Historical Perspective Industrial Relations In Australia

Consideration of the Workplace Relations and Other Legislation Amendment Bill 1996
Table of Contents

Historical Perspective Industrial Relations In Australia

The 1890s and the Constitutional Conventions

The great strikes of the 1890s provided the context in which the constitutional conventions considered a power in the proposed national parliament to prevent and settle interstate industrial disputes. The founders were deeply concerned about the extent to which the disputation had caused damage to both industry and workers that were left without any protection.

This was first raised at the 1891 Constitutional Convention by Charles Kingston, the Attorney-General in the South Australian Government who had in 1890 unsuccessfully introduced a 'Bill for an Act to encourage the formation of Industrial Unions and Associations, and to Facilitate the Settlement of Industrial Disputes'. However, as in South Australia, there was little Federal interest in the proposal.

In 1897, H B Higgins proposed a power to make laws with respect to 'conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State'. Again, the proposal was rejected by the Constitutional Convention. Finally, at the 1898 Convention, the same proposal was accepted. This power was the basis for the Commonwealth Conciliation and Arbitration Act 1904 (the 1904 Act).

Conciliation & Arbitration Act 1904 & Development of the Award System

The 1904 Act established the Commonwealth Court of Conciliation and Arbitration (CCCA) with extensive powers to prevent and settle industrial disputes by conciliation and arbitration. It was not the first piece of Australian legislation to establish a system of conciliation and arbitration - both WA (1900) and NSW (1901) had enacted legislation to establish such systems prior to the Commonwealth legislation. South Australia followed in 1915 and Queensland in 1916.

Victoria and Tasmania had the slightly different system of wages boards for a long period of time. These boards which consisted of equal numbers of employer and employee representatives with an independent chair had the power to fix wages and conditions in a trade or industry. Tasmania abandoned the wages board system in 1984 while Victoria's movement away was only completed in 1992.

Many of the central elements of the 1904 Act are still present in the current Industrial Relations Act 1988 including an independent tribunal with powers to conciliate and where necessary, compulsorily arbitrate on industrial disputes and the provision of a system of voluntary registration of employer and employee organisation. For the latter, giving the organisation the right to represent groups of workers and to be heard by the Tribunal.

In the years immediately following its enactment, the effect of the 1904 Act was limited, for the most part due to narrow interpretations of the legislation and the conciliation and arbitration power of the High Court. However, by 1919, there were 96 Federal awards in force, half the workforce was unionised and 80% of unionists belonged to Federally registered unions. [1]

The Harvester Judgment and the Basic Wage

The 1907 decision made by Justice Higgins (in Ex Parte HV McKay (1907) 2 CAR 1), is usually identified as the commencement of centralised wage fixation. It involved a determination of what wages and conditions of the employees were 'fair and reasonable' in the context of the Excise Tariff Act 1906.

Higgins J, held that the test of determining a 'fair and reasonable' wage was 'the normal needs of the average employee, regarded as human being living in a civilised community'. Higgins took evidence as to the cost of living in Victoria, food, rent, clothing etc to decide the fair and reasonable wage.

Although the High Court subsequently found the Excise Tariff Act 1906 to be invalid, the approach taken by Justice Higgins was adopted by the Court and the basic wage was awarded in every determination it made.

The Development of Wage Fixation

As discussed above, by 1920 all the States and the Commonwealth had adopted systems of compulsory conciliation and arbitration (or very similar systems). This approach has remained, until very recently, the predominant method by which the basic terms and conditions of employment for the vast majority of Australian employees are set.

The Federal system exerted a substantial influence on the State systems, primarily through the operation of national wage cases. Applications to review the wage rates in a number of key Federal awards would be made via submissions by the key union and employer organisations, as well as State and Commonwealth bodies. The resulting decision would then flow on to other Federal awards and usually be adopted by the various State tribunals.

In addition to the basic wage, Higgins also examined the wages to be paid to skilled tradespersons. Inquiries into 'margins for skill' continued until the mid-1960s. Through this process the Commission sought to ensure that its determinations reflected the market conditions in relation to these employees. In 1966, the Conciliation and Arbitration Commission moved away from this approach to instead adopting a single 'total' wage containing a minimum rate payale to all male adult employees [2]. This enabled the Commission to increase the take-home pay of the lower paid workers without the increase flowing on to hight paid classifications.

The oil crisis of the 1970s and other inflationary pressures, led to high inflation fueled by a price wage spiral. The Commission sought to reassert its control of the wage fixing system by introducing a system in which wage increases were indexed to the quarterly movements in the consumer prices index. The system implemented in the Commission's Wage Indexation Principles of 1975 continued, in a modified form, until 1981. [3]

Initially, the Commission adopted full indexation across the board; but from May 1976 until 1981, the Commission indexed in a variety of ways, including full indexation, partial indexation and plateau indexation (and a mixture of the three) In plateau indexation, workers earning below the plateau might receive full indexation, while those above only partial.

By 1981, the Commission formally abandoned its wage indexation principles with unions and employer negotiating substantial increases outside the system. Wage increases were then negotiated by the parties at an industry level; however, there was significant disparity in the level of wage increases across industries. In mid-1982, with the Australian economy in recession, the Commonwealth and States agreed to a wage freeze which was implemented by the Commission. [4]

In 1983, the ALP and the trade union movement negotiated a 'Prices and Incomes Accord' which sought the re-introduction of centralised wage fixation to enable all workers to maintain and improve living standards. The Commission agreed to adopt a centralised system based on prima facie full indexation. [5] In this system, the bulk of wage increases were to come from national adjustments (CPI movements and national productivity). In return, unions had to give firm no extra claims commitments (both award and overaward).

Equal Pay [6]

Justice Higgins determined the basic wage as that payable to an adult male worker supporting a non-working wife and two children. Initially, women (who it was assumed did not have dependents) received only 54% of the male wage.

Thus, from 1907 until 1969, employers were entitled to pay women less than their male colleagues for performing the same work. In 1969, the Commission adopted the principle of equal pay for identical work which meant that women performing the same tasks as men under the same award had to be paid the same award rate. [7]

In 1972, the Commission expanded the principle to require equal pay for work of equal value entitling women who performed the same tasks as (but under different awards) had to be paid the same. [8]

In 1993, the AIRC was given the power to make orders to ensure equal remuneration for work of equal value. These provisions were based on a number of international instruments to which Australia is a signatory, including ILO Convention 100 (Equal Remuneration) and the United Nations' Convention on the Elimination of All Forms of Discrimination Against Women.

The AIRC is able to make orders to ensure that men and women receive equal remuneration (including overaward payments) for work of equal value. The Commission can make such orders on application by an employee, a relevant trade union or the Sex Discrimination Commissioner. However, if it considers that there is an alternative and more appropriate means to ensuring equal remuneration for work of equal value (for example, under a State law), the Commission may refrain from dealing with an application.

The Hancock Inquiry

In 1983 the Government commissioned Professor Keith Hancock to examine the operation of the existing industrial relations system and to make recommendations as to its future direction. The consequent 'Report of the Committee of Review into Australian Industrial Relations Law and Systems' was presented to the Government in 1985. The report provided a comprehensive assessment of Australian industrial relations and made a large number of recommendations regarding changes to the system.

The Hancock Report's general conclusions about Australia's system of conciliation and arbitration were that:

In relation to registered organisations and the requirements for registration, the Hancock Committee sought a balance between the interest of employees and employers in being able to have bona fide associations registered and the need for representation of employees and employers to be on an orderly and stable basis. The Hancock Committee therefore recommended a wider statutory test, but incorporating the concept 'conveniently belong'. This is discussed further in Chapter 7 (Paragraph 7.8).

Many of the Hancock Committee's recommendations, including some of the more controversial ones such as the establishment of a Labour Court and new enforcement provisions, were adopted by the Industrial Relations Bill 1987 which was introduced into Parliament in May 1987. However, with the subsequent dissolution of Parliament, this Bill lapsed and a revised Bill (the Industrial Relations Bill 1988) was introduced after the Government was returned. The revised Bill became the Industrial Relations Act 1988 and did not differ much in substance from the previous Act.


[1] Plowman, DH 'Forced March: Employers and Arbitration', 1989, p. 152.

[2] Basic Wage, Margins and Total Wage Case 1966 (1966) 115 CAR 93.

[3] National Wage Case 30 April 1975 (1975)167 CAR 18.

[4] National Wage Case 1982 (1982) 287 CAR 82.

[5] National Wage Case 23 September 1983 (1983) 291 CAR 3.

[6] This material is drawn primarily from McCallum R and Pittard M, Australian Labour Law: Cases and Materials (1994).

[7] Equal Pay Case 1969 (1969) 127 CAR 1142.

[8] National Wage and Equal Pay Case 1972 (1972) 147 CAR 172.