Symposium: State Systems of Industrial Relations

Balancing fairness and flexibility: The NSW Commission 1981–1998

John Shields, The University of Sydney

William Kenneth (‘Bill’) Fisher succeeded Sir Alexander Beattie as president of the Industrial Commission of NSW on 18 November 1981. He would occupy the presidency for sixteen and one half years, and became the second longest serving president since the Commission was founded (as the NSW Court of Industrial Arbitration) in 1902. Fifty-five at the time of his appointment, Fisher steered the NSW Commission through some of the most dramatic changes in its history: from the death throes of the Fraser Liberal-National Coalition government’s wage indexation system in 1981 to the first wave of industrial relations ‘reform’ by the Howard Coalition government in 1996.

The NSW Commission’s continued relevance and influence during these turbulent times owed a great deal to Bill Fisher’s deep commitment to two principles of industrial relations regulation. The first was the maintenance of co-operation and co-partnership between the state and federal industrial relations commissions in the settlement of industrial disputes and the general regulation of wages and employment conditions. This principle of ‘co-operative federalism’ in industrial relations can be opposed to a unitary or single-system approach on the one hand (as the Howard Coalition government currently proposes) and to an emphasis on the sovereignty of state systems of industrial regulation on the other. The second principle underlying Fisher’s approach was the pursuit of a workable balance between two historically competing notions of the purpose of industrial relations regulation: regulation as a means of applying basic standards of fairness in the employment relationship and regulation as a means of enhancing workplace flexibility and efficiency.

Fisher steered the NSW Commission through some of the most dramatic changes in its history.

The headline industrial relations developments of Fisher’s presidency were, of course, the then federal Labor government’s system of Prices and Incomes Accords (1983–96), ‘second tier’ productivity bargaining and award restructuring (1987–92), and enterprise bargaining (from 1991). Most initiatives emanated from the federal sphere. But without the active involvement of the NSW Commission, none of the grand reforms of the 1980s and 1990s would have progressed very far.

A PILLAR OF CO-OPERATIVE FEDERALISM

Co-operation and co-ordination between the federal and state industrial relations commissions was imperative to the effective functioning of the Prices and Incomes Accords of the 1980s, which were intended primarily to ‘restrain’ wage increases across the nation in the interests of macro-economic stability. Even though the Accord system curtailed the autonomy of state industrial relations systems, Fisher consistently supported a co-ordinated federal-state approach to maintaining the Accord principles, including the principle of ‘no extra claims’ for wage increases beyond those justified by movements in the consumer price index (Shields 2003, pp. 242–43). At the instigation of federal Commission president, John Moore, the heads of the federal and state tribunals held regular informal meetings to ‘line up the approach’.

Fisher kept matters in hand in New South Wales by insisting that every new case went across his desk first. As Fisher recalls, he was also determined not to delegate to fellow judges, nor to the system’s twelve Conciliation Commissioners (those non-judicial officials appointed to resolve disputes by means of round-table negotiation and conciliation rather than by judicial determination), anything ‘that they could bugger-up’ (Fisher 2002). He reserved State Wage Cases and other Full Bench hearings for an inner group of three judges comprising Fisher himself, Justice John Cahill (son of former Labor premier Joe Cahill) and Justice Vernon Watson—the so-called ‘Holy Trinity’ (Fisher 2002; Shaw 2001). To facilitate unanimity, Fisher also had the three judges ‘talk through’ the issues before handing down judgment. Fisher notes that these arrangements made it easier for him than for his federal counterpart to ensure that decisions were consistent (Fisher 2002).

The later 1980s marked the highpoint of this regime of state-federal co-operation. Under Moore’s successor, Justice Barry Maddern (1985–1994), tribunal co-ordination reached new heights, with state heads of jurisdiction maintaining regular contact with each other and with Maddern as ‘anomalies’ cases and related issues arose. In October 1990 formal integration came a step closer when Fisher and the heads of three other state commissions were appointed to hold joint positions as deputy presidents of the Australian Industrial Relations Commission (Arbitration Reports 1986 p. 7; 1991, p. 3; Fisher 2002; Norrington 1990).

Fisher attributes the effectiveness of this regime of state-federal co-operation to Barry Maddern, a figure whom he holds in high esteem Yet, as president of the largest state jurisdiction, Fisher also played a decisive role in upholding the centralised system, particularly during its moment of greatest challenge—the Airlines Pilots strike of 1989—which raised the prospect of an across-the-board wages breakout. Once it became clear that there was no chance of compromise, the heads of tribunals were united in their determination to resist the pilots’ union’s pay claims. In what amounted to a council of war, the heads of tribunals met one Saturday morning in the inner Melbourne suburb of Richmond to plan a tactical response to the pilots’ union’s claim (Fisher 2002). It was a bitter affair, but the Accord system was preserved.

A VEHICLE FOR WORKPLACE CHANGE

Since his time as a senior union advocate in the 1960s, Fisher had argued that the state and federal tribunals should take a more proactive role in reshaping employment relations at workplace level, including taking more evidence on-the-job (Fisher 1972). Fisher’s first major inquiry as president, the 1982–3 inquiry into inefficiency and job losses in the NSW steel industry, made him a strong advocate of industry restructuring and the cautious reform of work practices (Shields 2003, pp. 239–40). His experience during the 1986 dispute over 60-year-old work practices in the Broken Hill mining industry, including prohibitions on weekend and night shift work and on underground firing during shifts (Flynn 1988; Shields 2002, pp. 246–49), certainly reinforced his belief that the Commission had a legitimate and vital role to play in encouraging the removal of restrictive work practices. Like some of his predecessors—most notably, perhaps, George Beeby, who presided over the NSW system between 1920 and 1926 and was a Judge of the Commonwealth Court of Conciliation and Arbitration between 1926 and 1942 (Taksa 2003)—Fisher was a moderniser.

The later 1980s marked the highpoint of the regime of state-federal co-operation.

Accordingly, when ‘two-tier’ wage adjustment was introduced at the federal level under the ‘restructuring and efficiency’ and ‘structural efficiency’ principles in 1987–88, the NSW Commission moved quickly to adopt the two-tiered model, which mandated general wage adjustments based on movements in the consumer price index (or ‘first tier’ increases), and additional, industry-specific increases of up to 4 per cent if relevant unions and employers reached agreement on specific measures to improve productivity (or ‘second tier’ increases). Fisher was essentially a follower rather than an initiator here; nevertheless he seized the opportunity to use the Commission as an agent of managed workplace change, taking a close personal interest in the application of the new principles to state awards and agreements. To handle the massive increase in caseload, Fisher overhauled the Commission’s own work practices, encouraged the use of ‘mixed benches’, which involved Conciliation Commissioners sitting in on Full Bench hearings and other major cases (Shields 2003, pp. 249–50).

HONEST BROKER OF ENTERPRISE BARGAINING

Changes to state industrial relations law by the Greiner Liberal-National Coalition government at the beginning of the 1990s produced the most radical transformation of the state system since the 1920s. The Greiner government was inspired by Professor John Niland’s 1989 blueprint for the thoroughgoing decentralisation of the NSW industrial relation system, including a radical curtailment of the Commission’s own regulatory role. The first wave of reform, the Industrial Arbitration (Enterprise Agreements) Act 1990, opened the way for union and non-union enterprise bargaining, although the Commission retained power to approve or reject any agreement based on a broadly defined ‘public interest’ test. The second wave of reform, the Industrial Relations Act 1991, went much further. The 1991 Act replaced the Industrial Commission with a new Industrial Relations Commission and a separate appellate body, the Industrial Court, akin to the longstanding separation between administrative and judicial functions at federal level (except that in New South Wales, judges also remained members of the state commission). The 1991 Act also withdrew the Commission’s power to scrutinise enterprise agreements, handing that responsibility to a new agency, the Commissioner of Enterprise Agreements (McCallum 1998, pp. 94–103; Pragnell & O’Donnell 1997, pp. 5–6).

Under Fisher’s leadership, though, the NSW Commission effectively rode the enterprise bargaining tiger, even pre-empting the adoption of enterprise bargaining by the Australian Commission (Fisher 2002). Once the 1991 Act was in place, Fisher redoubled his efforts to preserve the Commission’s authority over the system, especially as an honest broker of enterprise bargaining. In the State Wage Case decision handed down in March 1992, just days before the 1991 Act coming into force, a Full Bench announced the Commission’s intention to maintain a central role for both itself and the pre-existing system of registered agreements and consent awards. Scope existed in the Act for enterprise agreements to be converted into consent awards, and the Commission repeatedly urged employers and employees to follow this course, with considerable success ([1992] 41 IR 239; Annual Report 1994, p. 21; McCallum 1998, p. 104). In effect, the Commission salvaged from the Greiner legislation a regime of centrally-supervised agreement-making.

Following Labor’s narrow victory at the state election in March 1995, the new Labor Attorney-General and Minister for Industrial Relations, Jeff Shaw, held round-table conferences with Fisher and others with a view to reshaping the state’s industrial relations laws (McCallum 1998, p. 105). The result was the Industrial Relations Act 1996 which retained provision for non-union agreements, but required that all agreements be approved in a secret ballot by at least 65 per cent of the employees concerned. Labor’s legislation also restored full judicial power to the Commission and reinvested it with the power to approve or reject agreements. The 1996 Act also required the Commission to police a ‘no net detriment’ test for enterprise agreements, such that the Commission could reject any proposed agreement which, compared to the relevant state award, left the employees concerned worse off (McCallum 1998, p. 105). In Fisher’s estimation, the new Act was ‘shorter, clearer and more facilitative’ than the one it replaced (Arbitration Reports 1997, p. 1). It was also far more in tune with Fisher’s own long-held notions of a reasonable balance between fairness and flexibility.

REDUNDANCY PAY

Under Fisher’s leadership the NSW Commission rode the enterprise bargaining tiger.

Undoubtedly the signal achievement of Fisher’s early years in the presidency, and a clear example of his commitment to fairness, was his pioneering role in the development of systematic redundancy entitlements. On assuming office, Fisher caused considerable consternation in establishment circles by announcing that he intended to use his time on the Commission to ‘give redress’ to socially disadvantaged groups, including the unorganised and the unemployed (‘Misplaced concern’ 1981; Martin 1983). The opportunity was not long in coming. During the course of his 1982–83 inquiry into the economic problems facing the steel industry, undertaken at the request of the Wran Labor government, Fisher obliged the steelworks unions by inserting a set of redundancy provisions in the BHP award. The provisions required six months notification of intention to retrench workers and awarded a minimum of four weeks’ redundancy pay, plus an additional four weeks for each year of service, with successively higher payments for workers aged 35 and over and 45 and over ([1983] 4 IR 56; [1983] AR 624). These provisions were the evolutionary starting point for what would eventually become know as the ‘Fisher formula’ for redundancy pay.

The immediate backdrop to this innovation was the Wran government’s hastily drafted Employment Protection Act 1982 that came into force in December, two months after a round of mass sackings at BHP. Intended to provide special financial support to the retrenched steel workers, the Act was poorly drafted, providing little guidance as to how claims for support should be processed or determined. In effect, it abrogated detailed policy-making to the Commission. In July 1983, Fisher handed down judgment in a test case (Crocker’s case) brought by the Labor Council of NSW to establish a general standard for redundancy payments.

Fisher was particularly concerned to address the plight of older workers who found it far more difficult than younger workers to re-enter paid employment. Accordingly, in setting down a scale of severance pay entitlements which ranged from no payment for less than one year of service to eight weeks pay for between four and five years service, Fisher added a 25 per cent loading for employees over 45 years of age.

In subsequent judgments, Fisher made it very clear that the scale applied in Crocker’s case was a minimum scale of entitlement only. In one case, involving retail giant Myer, Fisher awarded severance payments three times higher than those set down in Crocker’s case ([1983] 7 IR 273 & 300; [1983] AR 485 & 596; Shields 2003, pp. 240–42; Fisher 2002). Various applications of principle were later appealed, but the precedent stood, and similar redundancy provisions were eventually applied by the federal Commission to employees covered by federal awards.

A decade on, in the 1994 Redundancy Test Case, a majority decision of the Full Bench of the NSW Commission widened considerably the scope of application of the Fisher formula. Again, the case was brought by the Labor Council of NSW, this time with a view to bringing the state standard into line with the rates of redundancy pay now applied at federal level. The Bench introduced a new, higher scale for severance payments based on Fisher’s original model as set down in the Crocker’s case ([1994] 53 IR 419].

The credit for entrenching redundancy pay as an award entitlement for Australian workers rightly belongs to Bill Fisher and the NSW Commission. It marked a further important step in the cause of ‘civilising’ Australian labour markets; of furthering the ideal of fairness by judicial means.

NO-STOPPAGE AGREEMENTS IN THE CONSTRUCTION INDUSTRY

Fisher was particularly concerned to address the plight of older workers.

Although committed to fairness, Fisher was equally determined to further the cause of workplace efficiency—and his cause célébre here was the hitherto strife-torn and corruption-ridden building and construction industry. Here, in the late 1980s, the NSW Commission encouraged a major innovation in construction project efficiency in the form of registered employment agreements for large projects incorporating no-stoppage provisions. The Commission was responding to the disruptions and cost overruns that plagued the redevelopment of Darling Harbour in the mid-1980s. Fisher took a direct hand in encouraging the insertion of no-stoppage provisions in agreements made under section 11 of the old Industrial Arbitration Act 1940, for showcase developments such as the Sydney Harbour Tunnel and the Tomago aluminium smelter extension project. Both projects involved fixed-cost construction contracts and followed the high-skill, high-pay prescriptions of the structural efficiency principle. Both were completed on time, on budget and with few significant site safety incidents (Annual Report 1992, pp. 10–11; Fisher 2002). They also furnished the model for other major projects during 1990s, including the construction of the Newcastle coal loader, the new smelter at Port Kembla, the Sydney Olympic site, and the Sydney-airport rail link. In the context of the Giles Royal Commission into alleged corruption in the state’s construction industry, these agreements established a standard of structural efficiency previously unknown in this industry. Fisher himself nominates these no-stoppage agreements as amongst the most significant achievements of his presidency (Fisher 2002).

CHALLENGES OF CHANGE

Despite, or perhaps because of, its achievements, the Commission’s work during Fisher years did not proceed without conflict. There were some tense stand-offs between the president and his fellow judges. Fisher’s uncompromising support for Accord wage restraint, and, in particular, for a strict interpretation of the ‘no extra claims’ and ‘anomalies’ provisions in the Accord Principles, caused a major rift with fellow judge Jim Macken, with some of the most powerful right-wing unions, and with NSW Industrial Relations Minister Pat Hills, particularly over union claims for shorter hours and increased penalty rates (Shields 2003, pp. 244–45; Campbell 1985).

Fisher also clashed with John Niland over key aspects of Niland’s Green Paper recommendations (Larriera 1989; Fisher 1990). The Greiner government’s decision to split the old Commission precipitated another internal rift, this time between Fisher and several longstanding fellow judges, including John Cahill and Michael Sweeney. This breach threatened directly both Fisher’s personal authority and the Commission’s viability and, as Fisher himself laments, caused him to abandon his previous consensual leadership style in favour of a more ‘presidential’ approach (Fisher 2002).

CONCLUSION

That the NSW Commission survived the immense challenges of the 1980s and 1990s at all was a remarkable achievement; that it emerged stronger and more effective was due in no small measure to Bill Fisher’s leadership qualities, powers of persuasion, and political savvy. While the major changes of his presidency emanated chiefly from the federal sphere, under his leadership the NSW Commission was no mere rubber stamp. It was an effective regulator that was anything but an unnecessary duplication of the federal Commission. Without the active support and involvement of the NSW Commission, and without the state-level administrative machinery at its disposal, none of the major federal initiatives of the 1980s and 1990s would succeeded.

Redundancy pay and no-stoppage agreements were just two of the NSW Commission’s many state-level innovations during the Fisher era. Other noteworthy initiatives include the introduction of family/personal carer’s leave for state award-covered employees, new entitlements for part-time workers, and the path-breaking 1997–8 inquiry into pay equity, which confirmed that work in certain female-dominated occupations, including librarianship, was undervalued (Annual Report 1998, pp. 18–19). Another significant achievement was the remarkably effective way that the Commission handled the flood of unfair dismissal hearings following the Greiner Government’s Industrial Arbitration (Unfair Dismissals) Amendment Act 1991 which, for the first time, gave individual employees, as opposed to unions, access to the Commission to seek redress against dismissals of a ‘harsh, unjust or unreasonable’ nature (McCallum 1998, pp. 100–1). Critics of the current unfair dismissal laws conveniently ignore the fact that this was a Liberal-National government initiative.

Bill Fisher was neither a centralist nor an advocate of ‘states rights’; in matters of employment regulation, his was a vision of co-operative federalism and managed flexibility. He saw the state and federal commissions as having essential, active, and shared roles in managing both workplace fairness and workplace reform. Robust in its defence, Fisher consolidated the NSW Commission’s position as the nation’s most efficient and respected state-level industrial relations body. It is a legacy worth celebrating and defending.

Proponents of a unitary system of industrial relations would do well to remember that, like Australian liberal democracy itself, the Australian approach to employment regulation—a system that constitutes one of the pillars of our civil society—is build on the principle of co-operative federalism and shaped by the time-honoured precept of ‘checks and balances’ in democratic governance and public administration. If the test of any system of employment regulation is demonstrated ability to strike a workable balance between fairness and flexibility, then under Bill Fisher’s stewardship the record of the NSW Commission must be judged a clear success.

REFERENCES

Annual Report, President of the NSW Industrial/Industrial Relations Commission, 1981–1997.

Arbitration Reports NSW [AR] 1981–98.

Campbell, E. 1985, ‘Industrial reform secrecy attacked’, Sydney Morning Herald, 38 March, p. 3.

Fisher, W. K. 1972, ‘Plant level relationships: The role of the tribunal’, Journal of Industrial Relations, vol. 14, no. 3, pp. 264–271.

Fisher, W. K. 1990, ‘The Green Paper: A failure in consultation?’, in Transforming Industrial Relations, eds M. Easson & J. Shaw, Pluto Press, Sydney, pp. 109–16.

Fisher, W. K. 2002, interviewed by author, North Sydney, 9 January, tape in author’s possession.

Flynn, B. 1988, ‘Trade unions and the law: the Broken Hill dispute’, Journal of Industrial Relations, vol. 30, no. 1, pp. 32–53.

Industrial Reports NSW [IR] 1981–98.

Larriera, A 1989, ‘Fisher attacks industrial relations plan’, Sydney Morning Herald, 15 July.

Martin, K. 1983, ‘Give jobless a voice: judge’, Sydney Morning Herald, 2 May, p. 3.

‘Misplaced concern’ (editorial), Sydney Morning Herald, 26 November 1981, p. 6.

McCallum, R. C. 1998, ‘Two approaches to industrial relations reform in New South Wales: The making of the Industrial Relations Acts of 1991 and 1996’, in The Australasian Labour Law Reforms, ed. D.R. Nolan, Federation Press, Sydney, pp. 89–113.

Norrington, B., 1990, ‘Centralised industrial relations a step closer’, Sydney Morning Herald, 29 October.

Pragnell, B. & O’Donnell, M. 1997, ‘A failed experiment? Enterprise bargaining under the New South Wales Industrial Relations Act 1991’, The Journal of Industrial Relations, vol. 39, no. 1, pp. 3–20.

Shields, J. 2003, ‘William Kenneth Fisher 1981–1998’, in Laying the Foundations of Industrial Justice. The Presidents of the Industrial Relations Commission of NSW 1902–1998, ed. G. Patmore, Federation Press, Sydney, pp. 230–66.

Shaw, J. 2001, ‘His Honour pens his last judgement’, Sydney Morning Herald, 20 December, p. 28.

Taksa, L. 2003, ‘George Stephenson Beeby 1920–1926’, in Laying the Foundations of Industrial Justice. The Presidents of the Industrial Relations Commission of NSW 1902–1998, ed. G. Patmore, Federation Press, Sydney, pp. 129–154.

John Shields is a senior lecturer in the Discipline of Work and Organisational Studies in School of Business of the Faculty of Economics and Business at The University of Sydney, where he teaches human resource management. His current research focuses on the association between executive remuneration, corporate governance, and company performance. John also has a longstanding research interest in labour history and is an associate editor of the journal Labour History.