA. After this dispute, it is highly unlikely that MUA members will want to have their union 'disamalgamated' into the previous entities (now allowed under the Workplace Relations Act). The MUA has clearly established its persona, and at the end of the day, Patrick employees will be employed under an agreed and certified collective industrial instrument.

As well, the ACTU has mobilised financial resources through its Trade Union Industrial Campaign Fund. One report revealed an early total of $7 million.(27) The ACTU will want to keep this sort of reserve for any future difficult protracted, litigated disputes which appear now to be a feature of the 'new industrial relations'.

Finally to assume that third parties have been removed from industrial relations is, at best, a big ask and if anything this dispute proved the reverse. Indeed the most patent example of the recourse to third parties (that is, apart from to the courts during the dispute) has been the sacked Dubai workers seeking assistance for the loss of income and security which they were caused when the Dubai training exercise was cancelled in December 1997. Documentation concerning the relationship between Fynwest and Patrick Stevedoring was leaked to the Age in early May 1998. It was interesting to note the sequence of events in this.

  • The first party was Fynwest. It employed serving and former ADF personnel. (Copious detail on each of these individuals has been provided to the Senate Foreign Affairs Defence and Trade Legislation Committee(28)).
  • These personnel, individually form the 'second' party. But, the ADF personnel (upon their termination) sought assistance of an association which represents ex-SAS (Special Air Services) officers.
  • It was executive members of this third-party association (particularly Andrew Harris) who represented the 'industrial' interests of the dismissed Fynwest employees by seeking financial redress from Patrick Stevedoring. When Patrick did not agree to its demands, documents were leaked to the media.

There is also the example of the PCS workers commenting on the relative effectiveness of unions and awards at the time when they were made aware of their pending termination.(29) In short, the lesson is that it is hard to deny a role for third parties in industrial relations. These are some of the repercussions of the 1998 waterfront dispute. At the Appendix may be found an additional section of the views of media and industrial relations practitioners on the significance of this dispute.

Endnotes

  1.  

  2. Steve O'Neill, A Preliminary Outline of the Waterfront Dispute, Current Issues Brief No.15 1997-98, Department of the Parliamentary Library, 12 May 1998.

  3. An account of this report appeared in 'Dock plot: how to kill a union' The Australian Financial Review, 16 December 1997.

  4. 'The Docks', The Age, 10 June 1998.

  5. See for example Senate, Estimates Committee Hansard, Department of Industrial Relations 18 August 1997; Department of Workplace Relations and Small Business, 27 February 1988 and 3 June 1988.

  6. Sen the Hon. R Alston, Senate, Debates, 23 October 1997, Statement on ACIL Economics.

  7. 'Coalition's secret waterfront strategy', The Australian Financial Review, 15 August 1997.

  8. 'Corrigan attacks dock failings', The Australian Financial Review, 23 September 1997.

  9. 'Put up or shut up, bosses tell PM', The Australian, 23 September 1997.

  10. Pamela Williams, 'Secret plan to cripple dock unions', The Australian Financial Review, 12 December 1997.

  11. 'Ministers discussed dock plans with Corrigan', The Australian Financial Review Weekend Edition, 6-7 June 1998.

  12. 'Reith pressures administrators', The Sydney Morning Herald, 15 May 1998.

  13. 'Patrick administrators want more time', The Canberra Times, 19 May 1998 and 'MUA sinks dock reform timetable', The Australian Financial Review, 19 May 1998.

  14. 'Leaks go union's way', The Australian, 5 June 1998.

  15. 'Patrick creditors' meeting adjourned again to July 20', AAP 9 June 1998.

  16. Mr Coombs representing the MUA appeared before the Senate's Rural and Regional Affairs and Transport Legislation Committee on 15 June 1998. There he contended:

    Clearly (the bills) could be interpreted as not only paying for the redundancies, but also paying for the Dubai exercise, the Cairns exercise, the Webb Dock exercise, the farmers ... It is intended for those sort of costs to be funded out of this bill.

  17. 'P&OP battles MUA over "lost" contracts', Daily Commercial News, 14 May 1998.

  18. Workforce, No. 1164.

  19. Interview with Donald McGauchie: in 'Waterfront crisis as National Farmers Federation takes possession of a berth at Webb Dock' 7.30 Report, ABC Television, 29 January 1998.

  20. 'P&C offers surprise deal on the docks' The Australian Financial Review Week-end Edition,
    9-10 May 1998.

  21. 'Farmers woo unions', The Australian, 10 June 1998.

  22. 'Non-union rift on role at docks', The Australian Financial Review, 12 June 1998.

  23. 'Docks deal appears to meet criteria for Govt funding', AAP, 16 June 1998. The seven benchmark objectives refer to a number of efficiencies such as targeted crane lifts and other changes to work arrangements.

  24. 'Farmers' dock company sacks non-union workers' The Sydney Morning Herald, 17 June 1998.

  25. 'Judge queries waste of cash', The Australian Financial Review, 12 June 1998.

  26. 'Patrick pays $7.5m. to ensure peace' The Australian, 4 September 1998.

  27. 'Corrigan: Crusader or capitalist?' Daily Commercial News, 31 March 1998.

  28. 'Fight Fund nudges $7m.', The Australian, 29 April 1998.

  29. Senate Foreign Affairs Defence and Trade Legislation Committee, Additional Information Received vol. 9, May 1998.

  30. 'Farmers' stevedore pays it's people off', The Australian, 17 June 1998.

Appendix

Media comment on the dispute

He (Chris Corrigan) was sold a pup. It's not house-trained and every time he hits it on the nose with a newspaper it makes an even bigger mess on the carpet. It's not a very clean pet, and not at all appropriate for a merchant banker (quote of an 'industry source' in Daily Commercial News, 31 March 1998)

The chance of an entirely new workforce becoming efficient in the short term is extremely remote. The chance of accidents and enormous damages claims as a result of using this new workforce is extremely high. Insurance rates must increase... During the progress of negotiations that led to recent agreements between Patrick and the Maritime Union of Australia, union officers were outvoted several times on matters that would affect Patrick's operations. Although union officials were well aware of the necessity to change and improve, the members were not ... (Business Review Weekly, 25 May 1998, report written by a former Patrick manager)

Prime Minister Howard really put his foot in it, when in answer to a question as to why wharfies in Cairns, Burnie and South Australia - workers who had a good relationship with their company and were performing effectively - were sacked, his response was: 'Because they were members of the MUA'. This answer not surprisingly put a lot of people off-side with the government ... certainly the three wins by the MUA in the courts will undoubtedly influence some workers into thinking that it could be of benefit to belong to a union. (Industrial Relations and Management Newsletter, May 1998)

The union had caused the company to take drastic action, as more reasonable methods had not borne fruit (but) that does not excuse Patrick's actions. In particular it did not excuse the heavy-handed approach taken by Patrick's after the MUA workers were dismissed with guards and dogs on the wharves. The other party was the Government and its Minister for Workplace Relations, Peter Reith. From documents tabled in the Parliament, it seems reasonable to conclude that the Government had a fair knowledge of Patrick's manoeuvres ... the Government went too far. In its legitimate concern that workers should have a freedom to choose and to be able to choose not to join a union, it attacked union membership. (The Canberra Times, 17 June 1998).+

On the face of it, the agreement struck between the Patrick stevedore company and the Maritime Union of Australia (MUA) to end the waterfront dispute falls short of the complete overhaul of work practices many people thought would result ...(t)his is an outcome that vindicates both Patrick and the Federal Government in taking on the MUA in the first place, because without their impetus the union would have never given anything like the ground it has given ... (The Sydney Morning Herald, 17 June 1998)

The waterfront peace deal should reduce the rorts and overmanning in Australia's ports and may be the best that Patrick Stevedores could get ...(t)he overtime culture which encouraged wharfies to deliberately go slow so they could pick up exorbitant overtime payments will be replaced, apparently leaving productivity bonuses tied to crane rate targets as the main means by which labour can fatten its paypacket ... (t)he courts failed to properly protect Patrick from illegal MUA picketing and strikes when the company simply decided to lease some of its unprofitable capital to the farmers' stevedoring company. (The Australian Financial Review, 17 June 1998)

Critics say the dispute raised huge doubts about his (Reith's) honesty, with a series of leaks undermining Reith's explanations of his involvement with Patrick, the PCS group and the ill-fated Dubai scheme. Other questions linger over the morality of using a strategy for dealing with 'illegal' union behaviour, when the unions actually stayed within the rules (The Weekend Australian, 20-21 June 1998)

There is ... agreement on the 25 lifts and hour, the target set by Workplace Relations Minister Peter Reith, although cynics might suggest it has more to do with Patrick getting its hands into the Government's coffers than productivity The union, of course, does not believe its monopoly is a barrier to change. Indeed, they argue there is no such monopoly - and in theory that's right An essential part of making it (the agreement) work is getting co-operation from the very workforce it recently sacked ... But no-one trusts Patrick. (The Australian, 23 June 1998)

Wage cuts and speed-ups: Patrick wharfies will move to a 40-hour week, based on 35 hours plus five hours of overtime, with the highest rate set at around $62,000 to 65,000 a year-up to 30% less than existing pay. The only way to maintain existing annual earnings is through bonuses based on accepting Reith's benchmark of 25 crane moves an hour as a productivity target rate, long rejected by the union as impossible or achievable only through ruining working conditions... it (the settlement) also betrays the massive outpouring of support for the MUA struggle, the sacrifices of those who stood on the picket lines in the rain, collected the money from other workers, argued the MUA's case with their friends over dinner, demanded that their politicians take a stand or simply sent in their messages of support to MUA HQ. Was it all for this "mess of pottage"?... why such a meagre result? Some say that the problem was the decision to suspend the mass pickets once the courts had found the Patrick lockouts illegal. They argue that had these been maintained and the 100,000-strong turnout for May 6 in Victoria spread to the whole of Australia, then Corrigan and Reith would have been forced to retreat even further. (Green-Left Weekly, 24 June 1998)

 

Some academic and practitioner views

Ron Callus (Director of the Australian Centre for Industrial Relations Research and Teaching):

The waterfront dispute highlights that industrial relations disputes are better resolved in the industrial tribunals rather than the civil courts where the aim is to win rather than compromise.

Reg Hamilton (Australian Chamber of Commerce and Industry): The crucial issue is how we change the waterfront so that its performance in terms of cost and efficiency is reasonably comparable with other industrialised nations. At the moment its performance in terms of cost and efficiency is well below what it should be, and in addition the penalty rates and shift loadings in the Stevedoring Industry Award are well in excess of those received by other Australian workers.

Peter Punch (Solicitor with Carroll & O'Dea): The events on the nation's docks since Easter have been a watershed in the history of Australian industrial relations. The following are some initial observations:

  1. The dispute highlights just how fundamentally the Workplace relations Act 1996 has emasculated the traditional Australian system of compulsory arbitration of disputes by an independent tribunal

  2. Despite the changes to the federal system, employers must realise that there are still no real short cuts to improving work practices and productivity

  3. There will be now some irresistible pressure for some level of protection of employees' accrued and termination entitlements in circumstances of 'corporate restructuring', not involving genuine insolvency.

Joe Riordan (NSW Workcover Authority): The conduct of certain of the parties left a lot to be desired. There are important principles involved which need urgent attention. The public interest needs to be protected in IR disputes and that can be best done by an effective Industrial Relations Commission.

(Source: CCH, Australian Industrial Law News, May 1998)

Paul Houlihan, Director PCS: I'm not going to gild the lily - we were done; we were beaten ... but we were done more in respect of the immediate future than of the medium term. And in five years it could well turn out that we weren't done at all. The settlement didn't break the union's closed shop, but it's still the biggest change we've seen yet on the waterfront ... we were let down by the shipping companies, who weren't prepared to patronise our facility and risk the union's wrath. (The Land, 2 July 1998)

 

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