Bills Digest No. 201 1997-98 Stevedoring Levy (Collection) Bill 1998


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details

Passage History

Date Introduced: 8 April 1998

House: House of Representatives

Portfolio: Workplace Relations and Small Business

Commencement: On Royal Assent.

Purpose

The Government's stated aim in introducing the Stevedoring Levy (Collection) Bill 1998 (the Collection Bill) and the Stevedoring Levy (Imposition) Bill 1998 (the Imposition Bill) is to underpin proposed administrative arrangements that will improve productivity in the stevedoring industry.

The Government has asserted that the cost of the levy will be carried exclusively by the stevedoring companies and not passed on to shippers or to users of stevedoring services, consumers or taxpayers.(1)

Background

Readers will be aware that this Bill and the related measure were introduced within 24 hours of Patrick Operations Pty Ltd (Patrick Operations) terminating the labour supply agreements with four Patrick employer companies which employed 1400 members of the Maritime Union of Australia (MUA).

As recognised by the Federal(2) and High Courts(3), the latter action was itself facilitated by the restructuring of the Patrick Group of companies that occurred without the knowledge of the MUA and its members in or about September 1997.

In essence the September 1997 restructure of the Patrick Group saw the four Patrick employer companies, which had till then been trading profitably, sell all their assets to their parent company then called Patrick Stevedores ESD Pty Ltd, subsequently named Patrick Stevedores Operations No.2 Pty Ltd and presently Patrick Operations. Through a series of asset sales and share buy-backs, the four labour hire companies were left with limited operating funds and only one asset. That asset was labour supply agreements with Patrick Operations. Those agreements could be terminated with minimal notice in the event that the employment companies could not maintain labour supply.(4)

Labour supply was interrupted by a series of industrial disputes perhaps not entirely unconnected with the Patrick Group's decision, announced in late January 1998, to transfer their right to operate stevedoring activities at No.5 Webb Dock to companies associated with the National Farmers Federation (NFF). This step was itself seen as the latest in a series of attempts post March 1996 to end (by direct action) what the Productivity Commission has described as the MUA's role as the 'de facto sole supplier of labour' at the majority of Australian container facilities.(5) [Others have been more blunt and described these arrangements as a 'closed shop' and alleged that compulsory unionism continues to operate on the docks contrary to the provisions of the Workplace Relations Act 1996 (WR Act).]

Patrick Operations' action in terminating the labour supply agreements was followed by the removal of the MUA workers, the closure of some Patrick's facilities and the engagement of a new workforce supplied by nine other companies including the NFF backed P&C Stevedoring. Simultaneously on the evening of 7 April 1998, MUA members were removed from Patrick's facilities and each of the Patrick employer companies appointed administrators under Part 5.3A of the Corporations Law.

Readers will also be aware that Patrick Operations actions' of 7 April 1998 were the subject of a series of court actions which, in broad terms, resulted in orders being issued to all the relevant parties to restore as far as practicable the position as it existed prior to the termination of the labour supply agreements on 7 April 1998.(6)

High Court decision

A detailed summary of the issues before the Court is beyond the scope of this brief as many of the Court's main findings have little direct bearing the fate of the Bills dealt with here. However, for future reference, it is worth signposting some of the more significant dates and findings whilst noting that at the time of writing this matter appears to have some considerable distance left to run.

The High Court's decision was on challenges to the orders of the Full Court of the Federal Court of Australia handed down by Wilcox, von Doussa and Finkelstein JJ on 23 April 1998. (The Full Court had itself made minor variations to orders made in respect of these matters by North J in the Federal Court on 21 April 1998.)

The Federal Court orders were stayed by Hayne J of the High Court late on Thursday 23 April 1998 pending hearing of the application for leave to appeal by the High Court. That stay remained in place until the Full Bench of the High Court delivered its judgment at 11.30am on Monday 4 May 1998.

The High Court, by a 6-1 majority, granted the application for special leave to appeal but by the same margin rejected the appeal by Patricks Operations and made an order for costs in favour of the MUA respondents in relation to the High Court appeal.

On the issue of the Federal Court orders, by a 5-2 majority the High Court upheld the bulk of the orders but made a number of refinements and clarifications. Gaudron J would have upheld the Federal Court orders and simply rejected Patrick Operations special leave to appeal application. Callinan J would have allowed the appeal against the orders under challenge and awarded costs against the union respondents.

The appeal raised a number of complex jurisdictional and procedural issues. However, whilst the Court considered some substantive matters of industrial law and corporate law, as these were appeals against orders made in interlocutory proceedings, not all issues were argued in full and some further facts and points of law may be raised and argued out in related proceedings. In short, the High Court was not seeking to reach final determinations on all the substantive matters at the heart of the dispute between Patrick Operations and others and the MUA.

The principal effect of the High Court decision was, as noted above, to restore as closely as possible the position of the parties to the situation that prevailed on 7 April 1998 prior to Patrick Operations terminating the services of the four Patrick employer (labour hire) companies.

The High Court made it plain that it is for the Administrators of the four labour hire companies to determine whether or not they would recommence trading within the terms and conditions laid down in the orders of the Federal Court as modified by the High Court.

This was the crucial finding, serving to underline the fact that the Administrators may not succeed in returning the four employer companies to a position of solvency. The profitability of the labour hire companies will depend on the productivity of the MUA workforce and a range of other factors including the willingness of others to continue to do business with the Patrick Group and the terms of the labour hire agreements themselves.

On 5 May 1998 the Administrators of the four labour hire companies, after extensive consultations with the parties and the Commonwealth, indicated that they proposed to recommence trading.

The Administrators indicated to Minister Reith on 5 May 1998 that they intend to keep the companies in administration until 25 May 1998 or thereabouts and would decide before then whether to liquidate the companies or continue trading under a Deed of Arrangement.(7)

According to AAP sources, the Administrators had said, after an earlier meeting with Minister Reith, that a Deed of Arrangement was only likely with funding for redundancies from the Federal Government and that such funding was only to be made available where the companies met the Government's reform criteria.(8)

By the evening of Friday 8 May waterside workers had returned to a number of Patrick's terminals and subsequently to the Fremantle terminal on 10 May 1998. However, information on the return to work is sketchy and some reports are contradictory.

On 7 May 1998 Patrick announced that it would not recommence operations in Burnie, Bell Bay, Port Kembla, Newcastle, Port Alma (Rockhampton), Geraldton and Adelaide. Patrick has stated that they would not be re-opening the ports '1/4 until they are viable, until the union accepts productive manning levels.'(9)

It was reported that waterside workers had returned to work at Burnie and Bell Bay on 8 May 1998.(10)

The latest information available as at COB 11 May 1998 is that the following Patrick port facilities are not operating: Port Kembla, Newcastle, Port Alma, Adelaide, Mackay, Devonport and Hobart. Only the Adelaide operation is a confirmed permanent closure with 45 jobs lost. The Adelaide closure is a decision of Patrick Operations and flows from the fact that the High Court's orders do not compel Patrick Operations to continue trading. (11)

A report in The Age on 11 May 1998 quoted the Administrators in charge of the Patrick employer companies as saying that no work was available for 600 of the 1400 workers affected by the decision to recommence trading after the High Court's decision.

On 9 May 1998, it was reported that Patrick expected that the backlog of 10 000 containers which had built up during the dispute would be removed in the following 3 days.(12)

Further complicating the picture, on Thursday 7 May 1998, Patrick Operations served notice on the Administrators of the labour hire companies that it intended terminating its labour supply contract by 21 May 1998.(13) On 11 May 1998 AAP reported that co-Administrator, Peter Brook, would be having talks later that day with Mr Chris Corrigan, the head of the Patrick stevedores group, on the matter which the former says might again lead to MUA members being thrown out of work.

Reports also suggest that up to four companies have offered to buy the Patrick labour hire companies employing the union workers. Commenting on the proposed sale co-Administrator, Bill Butterell, said he had received three or four offers from potential buyers seeking to gain the companies' 'one tangible asset' - contracts to supply labour to Patrick Operations - but that the Administrators would only sell the labour supply contracts if the companies were put into liquidation.' He added that:

[w]e could sell now - we have the right to sell, but I don't think it is a position we would take. I don't think we would see this as being in the forefront of the creditors' [which include the employees] interests.

The same report went on to note that negotiating a Deed of Arrangement that would make the companies viable by gaining Federal Government guarantees to fund redundancy payouts, in return for a commitment to waterfront reform, remained the Administrator's preferred option. This, however, depended on brokering a deal agreeable to the MUA, the Federal Government and a consortium of seven banks owed about $270 million by the Patrick Group.(14)

Redundancies

Press estimates suggest that significant numbers of redundancies amongst the MUA members employed by the Patrick labour hire companies are unavoidable with estimates ranging from 200 to about 700.

Stories have subsequently emerged that the other major stevedore, P&O, is planning to 'take on' the MUA by axing 450 jobs from its operations. Of these, 100 jobs were reported as being affected by the possible out-sourcing of P&O's cleaning contracts and some other non-stevedoring services.(15) The same reports quote MUA National Secretary, John Coombs, as being unaware of the detail of the reported proposal which is linked to scheduled enterprise bargaining discussions between P&O and the MUA.

According to AAP, Minister Reith responded to the above reports by quickly backing P&O's reported plans 'to retrench some of its unionised workforce, saying that there was significant overmanning on the docks.'(16) In another AAP report, however, P&O Stevedores Chairman, Richard Hein, denied that the company was seeking 450 redundancies. He reportedly also described claims that the company was prepared to use the provisions of the Workplace Relations Act such as lock-outs and non-union replacements during strikes if negotiations were unsuccessful as a journalist's 'speculation'.(17)

The proposed Government sponsored redundancy arrangements are predicated on three key assumptions: (a) general overmanning in the industry;(18) (b) Government sponsorship of the scheme will serve the wider community interest;(19) and (c) that the Patrick labour hire companies are not in a position to fund the redundancies themselves.(20)

Patrick Redundancies

As a result of the above events, the case of the Patrick Group and its employees is somewhat different and arguably more critical than that of the remainder of the industry.

The proposed levy scheme in practice applies only to two companies P&O stevedores and Patrick's, and, in respect of the latter, the Minister has made a number of general remarks regarding ending what he sees as uncompetitive practices in the labour market.(21) He has also had direct discussions with the Administrators concerning the application or otherwise of the Government's proposed redundancy scheme to the employees of the labour hire companies (see above).

As was recognised by the Federal Court and the High Court, the restructuring of the Patrick Group in September 1997 (and subsequent industrial disputation) has significantly affected the fortunes of the companies and the workers employed by them.

It is apposite to note the views expressed by Callinan J who observed that the accounting information before the Federal Court and the High Court on the state of the Patrick companies was 'incomplete', and 'to a large extent unexplained'.(22) His Honour's comments were directed towards the drawing of any conclusion as to why Patrick had restructured its operations and, in that respect, were not supported by the other judges. Nonetheless, there is much to be said for the view that the full account of Patrick's affairs is yet to emerge.

On the state of the employer company finances and the extent of monies owing to the MUA's members, the following information can be gleaned from the various judgements in the High Court case mentioned above.

In their joint judgment, Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ concluded that:

  • As a result of the September 1997 restructuring somewhere between $60 million and $70 million of the capital of the employer companies, which would otherwise have been available to finance their business operations, was returned to shareholders.
  • The shareholders' funds in the employer companies were reduced to about $2.5 million by the restructure and those funds were exhausted by April 1998.
  • The employer companies were said to be owed an amount of $16 million or $17 million by other companies in the Patrick Group. However, those funds were unavailable to the employer companies when the Group's financiers gave notice of a crystallisation of a charge over that debt on 7 April 1998.(23)
  • The employees are the major creditors of the Patrick employer companies.(24)
  • As far as can be established from the available (1996) balance sheets the employer companies had made provision for current employee entitlements (such as long service leave, annual leave etc) totalling about $19 million. The provisions for non-current employee entitlements added a further $14.5 million.(25)

Gaudron J further noted in respect of the employer companies' liabilities that:

  • It was not disputed that (as at 7 April 1998), if the Patrick employees were to be dismissed, either because there was no work for them or, else, no funds to pay them, that would result in a liability in respect of accrued leave entitlements and severance pay in the order of $125 million.(26)

From Callinan J's judgment we learn that:

  • The sale of the business assets of the four employer companies to Patrick Operations in September 1997 was for approximately $315 million with the price paid struck in accordance with a valuation of the Patrick Group made by a firm of accountants, Price Waterhouse Corporate Finance, in late 1996.(27) The receipt of such independent advice would tend to suggest that it the Directors of various companies discharged their duties in respect of conducting the asset sale in accordance with the best interests of their respective shareholders.

Independently of this we know that the Administrators would not recommence trading until they secured an injection of funds and that $3.65 million was provided by the Patrick Group after the High Court's decision on 4 May 1998.(28)

The employees gave undertakings to the Federal Court that can be seen as making a contribution to refloating the employer companies. Those undertakings were that, as an interim measure, wage claims against the employer companies would not be made to the extent necessary for the employer companies to resume trading profitably.(29) (As interpreted by the High Court, the undertaking by the employees not to claim wages during an initial period of trading did not alter the fact that the companies themselves remain liable for wages - the MUA undertaking as to wages only protects the Administrators.)(30)

If the employer companies cannot be rescued, the company will go into liquidation and its assets will be realised and the proceeds distributed amongst the creditors in the manner prescribed by the Corporations Law. Employee entitlements are paid out in priority to the debts of third parties.

Clearly, then, the employees have an interest in one or more of four outcomes:

  • A successful return to trading of the employer/labour hire companies;
  • A successful claim against the Patrick Group for all outstanding entitlements;
  • A full redundancy payment under the Government's proposed redundancy scheme; and
  • An action for damages against any of the parties named in the conspiracy actions and other tort actions that are to be heard by North J in the Federal Court.

Given that some Patrick facilities have now closed whilst others have returned to operation, at least some of the 1400 MUA members who were locked-out of their work places from 7 April 1998 will have a considerable interest in the present Bill.

The likelihood of the employer companies returning to solvent trading is, as noted above, dependent on a number of factors other than the performance of the restored workforce. An improved performance from those workers who actually return to work is probably a necessary, but not necessarily sufficient, pre-condition for the employer companies trading successfully. Loss of contracts and the closing of some Patrick facilities will impact on the companies' overall performance in ways which are not easy to predict.

North J provides some further indication of the prospects of success if some degree of mutual co-operation can be attained. His Honour notes that the four employer companies prior to their restructuring in 1997 had recorded significant profits in the previous two financial years.(31) Further, His Honour's decision records that for the first two months of 1998 the restructured employment companies operated close to thee break-even point despite some industrial action.(32) This would appear to suggest that a co-operative approach would still allow the employer companies to return to solvent trading. (Whether this is the most economically efficient or industrially effective outcome is another matter.)

Waterfront Efficiency

Greater efficiency on the waterfront is a policy priority for the present Government and was also a priority for its predecessor. Political argument revolves around the pace and extent of reform, the effectiveness of the strategies pursued or being pursued, and, of late, the lawfulness or otherwise of some of the means adopted by all the stakeholders in seeking to achieve their ends.

It is beyond the brief of this paper to debate the claims and counter-claims about the degree to which Australian container handling is below world best practice and the extent that any lack of efficiency is caused by an excess of union bargaining power or other factors. If that were an issue, those other factors might include: a lack of competition amongst stevedores, excessive state government charges, poor integration of port and road/rail facilities, container yard congestion, the pattern of ship arrivals, and the percentage of each vessel's overall capacity exchanged at each call.

Readers are invited to form their own conclusions and may be assisted in doing so by the publications listed below:

  • Productivity Commission, Work Arrangements in Container Stevedoring, April 1998.
  • Productivity Commission, International Benchmarking of the Australian Waterfront, April 1998.
  • Minister for Workplace Relations and Small Business, Waterfront Reform: Seven Benchmark Objectives, 8 April 1998.
  • Dr Clive Hamilton, Productivity in Australian Container Terminals: New evidence from an international study, The Australia Institute, 24 April 1998.
  • Bureau of Transport and Communications Economics, Review of the Waterfront Industry Reform Program, Report 91, Commonwealth of Australia, 1995.
  • House of Representatives Standing Committee on Transport, Communications and Infrastructure, Warehouse to Wharf: Efficiency of the Interface between Seaports and Land Transport, AGPS, April 1992.
  • Honor Figis, Reforming the Waterfront: Background to the Current Debate, Briefing Paper No.5/98, NSW Parliamentary Library, 1998.

Those readers looking for a succinct (albeit more critical) account of the claims and counter-claims made about the records of respective federal Governments are directed to Alan Ramsay's piece, 'The lies of the wharf war', Sydney Morning Herald, 25 April 1998.

A brief comment piece by Ross Gittins, 'Port disruption good for trade', Sydney Morning Herald, 4 May 1998 contains material suggesting that a significant but nonetheless relatively small percentage of trade will be affected by the dispute - 5 percent of exports and 10 percent of imports. By implication the effect of wharf inefficiencies on total trade - imports and exports - needs to be kept in perspective. Gittins similarly berates some politicians for what he suggests is implying that increased efficiency will improve the balance of trade. It need not. In short, 'wharfies' who become more efficient at loading exports will also become more efficient at unloading imports.

Present Proposals

The proposals advanced as part of the present package may be considered in three parts, those being:

  • The present Bills
  • The Seven Benchmark Objectives announced by the Minister on 8 April 1998
  • Any guidelines or criteria in relation to specific redundancy payments that may be made under the scheme.

The Legislation

The legislation is outlined in the Minister's Second Reading Speech and is described in detail in the Main Provisions.

In brief, the Minister commits the Commonwealth to establishing the Maritime Industry Finance Company (MIFCo) as a wholly owned Commonwealth Company under the Corporations Law.

MIFCo is a company limited by guarantee and will administer a loan facility of up to $250 million from financial institutions which it may then use to pay stevedoring employees sums equal to their redundancy entitlements.

Funds for the payment of the redundancies are to be raised over time by a levy on the loading and unloading of containers and vehicles in Australia. The legislation is described by the Minister as being modelled on existing stevedoring levy legislation, the Stevedoring Industry Levy Act 1977 and the Stevedoring Industry Collection Act 1977.(33)

The levy will not be raised on bulk cargo and both major stevedores have agreed that the levy at its presently intended rate ($6 per vehicle and $12 per container loaded or unloaded) can be absorbed into their existing structure of charges.

The Commonwealth, via MIFCo, intends funding redundancies in advance of levy payments and the Bill includes in proposed section 17 the provision for a special appropriation allowing the Minister for Workplace Relations and Small Business to authorise payments that are directly related to reform or restructuring of stevedoring. The Government also states that its intention is to wind-up the scheme in six or seven years.(34)

As at COB 11 May 1998, it appears that the Government had not announced that it had secured a line of bank credit for the proposed fund.

Seven Benchmark Objectives

The objectives are detailed in a document issued on 8 April 1998. To quote from that paper, the objectives in summary are:

  1. An end to the overmanning and restrictive work practices;
  2. Higher productivity. We have commitments from the major stevedores to a benchmark of 25 lifts per hour as a national five port average;
  3. Greater reliability through less industrial disputation and less interruption through elimination of restrictive work practices. The level of industrial action on the waterfront should be no worse, and preferably better, than the national average;
  4. Injury and fatality levels must come back to the all industries' average or better;
  5. Lower costs throughout the logistics chain of the waterfront gateway;
  6. A drive to make full effective use of the technology available to increase productivity and improve ship turnaround times; and
  7. Improved training. We will actively promote training opportunities and apprenticeship programs.(35)

A Newcastle-based writer, Bob Mills, writing in the Australian Financial Review, has argued that the proposed benchmarks are largely meaningless.(36) He further argues that 4 of the 7 benchmarks are not even benchmarks because they have no measurable outcomes whilst others are to be calculated using inappropriate or overly simplified criteria.

Distributing Redundancy Funds

On 23 April 1998, the day that the Full Federal Court substantially upheld the orders of Justice North, Minister Reith issued a Media Release indicating that the 1400 MUA members locked-out by Patrick Operations should not assume that they would automatically be entitled to redundancy money from the Government's proposed scheme.

Attached to that release was a letter from the Secretary of Mr Reith's Department to the Administrators of the employer companies. Dr Shergold's letter emphasised that funds would only be available if the expenditure of those funds contributes to 'genuine waterfront reform'. The letter further reminded the Administrators that:

The objective is to reduce over-manning, eliminate inefficient work practices and create genuine competition on Australian wharves. You will be aware that both Patrick Stevedores and P&O Ports have committed themselves in writing to Seven Benchmark Indicators to achieve this end.

In a series of interviews and releases since 23 April 1998, Minister Reith showed a consistency of purpose in continuing to re-iterate this position. On a number of occasions he has come close, if indeed he has not done so, to suggesting that union members presently engaged by Patrick employment companies ought to be displaced by non unionists.(37) Such a suggestion may arise because in arguing that non unionists be found a place on the docks, they presently must almost necessarily displace union members given the over-supply of labour on the wharves. The only ways that such a displacement of unionists would not occur is if some MUA members were to leave the union or there were to be a significant increase in the number of jobs on the wharfs. If MUA members were to be dismissed or prejudiced in their employment simply because of their union affiliation then there would again be legal argument as to whether the dismissal or disadvantage constituted a breach of the Workplace Relations Act's freedom of association provisions.

On 11 May 1998 the Government said that it was willing to fund waterfront redundancies made by the Administrators of the four Patrick labour hire companies, but only if strict conditions were met.

At the time of writing a full text of the Minister's media release is not available nor is an accompanying letter again sent by Dr Shergold to the Administrators.

However, the AAP Report states that:

'The Commonwealth is willing to provide financial support to any stevedoring employer who needs to reduce excess labour as part of an industry restructuring and reform process.'

The conditions for government support of a deed of company arrangement [see above] are a resolution in favour of the deed being passed at a meeting of creditors on May 25 and a ballot of company employees to be held on May 30, seeking their agreement to cooperate with the deed.

'The Commonwealth would not be willing to provide financial support in the manner contemplated if any delays in this timing eventuate or if a majority of employees vote against cooperation.'

The Commonwealth's intentions become clearer in the following AAP item which details the requirements that the Administrators must meet to demonstrate a commitment to the ideals of competition detailed in the Government benchmarks.

The AAP item recounts, in part, that:

The government earlier indicated it may not pay the redundancy money, but the letter [Dr Shergold's (?)] said one way for the companies to demonstrate competition was to tender for the most efficient provision of labour on at least some of the docks.

'On other docks it would need to be shown the provision of non-stevedoring services 1/4 would be sub-contracted and awarded to the tenderer offering overall best value for money,' it said.

'Naturally members of the union could be employed as part of the outsourced labour arrangements.'

The money was also tied to new workplace arrangements specifying as goals the government's seven performance benchmarks to increase productivity on the docks.

'Provided the above mentioned steps are completed within the 50 day timeframe, the Commonwealth would then be prepared to contribute the monies required to meet in full the retrenchment entitlements of those employees who have been made redundant.'

Mr Reith told reporters the government would be opposed to measures which maintained a monopoly in breach of the Workplace Relations Act freedom of association provisions. (38)

Opposition Position

Those opposed to the Government's actions in the present dispute confront a difficult dilemma in deciding whether or not to support the proposed legislation.

The legislation provides an apparently secure basis for providing not ungenerous redundancy packages for members of the MUA likely to be displaced in the present round of industry redundancies.

However, the proposed funds now clearly come with significant strings attached (see above) including agreeing to waterfront targets which it has been argued by some are unrealistic and a forced end to the MUA's near labour supply monopoly at many ports.

The alternative for the MUA and its members is to pursue the uncertain paths of seeking redundancy monies directly from the Patrick Group or compensation for unlawful dismissal through the courts.

Opposition Leader Beazley has described the legislation as 'endorsing a process of unlawfully sacking Australian workers for one reason only, and that is that they are members of a union.'(39)

On the Sunday Program, Mr Beazley further indicated that the Opposition would be seeking changes to Corporations Law to prevent persons artificially restructuring their business arrangements to avoid their lawful obligations to their employees and other creditors. Mr Beazley has further indicated that the Bills are likely to be referred to a Senate Committee for investigation.(40)

Labor Deputy Leader, Gareth Evans, has also indicated that the ALP will be moving in Parliament for changes to the Workplace Relations Act, to ensure that companies can't, by arrangements with subsidiaries, escape their legal obligations.(41)

At the ALP Caucus meeting held on 11 May 1998, the Party reportedly voted to defer a decision on whether to support the Bills, voting instead to refer them to a Senate Committee.(42)

Main Provisions

This is a rather slender Bill as many of the provisions regulating the affairs of MIFCo form part of other laws - principally the Corporations Law and the Commonwealth Authorities and Companies Act 1997. The latter law contains special provisions relating to the accountability and reporting requirements of wholly-owned Commonwealth companies.

It has been reported that a paper being prepared by two Australian National University academics - Professor Stephen Bottomley and Dr Nick Seddon - will express some concerns about certain aspects of the Bill.(43)

The authors apparently suggest that the creation of MIFCo may be a device for circumventing the requirements of section 37 of the Financial Management and Accountability Act 1997 which says that the Commonwealth cannot raise money without legislative authorisation.

Although lines of credit have yet to be announced, it is, as noted above, apparently the intention of the Government that MIFCo commence operations before the present Bill is enacted or at least before levy payments are received.(44) This may heighten some concerns that the creation of MIFCo as a public company allows the Commonwealth to perform certain acts that would otherwise require prior parliamentary approval.

The main provisions of the Bill reflect the usual requirements of a levy scheme and are in part modelled on existing laws. The provisions are discussed clearly in the Explanatory Memorandum and the totality of the scheme itself has been outlined above.

A number of provisions may attract further attention.

Clauses 2 and 8 provide that whilst the Act is to commence on Royal Assent, the levy itself may not be imposed until a notice is placed in the Gazette. A notice cannot be issued by the Minister until 2 months after the Bill has been enacted.

Clause 6 sets out the conditions under which the levy is and is not payable and clause 7 declares who is responsible for paying the levy.

The core, and potentially most contentious provisions, however, are clauses 16 and 17. Subclause 16(1) gives the Minister explicit power to delegate all or any of his powers under the Act to a Senior Executive Service Officer in his Department. Subclause 16(2) likewise gives a largely unfettered power of delegation to the Secretary of the Department of Workplace Relations and Small Business.

What may make the power of delegation more significant in the case of the Minister is the wide powers that the Minister will enjoy under proposed section 17.

Subclause 17(1) provides the Minister with a wide discretion to authorise payments that are directly or indirectly in connection with waterfront reform in the stevedoring industry. Subclause 17(2) provides a similarly open-ended capacity to appropriate monies from consolidated revenue for purposes 'directly or indirectly' connected with 'the reform or restructuring of the stevedoring industry'.

The breadth of these discretions would appear to contemplate a situation where the Minister or his delegate has unlimited funds to spend in achieving ends which the Minister determines are ends directly or indirectly connected with waterfront reform. The capacity of the Parliament to subsequently challenge or curtail the exercise of such wide discretionary powers is arguably limited.

Regulatory Impact Statement

The Explanatory Memorandum contains a Regulatory Impact Statement setting out the arguments for proceeding with the current legislation rather than operating under the Stevedoring Industry Finance Committee Act (SIFC) arrangements discussed above.

The reasons advanced for pursuing the proposed scheme appear well based and centre on the fact that the old scheme was largely dismantled (but not fully wound-up) in September 1995. Moreover, the proposed scheme will apply only to container and vehicle movements, not to bulk cargo handling.

This does, however, raise a question as to why the legislation and arrangements supporting the 1977 scheme are still in place even though levy payments under the scheme were discontinued in September 1995. The Department of Industrial Relations Annual Report 1995-96 lists amongst the key objectives for the Special Service Sub-program the aim of winding-up SIFC and the abolition of the levy collection arrangements.(45) This objective apparently has not yet been met.(46)

Concluding Comments

Unlawful Conduct ?

The two present Bills that form part of the Government's waterfront package are connected to a series of events which have divided the community not so much on the need for waterfront reform but over the means by which such reform has been pursued.

The Full Federal Court in handing down its decision substantially upholding the interlocutory orders of North J was even moved to begin its judgment with the following:

As individuals, each member of the Bench, like all sensible Australians, is in favour of an efficient waterfront...

Their Honours then went on to make a very basic point about the rule of law in any democracy:

The business of the Court is legality. Just as it is not unknown in human affairs for a noble objective to be pursued by ignoble means, so it happens sometimes that desirable ends are pursued by unlawful means. If the point is taken before them, courts have to rule on the legality of the means, whatever view individual judges may have about the desirability of the end. This is one aspect of the rule of law, a societal value that is at the heart of our system of government. It follows that this judgment should be seen only as a judgment about legal issues, not a view about social, economic and political arguments concerning waterfront reform management that have dominated the media during the last couple of weeks.(47)

Hence, it is open for the Government to argue that in a technical legal sense neither it nor Patrick stevedores have done anything unlawful.

This claim is of course subject to the hearing by the Federal Court of the MUA's various substantive claims against some in the Patrick Group and others, including Minister Reith, that they have acted unlawfully or as part of an unlawful conspiracy. Those proceedings are set down for a directions hearing in late May 1998 and may come to trial by mid-year.

The claims of unlawful behaviour rest on alleged breaches of the Workplace Relations Act 1996 and the alleged committal of a number of economic torts by the defendants in the course of prejudicing the employment of the 1400 MUA members engaged by the Patrick labour hire companies.

North J found that the MUA had established an arguable case against the respondents in regard to the conspiracy and other related claims and that this finding was not found to be in error by either the Full Federal Court or the High Court.

In related proceedings before Gaudron J in the High Court on 17 April 1998, Patrick Operations, the NFF, the Commonwealth and other parties sought to challenge the jurisdiction of the Federal Court to hear the MUA's allegations regarding various forms of unlawful action by Patrick and others.(48) Except in relation to a claim challenging the operation of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic) and the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), the application for special leave to appeal was dismissed. The judgment ended immediate prosects of the MUA's action against the above parties in the Federal Court being stopped on technical jurisdictional grounds.

Her Honour's judgment also usefully sets out the main causes of action being pursued by the MUA. They are:

  • that parts of the Patrick Group, the NFF parties, the Commonwealth and Minister Reith conspired to injure the MUA and various of its members;
  • that parts of the Patrick Group, the NFF parties, the Commonwealth and Minister Reith conspired to injure the MUA and various of its members by unlawful means;
  • that parts of the Patrick Group and the NFF parties induced certain other Patrick parties to breach contracts of employment with MUA members on whose behalf the action was brought.(49)

The basic elements of these three economic torts are as follows:

  • 'Simple conspiracy' involves a situation where two or more persons combine to injure another person by lawful means. The defence to a charge of simple conspiracy is that the intention to injure was absent and that the conduct engaged in was to defend the trade interests of those engaged in the concerted action.
  • 'Unlawful conspiracy' occurs where two or more persons are shown to have combined to injure another person by the commission of an unlawful act. In the case of unlawful conspiracy, the intentions of the conspirators are irrelevant and, as a number of trade unions have discovered to their cost over the years, lack of intention to injure does not constitute a defence.
  • The tort of 'intentional interference with contractual relations' involves four elements: (a) the defendant must have knowledge of the contract between the parties; (b) the defendant intends to prevent the performance of the contract; (c) the defendant takes direct, or unlawful indirect, action to induce the third party not to perform the contract, or prevents or hinders that performance; and (d) the plaintiff suffers damage.(50)

The allegations made by the MUA are, of course, yet to be tested against the above criteria or the provisions of the WR Act dealing with unlawful dismissal.

However, there is some limited but interesting discussion of how the law may be applied in the present cases in all the decisions of North J and the Full Bench of the High Court. For example, a useful discussion of how the laws of conspiracy might conceivably applied in the present instance appears in the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ at pages 18-21.

It will also be recalled that in that joint judgment their Honours made some pertinent observations about the substantive allegations to come before the Federal Court, including:

  • Orders made in respect of breaches of the unlawful termination [sic] provisions of the Workplace Relations Act 1996 may be made against persons other than persons who engaged directly in conduct contravening the Act.(51)
  • Although only an employer can engage in conduct contravening subsection 298K(1) of the Act, all parties to a conspiracy that the employer companies should engage in such conduct are liable as concurrent tortfeasors.(52)
  • If a conspiracy to perform an unlawful act is completed by the performance of the act, it is only necessary for one of the conspirators to have performed the act or to have procured the act to be performed for an action to lie against all the parties to the act. If damages are recovered each party is liable for the whole amount.(53)
  • If the employees were dismissed before trial in contravention of section 298U(a) of the Act or pursuant to conspiracy in contravention of that provision, the damages would be likely to be enormous.(54)

The outcome of the trial before North J will turn on such questions of law but also on the facts and the evidence that is able to be presented to the court.

Episodes such as the so called 'Dubai Affair', which are deliberately not discussed here, may be of relevance in the conspiracy trial as may the timing and substance of various communications between the parties. What weight is to be given to various documents, the timing of various actions such as the development of legislation and the preparation and circulation of Departmental briefing papers and minutes is also a matter for the court and beyond the scope of this brief.

Unwise Behaviour ?

The present Bill forms part of a concerted push by the Government to secure a series of objectives which may generically be described as 'waterfront reform'. The proposed legislation is just one aspect or part of a public policy debate that has clearly stirred controversy. That push has raised a range of public policy issues extending beyond the Government's waterfront reform agenda.

One criticism of the Government's approach is that it has been too interventionist, another is that the policy development process has itself been flawed.

In relation to the level of Commonwealth intervention, the Minister's Second Reading Speech makes it plain that waterfront reform is an economically important objective and that direct intervention in establishing a taxpayer guaranteed redundancy fund is not out of step with past practice and is in the national interest.

Similarly, the Government would defend the extensive use of consultancies in preparing its policies,(55) and its apparent heavier than usual reliance on private sector legal firms in developing its overall strategy(56) as commensurate with the importance of the reforms being pursued.

Moreover, it could be argued that the Government has principally stuck to what it saw as the primary role of Government in industrial relations, ie setting the framework within which employers and employees conduct their affairs.(57) For example, as noted by the Productivity Commission, several provisions of the Government's Workplace Relations Act limit the role of unions and aim to encourage greater choice in employee representation thus making any union monopoly in the supply of waterfront labour more difficult maintain.(58)

The Government has also argued that court proceedings are incidental to the main game of waterfront reform.

Largely from a public policy perspective, concerns about 'means and ends' have been raised both about the 'Dubai affair' and the Government's apparent relationship with the Patrick group.

Attention has also focussed on the ethics of corporate restructures(59) and the reduction in the powers of the Australian Industrial Relations Commission.(60) To date these, in varying degrees, remain open questions.

Related concerns about the role of the Government have not simply been expressed by frequent government critics such as Ken Davidson of The Age, who has criticised the policy-making process using the handling of the Government's waterfront agenda as an example of declining standards. Davidson's argument is that governments are now generally less well advised than they once were because, to use one of his more colourful phrases, '[g]overnments have been converted into medieval courts and public servants into courtiers.'(61) Professional and sceptical public service advice is, on this view, no longer the bulwark that it once was against ministerial caprice and political adviser-driven adventurism.

Other commentators, including business oriented journalists such as Terry McCrann,(62) Trevor Sykes(63) and Alan Kohler(64) have all been either critical or decidedly wary about the Government's role and the workings of its policy formulation processes. On the other hand, editorial comment in the major metropolitan newspapers has been strongly supportive of the overall thrust of government policy.

Many aspects of the picture are for some time likely to remain clouded.

For example, it remains something of a mystery to this writer why, having made compulsory unionism and other union security devices explicitly unlawful at the federal level in 1996, the Government apparently has not pursued any actual instances of alleged MUA intimidation through the courts.(65) The present approach to 'encouraging' the use of non-union labour seems a somewhat curious way of attacking any MUA closed shop. It is an approach that, paradoxically, could result in some workers who have arguably been pressured into joining the MUA being disadvantaged or dismissed because of their affiliation with a union that they did not wish to join.

Public sentiment also appears rather volatile and at times difficult to fathom. Even public support for the proposed levy scheme appears divided. A Bulletin poll suggests that 53 percent of voters are unhappy with federal government funds being used to assist in the retrenchment of surplus MUA members.(66)

Public support for legislative action to protect the interests of workers and creditors generally from the intended or unintended consequences of corporate collapses and restructures may, however, produce a rather more positive result.

Endnotes

  1. Hon Peter Reith, Second Reading Speech, Parliamentary Debates, 8 April 1998, 2725.
  2. Maritime Union of Australia & Others v Patrick Stevedores No.1 Pty Ltd & Others No VG 152 of 1998. Before North J at page 11. His Honour accepted that the MUA only learned of the transaction on 8 April 1998.
  3. Patrick Stevedores Operations No.2 Pty Ltd & Ors v Maritime Union of Australia and Ors M29/ 1998, 5 and 45.
  4. Ibid., 4-10, 44-46 and 73-78.
  5. Productivity Commission, Work Arrangements in Container Stevedoring, AGPS, April 1998, 137.
  6. A substantial argument was put to both the Federal Court and the High Court that it was neither within the power of the courts, nor would was it practicable, to effect a workable restoration of the pre 7 April 1998 position.
  7. Department of Workplace Relations and Small Business, Transcript of Doorstop Interview with Hon Peter Reith, Charterbridge House, Sydney, 5 May 1998.
  8. 5 May 1998, 18:16.
  9. AAP, 7 May 1998, 17:20.
  10. AAP, 8 May 1998, 12:02.
  11. ABC, PM, 11 May 1998.
  12. Sydney Morning Herald, 9 May 1998, 7.
  13. AAP, 7 May 1998,13:19.
  14. Australian Financial Review, 11 May 1998, 1 and 8.
  15. The Age, 11 May 1998, 1. Sydney Morning Herald, 11 May 1998, 1.
  16. AAP, 11 May 1998.
  17. AAP, 11 May 1998.
  18. Hon Peter Reith MP, Minister for Workplace Relations & Small Business, Waterfront Reform: Seven Benchmark Objectives, 8 April 1998.
  19. Second Reading Speech, op cit, 2725.
  20. Hon Peter Reith, Transcript, Doorstop Interview, op cit., 5 May 1998.
  21. Australian Financial Review, 'No reform - no money, says, Reith', 5 May 1998, p 4.
  22. Patrick Stevedores Operations No.2 Pty Ltd & Ors v Maritime Union of Australia and Ors M29/ 1998, 74.
  23. Ibid., 7 and 30.
  24. Ibid., 30.
  25. Ibid., 30.
  26. Ibid., 54.
  27. Ibid., 73.
  28. Australian Financial Review, 5 May 1998, 1-6.
  29. North J, op cit, 19 and Wilcox, von Doussa and Finklestein JJ, op cit, 9-10.
  30. Patrick Stevedores Operations No.2 Pty Ltd & Ors v Maritime Union of Australia and Ors M29/ 1998, 29-30.
  31. Maritime Union of Australia & Others v Patrick Stevedores No.1 Pty Ltd & Others No VG 152 of 1998, 17.
  32. Ibid., 19.
  33. The Stevedoring Industry Finance Committee (SIFC) repaid an AIDC loan facility used to fund redundancy payments under the Waterfront Industry Reform Program on 17 September 1995 and was to be wound-up and the relevant legislation repealed. The legislation has not been repealed and there are apparently some technical problems to be addressed before SIFC can be terminated.
  34. Parliamentary Debates, op cit, 2725-26.
  35. At page 5.
  36. 20 April 1998, 16.
  37. ABC, PM, Monday , 4 May 1998. Transcript, Doorstop Interview - Charterbridge House, op cit, 5 May 1998.
  38. 11 May 1998.
  39. Parliamentary Debates, 8 April 1998, 2728.
  40. Nine Network, Sunday Program, Transcript, 19 April 1998.
  41. ABC Online, News, 10 May 1998.
  42. AAP, 11 May 1998.
  43. Australian Financial Review, 7 May 1998, 4.
  44. Parliamentary Debates, op cit, 8 April 1998, 2726.
  45. Page 54.
  46. Explanatory Memorandum, Stevedoring Levy Collection Bill 1998, 3.
  47. Patrick Stevedores Operations No.2 Pty Ltd v Maritime Union of Australia (unreported) 23 April 1998, transcript, 2.
  48. PCS Operations Pty Ltd & Ors v Maritime Union of Australia & Ors, Matter No M24 of 1998.
  49. Ibid, 3.
  50. For more detailed discussion of the economic torts see: Breen Creighton and Andrew Stewart, Labour Law: an introduction, second edition, Federation Press, 1994,267-275.
  51. At page 16.
  52. Ibid., 19.
  53. Ibid.
  54. Ibid., 21.
  55. See Alan Ramsay, 'Wharf 'reform': we're paying', Sydney Morning Herald, 18 April 1998 which with one or two apparently very minor discrepancies reflects the publicly available material on the Government's waterfront consultancies over the past two years.
  56. Mike Taylor, 'Row fuels breach of legal guidelines', Canberra Times, 8 May 1998; and Pamela Williams, 'This Tangled Web: inside the unholy war on the waterfront', Australian Financial Review, 9-10 May 1998, 23-25.
  57. Peter Reith, 'Better Pay for Better Work', The Federal Coalition's Industrial Relations Policy, 18 February 1996, 3.
  58. The Productivity Commission refers specifically to section 298A (freedom of association), section 189 (modification of the conveniently belong rule), and section 285 (new right of entry provisions for union officials) in its report on work arrangements in container stevedoring, op cit, 148.
  59. Frank Costigan QC, 'Asset-shifting rings a bell', Sydney Morning Herald, 23 April 1998 and Peta Spender, 'Corporate and insolvency perform fine pas de deux before High Court', Canberra Times, 25 April 1998.
  60. Jim Macken, 'Umpire shows real worth', Sydney Morning Herald, 22 April 1998, 21.
  61. 'Howard needs better advice', 30 April 1998, 15.
  62. 'All is not fair in the waterfront war', Weekend Australian, 18 April 1998, 49-50; and 'Howard's joy-ride with Scanlon is out of control', Weekend Australian, 25 April 1998, 51 and 54.
  63. 'Lang Corporation shares are strictly for heroic', Australian Financial Review, 18-19 April 1998. Also interviewed on the Sunday Program (19 April 1998) and Lateline (22 April 1998) talking about concerns in relation to the ethics of the exercise.
  64. 'Oh what a feeling - pity it won't last', Australian Financial Review, 9-10 May 1998, 24-25.
  65. Refer Part XA of the WR Act.
  66. AAP, 10 May 1998. Such a result may arguably reflect some community misunderstanding of how the scheme is to be funded.

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12 May 1998
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