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IR rulings in dire need of objectivity

(AFR 5/9/01)

An ACCC-style body could ensure competition in the labour market, suggests Des Moore

Judge-made law has existed for so long that AP Herbert even quipped in 1935 that "the Common Law of England has been laboriously built about a mythical figure of The Reasonable Man." But, with much greater statute law today and a statutory requirement that judicial interpretations should promote their objects, why do judges still impose their own views so much?

Chief Justice Murray Gleeson has warned several times recently against excessively individualized or subjective assessments of cases. AIRC President Justice Guidice has also complained that uncertainties in employment relationships were eroding freedom and impacting adversely on the quality of society. Alarmingly, he acknowledged that the outcome of particular cases was of little predictive value in similar cases.

But the legal arm of government has not moved to remedy the many problems caused by the wide discretion exercised in industrial cases. A major concern with industrial tribunals is their implicit assumption that a major imbalance of bargaining power exists between employers and employees. This fails to recognize that, even within their regulated framework, modern labour markets operate under competitive conditions.

Similarly, the explicit conditions tribunals prescribe cannot take account of the many implicit factors determining whether an employment relationships works. The adverse effects on the unemployed have also been overlooked, as have actions by major political parties creating a more flexible labour market.

All this suggests there is a strong case for limiting judicial discretion by legislative means.

The marked contrast between interventionism in the corporate and industrial relations areas also needs addressing. Those thought to have infringed corporate law are pursued and, if caught and convicted, are fined or jailed and the companies they have operated may be made insolvent. Some are even barred from operating a business. But, while this is appropriate, there is very limited comparable action in relation to behaviour by unionists or employees that is either unlawful or deliberately obstructive. There are few higher penalties for repeat offenders.

The apparently "soft" approach adopted towards such behaviour presumably reflects a fear that jailing a unionist or sending a union insolvent is socially unacceptable while providing the same treatment to a "greedy capitalist" is not. The reluctance of the police to pursue complaints against intimidation and coercion by unionists is part of this syndrome and helps explain why royal commissions into the construction industry are needed from time to time.

What we badly need is a body to ensure competition in the labour market and to prosecute those who behave unlawfully, just as the Australian Competition and Consumer Commission prosecutes anti-competitive behaviour by business in the production and trading fields. The NSW Building Industry Task Force operated

successfully for three years in the construction industry and it could provide a model for a body with wider authority.

Publicly expressed concern has produced some recent moderation in judicial intervention in industrial cases, most notably reflected in the Federal Court’s compositional change. But the picture is mixed, with numerous puzzling exercises of discretion and long periods taken to reach decisions. That compositional changes should determine outcomes highlights the need for radical Federal Court reform alone.

It remains particularly worrying that an examination of the plethora of industrial cases suggests that "ad hocery" prevails. Chief Justice Gleeson’s general call for an "abiding need for predictability and certainty" is certainly nowhere to be found in industrial relations: it has been overwhelmed by what he characterized as the "irreversible move towards subjectivisation of issues" - with obvious deterrent effects on employment and


If Labor were to attain Government in Canberra, there is a further worry that even the recent slightly more moderate Federal Court approach would not last. Labor has already largely adopted the ACTU’s industrial relations interventionist agenda and was responsible for many of the Federal Court appointees.

Those who understand that minimal intervention in employment relationships is in the best interests of the community, particularly those in the poorest group, clearly need to better explain the problems. Those who continue to support a highly interventionist industrial system in a modern economy should be reminded of Dr Johnson’s observation of an acquaintance: "such an excess of stupidity, Sir, is not in nature".

Des Moore is director of the Institute for Private Enterprise. This is an edited extract from his address to the Samuel Griffith Society conference on Saturday.