SEPTEMBER - OCTOBER 2001 NEWSLETTER

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Attached is an unedited version of an article of mine, published by The Age (8 Oct), attempting to spell out more definitively than most commentators the seriousness of the terrorist situation. One might also:

• Again emphasise how capably the Bush Government has handled what is obviously an extraordinary difficult and complex political situation. The garnering of support by both the US and the UK from governments with a wide range of political and other complexions have been remarkable and praiseworthy, as has their apparent success. The disowning by Foreign Ministers of 56 Islamic countries of bin Laden’s jihad, on the ground that it "opposed the tolerant and divine message of Islam", is particularly helpful. Of course, it remains to be seen how well this holds, particularly if anti-terrorism extends beyond the Taliban (as it needs to). But the strategy is obviously first rate particularly from a political/psychological perspective;

• Emphasise the complexity of the situation by reference to a recent article in The Spectator claiming that the suiciders are Wahhabists, an extreme form of Islamic fundamentalism that might broadly be compared with puritanical Protestantism. It is said that Wahhabism is subsidized by Saudi Arabia (indeed most of the hijackers came from Saudi) and 80 per cent of US mosques are controlled by Wahhabi imans;

• Praise the generally excellent speech by Tony Blair to the UK Labour Party conference, particularly his comments that "There is no compromise possible with such people, no meeting of minds, no point of understanding with such terror. Just a choice: defeat or be defeated by it. And defeat it we must." While Blair went over the top and introduced irrelevant objectives, the situation demanded that sights be set high and that governments not appear ready to soften because of the peaceniks et al.

• Note that a US commission on national security comprising top experts concluded in 1999 that, inter alia, "States, terrorists and other disaffected groups will acquire weapons of mass destruction, and some will use them. Americans will likely die on American soil, possibly in large numbers."

• Note also that statements by Australian Muslims offering general support for bin Laden or criticism of America, and indications of possible extremists living here, have received more limited reportage by our "quality" media.

The damage caused by the terrorists destruction in the US is about half that from the Kobe earthquake in 1995 ($US 130 bn cf $US 50-80 bn) and will not in itself cause a recession. However, the adverse "cautionary" indirect effects on consumer and business behaviour may now produce a couple of quarters of negative growth in the US, particularly as growth in that country was already stalled and growth in most other countries was also slowing. At the Economic Society’s recent forecasting conference the consensus was for world growth to continue but to decline to about 2 per cent this calendar year and next (compared with about 4.5 per cent in 2000), for US growth to be around 1 per cent each year, and for Australian growth to be around 2 per cent and 3 per cent respectively.

Of course, such forecasts assume that there are no further major adverse "shocks". This is one occasion when reverse shocks in the form of policy stimuli are appropriate and the large US ones in train should help. Absent further major terrorist occurrences, there could be a surge in spending next year, including from consumer/business spending at present held back. With their supposed pre-emptive policies that focus on inflation 12-18 months ahead, central banks will presumably quickly reverse existing "expansionary" policies.

I have been arguing for some time that Labor is likely to be returned at the (now called) Federal election because the Coalition has not differentiated itself sufficiently from Labor and has turned off enough marginal voters (who would have otherwise voted for them) on issues such as the GST.

Although the Prime Minister’s policy positions on the immigration and terrorist issues have obviously helped the Coalition in the short term, Beazley may largely have neutralized such aspects by (eventually) making both these issues bipartisan. The focus on such issues also makes it unlikely the Coalition will announce major reform proposals.

Although Beazley’s attempt to run with "security at home" provides the potential to exploit the reality that the great majority of employees feel both secure in (and satisfied with) their jobs, the Coalition seems disinclined to make a major issue of this or to propose major new industrial relations reforms (although the announcement that the ACCC would examine complaints from small businesses on secondary boycotts provides modest encouragement to those who want a more competitive labour market). Nor is the Coalition being pushed by the Business Council, whose approach to industrial relations is to oppose re-regulation rather than push for further reform.

The Coalition’s problem is that there may be enough erstwhile voters who have developed an "I hate Howard" position for GST or other reasons - and may stick with it. After all, Labor only needs to get a small number to switch. There is something of a parallel here with the position of Jeff Kennett in the Victorian election: despite the generally good performance of his government in Victoria there were enough Kennett-haters amongst marginal voters to turn the tide.

The marked improvement since early September in the attitude to the Prime Minister in the media is unlikely to help either, even with the sudden discovery by leading journalist Paul Kelly that "Howard and Kim Beazley have not changed — yet suddenly they look different"! Of course, Kelly had plenty of explanations for the new look PM and Opposition Leader, which he considered to be "the most dramatic shift in the national mood for decades". One can only wonder where he has been since 1970!

A large majority of Australians (including the Opposition) have rightly supported the Government’s rather ad hoc actions to stop asylum-seeking boat people from reaching the mainland. But there has also been an extraordinarily emotional adverse reaction from a small group, supported/encouraged by some sections of the media. A few are even saying the Government’s policy makes them ashamed to be Australians because only small numbers are involved and they constitute no real threat to Australia. So, why not be "compassionate" and let them come to Australia in boats to be processed?

One can understand the naturally compassionate feeling for people who are trying to escape from repressive overseas regimes. However, it should at least be acknowledged that Australia already has a significant compassionate component in its immigration program. Moreover, the boat people are few among many in that category and include some who are not genuine refugees.

Indeed, as pointed out by Alexander Casella, a representative in Geneva of the International Centre for Migration Policy Development (an organization funded by European governments to develop migration policies), "refugees in need of sanctuary are a minute minority. The overwhelming majority are either refugees who already have asylum — and thus are in no danger of persecution — or illegal migrants more often than not trying to pass themselves off as refugees" (Herald Sun 4/10). Casella notes that the Tampa group was not persecuted refugees in need of sanctuary but was illegal migrants who effectively hijacked the ship and forced the captain to re-route it.

The key issue is - should Australia give the boat people greater opportunity to migrate here than those who have to go through the established refugee processes overseas? Is it lacking in compassion to have a policy that requires all potential refugees to go through such processes? As Casella says, refugees are already applying to migrate to Australia in large numbers and are going through set procedures that would be made a mockery of if queue jumping were freely allowed.

The absurd logic of the pro-boat advocates is so apparent that it is astonishing that people one might otherwise regard as sensible are pursuing the line. One is forced to the view that these people may be doing so for "other" reasons, that is, they are being dishonest. The pro-boaters certainly include some who are strong advocates of a larger population for economic and/or defence reasons; some who are Howard-haters; and even some who believe Australia should have no immigration restrictions at all.

Few if any of the pro-boaters have indicated that they would either increase the refugee component in the immigration program (involving a cut back in other components, such as the skilled intake) or increase the immigration program itself to accommodate extra refugees (and increase the proportion from boaters). It is difficult to believe that the Opposition leader is serious in his main criticism of the Government, viz, that it should have concluded an agreement with Indonesia to stop and/or control the flow. The recently arrived refugees were allowed into Indonesia in the first place but that country has indicated that it will not take them back once they become rejected boat people.

Of course, a major part of the refugee problem has been the extraordinary interventionist actions by Federal Court judges in reviewing decisions by the administrative tribunals that assess refugee claims. This has been part of the Court’s search for a role, brilliantly analysed by Dr John Forbes in two excellent Samuel Griffith Society papers. In the Tampa case it was illustrated by the actions of Justice (interventionist) North (again!), fortunately over-ruled on this occasion by the full Federal Court.

However, there now seems to have become something of a pattern in that court of decisions that are then over-ruled, though not necessarily on a consistent basis. The continued generally pro-union bias, the additional costs imposed on business and the inadequate precedents almost make this court a farce.

The attached article of mine published in The Australian (4/10) is simply another example of the farcical interventionist processes that occur in industrial cases and that encourage claims by unions. In this case, Justice Finkelstein initially decided there was no anti-union discrimination in the "guidance" to managers on retrenchments of 10,000 employees that emphasized Telstra’s preference for individual agreements.

However, although such a preference was already well known (the company had over 8,000 employees on such agreements), and although Finkelstein concluded that Telstra had a fair procedure for selecting staff for redundancy, he was over-ruled by the full Federal Court. How can employers determine their employment policies in the face of such uncertainty about which way judicial decisions will go?

Also attached is my (brief) submission to the Royal Commission Into The Building And Construction Industry. This argues that there has been a failure by both the judicial and police sides of the law to deal with obstruction and intimidation in the industry. One possible solution suggested is to create a body similar to the NSW Building Industry Task Force with the power and responsibility to prosecute both employers and employees who behave unlawfully.

When we had two airlines and (as a public servant) one informed one’s government car driver that one was traveling Ansett rather than the (government-owned) Australian, the usual caustic retort was "you mean the government airline". This referred to the protection provided to Ansett under the two-airline policy operated by the then Liberal-National Government.

In more recent years, Ansett appears to have become "the union line". Reportedly, it operated with an average of 265 employees per plane compared with Qantas’ 160 and Virgin’s 80. Little wonder, then, that the ACTU voted Ansett the No.1 employer in 2000 and that ACTU Secretary Combet has spent so much time blaming everyone else bar the unions for Ansett’s problems. He must have got a shock when Lindsay Fox (reportedly) offered to run Ansett with 6,000 employees instead of its 17,000!

Union claims that 17,000 jobs were at risk were always nonsense, of course. What is clear is that there will be far fewer jobs in whatever line or lines run the routes that replace Ansett. Presumably the hopes of the ACTU et al are to try to retain as many of the restrictive practices as practicable.

Beazley’s extraordinary enthusiasm for restoring Ansett as an on-going business (though not as a government airline, as NZ Labor seems effectively to have done with Air NZ) can only be interpreted as a response to strong ACTU/union pressure. Premier Bracks now seems to be following suit. Beazley’s approach of shoring up a failed company sends further bad signals for industrial relations/industry policies if Labor is elected.

It is remarkable that few if any commentators have recognised that Ansett’s collapse provides another example of the problems caused by our regulated labour market. Of course, management should have done much better but it had to operate in the context of the regulations, the biased tribunals and the consequent difficulties of coping with unions. Those difficulties become even greater in an industry that needs to maximize the utilization of its large capital base ie planes. But it is unlikely that Ansett would have collapsed in a deregulated labour market.

The Bennelong Society’s first conference, Australian Aborigines: From Separatism to Self Respect, is to be held at the Gazebo, Kings Cross, Sydney on 26 —27 October. The Society, recently formed under the chairmanship of former Aboriginal Affairs Minister, Senator John Herron, promotes the well-being of Aboriginal people and their inclusion in the wider Australian community.

The conference will analyse the problems and consequences of separatism, the increase in dependency on social welfare and family violence, problems in education and employment, and facilitating the inclusion of Aborigines in Australian society. Leading speakers will include Dr Stephen Davis, Professor Alan Hayes, Rev Steve Etherington, Dr Stephanie Jarrett and the Hon Gary Johns (currently editing a book on separatism).

The cost of attending the full conference (including dinner on 26 October) will be $180 per head. Those wishing to attend should write to The Secretary, PO Box 424, Collins St West, Victoria, 8007 or contact Vice President, the Hon Peter Howson on 03 9827 2935.

David Love, who was for many years probably Australia’s most respected financial/political journalist and owned and ran the independent journal "Syntec", has authored an important book on the inter-play between Australian politics and finance, Straw Polls, Paper Money. This book covers the last thirty years and actually ranges across various economic and political issues, including interviews with former Prime Ministers Malcolm Fraser, Bob Hawke and Paul Keating. The chapter that includes an extensive interview with me is on the IPE web site (www.ipe.net.au).

Victorians are being subjected to another round of MUA-type sloganeering. But this time Environment Minister, Sheryl Garbutt, has hoisted the white flag and conceded that the Botanic Gardens bats "are here to stay", that is, except for 200 of the thousands expected to accumulate now that Melbourne is warming. The select 200 (sex unknown) will be cruelly caged along the Yarra to encourage others to move to the Ivanhoe part. A special Bats task force has also been established to see if the bats can be enticed there — subject of course to the outcome of intensive consultations with the local council and residents. Will the bats problem eventually require the creation of a new Minister of ……?

Melbourne’s new Archbishop, Peter Watson, broke new ground at the 2001 Synod when he virtually excommunicated liberal economists — "the doctrine of free and deregulated markets, and the arguments for economic rationalism, have become blunt instruments that can discard human beings in a moment", he confidently asserted. The Archbishop, by contrast, believes that (wait for it) "people matter"(!), particularly asylum seekers who are not being treated with compassion.

Those engaged in "short-term wealth creation" (undefined and undefinable) must also mend their ways. That is a danger to our climate and is "shamefully making" Australia the worst per capita emitter of greenhouse gases!

It is rumoured that Watson’s evangelican socialism has even stirred up some fellow clergy. He has certainly demonstrated abysmal ignorance of the benefits from economic rationalism, including for the poor.

Of course, the Archbishop may have quite a bit more to do looking after the souls of the additional unemployed that will emerge if his party is returned at the election with its re-regulation of the labour market and the cruelling of industry from the reduction in greenhouse gas emissions that will flow from its signature of the Kyoto treaty. He may even need a couple of extra bishops in Gippsland once Victoria’s coal (and hence electricity) industries in the Latrobe Valley are emasculated.

Amazingly, Labor’s announcement that it would sign the Treaty brought only a mild rebuke from the Coalition (and the Liberal candidate for McMillan, the main electorate covered by the coal industry that will suffer, is reportedly in favour of signing the Treaty!). Neither the Bracks Government nor (astonishingly) the Victorian Coalition appear to have made even a mild protest against Beazley’s decision.

Some who advocate signing appear to believe that it will not become effective unless the US signs up. But ratification could occur if Russia and Japan now sign — and it is not inconceivable that they could do so simply to demonstrate their good international citizenship in the post—terrorist period. An Australian signing that was followed by those two countries could thus be our economic death warrant — assuming of course that we met our international obligations.

It would be particularly ironic if this occurred in the face of a new book by a Swedish professor of statistics, Jon Lomberg, who has undertaken a detailed examination of greenhouse and other claims by environmentalists. According to The Economist, "again and again, he finds that the pessimists’ claims are falsified not merely by the available scientific evidence but by their own quoted sources". His analysis becomes the more significant given that " Mr Lomborg is a soft-left Greenpeace defector".

TERRORISM — WHAT STILL NEEDS TO BE SAID

(A slightly edited version of this appeared in The Age, 8 Oct)

First, it is important that the community understands that this terrorism is not simply an attack on America’s alleged imperialism but is a threat to civilization and to Australia itself. The measured response by President Bush confirms that his aim is the prevention of future atrocities, not simply retribution.

These terrorists are fanatics who are prepared to pursue a suicide strategy to attack Western institutions and all who believe in individual freedom and democracy. The leaders of the fanatics live in hierarchical, "tribal" societies and (rightly) regard their existing dictatorial power and their different ways of life as under threat from liberalism.

Second, the terrorist threat is not only to our democratic and liberal way of life: it extends to our physical existence. If not brought under control, it will pose a much more serious threat in the future as terrorists acquire greater technical capacities and access to weapons with much greater killing capacities. The existing terrorists are, in one sense, amateurs. But if they get hold of nuclear weapons (as will happen if the present situation is allowed to continue) we are in very serious trouble indeed.

Third, many are worried that America will over-react and kill a lot of innocent civilians in Afghanistan or Iraq. This in turn could lead to some countries turning against the US and its allies. Otherwise friendly Arab countries could themselves feel forced to take an anti-American position.

But, while it is naturally desirable that any military action minimises losses of innocent civilians, it is absolutely vital that the terrorists and their support mechanisms (including training camps and financial assets) be destroyed wherever possible. If those support mechanisms include governments, over time they too must be removed. Innocent civilians trying to escape terrorist activities should be given generous aid.

Although military action will almost certainly mean losses of innocents, a failure to bring terrorism under control would undoubtedly bring more terrorist acts in the rest of the world causing subsequent large losses of innocent civilians there. Those supporting protests against military action must ask themselves whether they are prepared seriously to risk the destruction of our cities and populations. In short, unpleasant as it may seem, a trade off between innocent lives must be faced.

Fourth, while the Islamic religion does not provide a justification for terrorism and the innocents among our more than 200,000 Muslims must be protected, it is an inescapable fact that the terrorists are able to use that religion as a vehicle to attract or force adherents to become extremist supporters, even suiciders. Australia already has some who are actual or potential supporters. Worryingly, those supporters do not necessarily display extremist tendencies when living in Western communities.

A coherent response to this situation is extraordinarily difficult and, as President Bush has indicated, attempts to negotiate or to talk through the issues will not help. But we must certainly demand that leaders in Islamic communities tell their groups that support for the terrorists (and overt anti-Americanism) is contrary to their religion, the interests of the communities themselves - and Australia’s interests.

Serious questions also need to be addressed in regard to the composition of Australia’s immigration program. Is it sensible in circumstances where it is impossible to distinguish between good and bad Muslims to continue allowing immigrants who are adherents to Islam and/or are from Islamic countries?

Fifth, some argue that America needs to publicly display "the evidence" identifying the terrorists before it takes action against them. Such people are also worried about the likely additional constraints that will almost certainly be imposed on individual freedom. But the very serious dangers to the Western world make it vital that we allow our defenders greater latitude in identifying the possible opponents and that we accept more restraints on our freedoms.

Sixth, many say that American support for Israel is the underlying cause of the terrorism and their desire to retrieve the perceived holy land: indeed one object of the terrorists is clearly to eliminate the US presence in the Middle East. But even if Israel were simply left to defend itself — as would be unthinkable — it is highly unlikely that this would eliminate a terrorism whose roots go much deeper.

The bottom line is that we have no practical alternative but to support aggressive American action against terrorism and to recognize that such action may require the killing of innocent civilians — in the interest of our own survival.

Workplace is no place for judicial interference

(The Australian 4 Oct 01)

A recent Federal Court Decision underlines the case for more industrial relations reforms

One of the Howard Government’s significant workplace relations reform is to allow employees and employers to negotiate individual agreements in place of awards. Its political importance is indicated by Labor’s decision that, if elected, it will not only prevent further such agreements but also phase out existing ones. This is part of its reactionary policy of re-regulating employer-employee relations despite the greater employment opportunities offered by individual agreements.

Labor’s policy reflects the close ties retained with a union movement whose power is heavily dependent on a continuation of a highly regulated labour market and sympathetic tribunals. The ACTU’s nomination of Ansett as the employer of 2000 underlies, for example, Mr Beazley’s extraordinarily enthusiastic support for reviving that airline, not to mention his preparedness to "overlook" the cost excesses deriving from Ansett’s union-induced, much higher employment-to- plane ratio than Qantas.

Unions are naturally strongly opposed to individual bargaining policies, such as those adopted by Telstra. In a case that ran for over a year, they persuaded the Federal Court to fine that company a record $75,000 for sending to managers an email guidance regarding its redundancy process that could be interpreted as favouring employees working under individual agreements.

It is ironic that, while threatening to abolish individual agreements, Labor argues they have had only limited appeal. True, the Employment Advocate (also to be abolished by Labor) has approved only 180,000 Australian Workplace Agreements. But this partly reflects the ridiculously complex legislative provisions the Democrats insisted on applying to individual agreements before passing the Coalition’s 1996 legislation.

In fact, a recent survey commissioned by the Employment Advocate shows AWAs benefit both employers and employees. Indeed, the mere possibility that an employer might move to AWAs has helped improve flexibility.

Nonetheless, their validity depends on whether employees are judged by the Advocate to avoid any overall disadvantage as compared with existing award employment conditions. This piece of medieval regulation reflects the mistaken idea that employers generally hold the balance of bargaining power, allegedly requiring protection for employees against possible exploitation.

Other requirements are that employees’ rights to join (or not to join) a union are not infringed and that their positions are not reduced or threatened because they are on awards or certified agreements. This latter provision justified the fine imposed on Telstra after it announced the retrenchment of 10,000 employees last year and dispatched implementation guidance to Telstra managers that included the instruction to support the values of the company’s preferred model of individual employment (Telstra already had 3,300 of its redundancy-prone staff on AWAs and over 5,000 of other staff).

Interestingly, Justice Finkelstein concluded that Telstra has in place a fair procedure for selecting staff for redundancy and that the guidance to managers (it did not go to employees) did not in itself constitute discrimination. But in the flip-flop behaviour typical of tribunals handling industrial matters, the full Federal Court adopted a contrary view despite the withdrawal of the guidance.

The Court was doubtless influenced by the absurd statutory provision putting the onus on employers to prove that their intentions are not discriminatory. But it also reflects the continuing tendency for tribunal decisions to favour the union position.

In itself, the Telstra decision probably adds only marginally to the already existing uncertainty of existing arrangements and the difficulties of entering individual agreements. It is a typical example of union pay-back against the reforming managing director of Telstra’s employees, Rob Cartwright, whose "guidance" reflected the considerable efficiency improvements he made before becoming a senior deputy president of the AIRC itself.

It must also be seen, however, in the context that unions are all too often (wrongly) treated as the underdogs that can be allowed to get away with violence and intimidation, or with flouting statutory provisions.

Recent examples of such treatment include one Federal Court judge’s action in dismissing a union tape-recorded guidance forbidding a company to employ a non-unionist; and the open acknowledgement by the federal secretary of the Construction, Forestry, Mining and Energy Union to last week’s Master Builders Association conference that he believes in compulsory unionism (outlawed under the legislation).

Alarmingly, AIRC President Guidice recently acknowledged that the outcome of particular cases is of little predictive value in similar cases. His accompanying admission that the resultant uncertainties in employment relationships are eroding freedom and impacting adversely on the quality of society points to the urgent need for wholesale reforms.

Labor must abandon its employment-deterring anti-AWAs policy and both parties should accept the minimization of statutory regulation as a major contribution to reducing unemployment. The judiciary’s capacity to intervene in employer-employee relationships must also be constrained. It would help to have an authority charged with ensuring competition in the labour market, as the ACCC does elsewhere, and to convert the AIRC itself into a voluntary mediation body.

The Secretary

Royal Commission into the Building and Construction Industry

5 October 2001

Dear Sir

I refer to your invitation to provide information that may assist the Commission in its inquiries as set out in the advertisement in the Australian Financial Review of 29 September.

I am writing to you as Director of the Institute for Private Enterprise and as the author of various analyses of the Australian labour market. They include a report on The Case for Further Deregulation of the Labour Market, commissioned by the Labour Ministers’ Council and published in November 1998; and an analysis of judicial intervention in employer-employee relations presented to the Samuel Griffith Society on 1 September under the title Judicial Intervention: The Old Province for Law and Order. Copies of these two papers are enclosed.

I am also enclosing a copy of a paper presented by Mr Ross Dalgleish to the HR Nicholls Society (of which I am a Board Member) in 1999 on Union Power in Context: Industrial Relations in the Building Industry. This paper (which is preceded by my introduction) includes an outline of the NSW Building Industry Task Force, of which Mr Dalgleish was appointed Director following his position as Director of Operations in the Gyles Royal Commission into the NSW Building Industry.

While I have no direct working knowledge of conditions in the building and construction industry, my extensive experience in economic analysis, including 28 years in the Commonwealth Treasury, and my analyses of the labour market in Australia, have provided a perspective that may help the Commission’s consideration of the circumstances in that industry and what might be done to improve those circumstances. The following summary of that perspective draws particularly on my Samuel Griffith paper and needs to be read in conjunction with that paper and, where more detail is required, my report for the Labour Ministers Council.

First, at both the legislative and judicial levels employer-employee relations in Australia are regulated in very considerable detail, almost certainly more than in other developed countries. High degrees of regulation of any economic activity tend to be accompanied by regulatory "capture" and varying degrees of monopolistic practices.

Second, although this regulatory system was purportedly established to provide a neutral umpire that would be able to better resolve the kind of major industrial disputes that occurred in the 1890s, it is now well established that it totally failed to meet that particular objective.

Third, the powers provided by legislatures to settle disputes have been interpreted so widely by tribunals and courts that they have enabled those institutions to impose very detailed regulatory requirements on employment relationships. There is a high degree of judicial intervention in those relationships.

Fourth, two important underlying rationales have been used to justify the regulatory requirements imposed:

(a) There is supposedly an imbalance of bargaining power between employers and employees that requires intervention on behalf of employees to offset the perceived failure of the labour market to produce "fair" outcomes. This has led, inter alia, to preferential treatment being given to trade unions in representing the interests of employees;

(b) Tribunals and courts have a capacity to make informed and meaningful judgements on employment contracts and this allows them to make decisions that provide a fair and balanced outcome between the interests of employers and employees.

Each of these rationales is falsely based, however. In particular, they fail to recognize the extent of competition in the labour market, the virtual impossibility of (even) judicial outsiders making meaningful interpretations of employment contracts and the considerable security now provided to those in social need.

Fifth, the attempted application of these rationales has caused adverse economic and social effects. Importantly for this Commission’s inquiries, the misplaced attempt to correct the imagined imbalance in bargaining power has encouraged unions, some more than others, to try to exploit their apparent power over employers and employees (including would be employees) that are non-union members.

Sixth, the adverse social and economic effects arising from the attempted application of the rationales demonstrate the serious problem with what Chief Justice Gleeson has called the subjectivisation approach to judicial decision-making. The Chief Justice has identified many general problems in regard to that approach. It is also particularly worrying that AIRC President Guidice has pointed to serious problems with decision-making in industrial cases, including that it reveals no precedent that would enable one to advise an employer that he could confidently pursue this or that course of action: as Justice Guidice put it, "the outcome of particular cases is of very little predictive value in similar cases".

Seventh, relevant to this approach to employer-employee relations is the marked contrast between legal interventionism in the corporate and industrial relations areas. Those thought to have infringed corporate law are pursued and, if caught and convicted, are fined or jailed and the companies they have operated are made insolvent. Some are even barred from operating a business. But, while this is appropriate, there appears to be very limited comparable action in relation to well-known behaviour by unionists/ employees that is either unlawful or deliberately obstructive, and there are few higher penalties for repeat offenders.

This apparently "soft" approach in dealing with such unlawful/obstructive behaviour seems to reflect a fear that, say, jailing a unionist or sending a union insolvent is socially unacceptable while providing the same treatment to a "greedy capitalist" is not. The apparent reluctance of the police side of the legal arm to pursue complaints against intimidation and coercion by unionists is part of this syndrome.

Finally, it is now well known that intimidation and coercion, and industrial disputation, are extensive in the construction industry and it is presumed that the Commission will have little difficulty in establishing this. It is also well known, by contrast, that the house building industry is relatively free of such behaviour.

The different vulnerabilities of the two industries arises to a considerable degree from the differing extents of exposure of uncompleted capital works to disruption and hence the differing preparedness of employers to pay for peace if they are unable to obtain satisfactory protection from the judicial/legal systems. The apparently "soft" approaches by both the judicial and police sides certainly help explain the extent of criminal behaviour in the construction industry. There is also a natural reluctance in these circumstances by employers to pursue penalties to the maximum degree, if at all.

One way of dealing with this situation would be to establish a body specifically charged with ensuring the operation of a competitive labour market within the construction industry. Such a body could have the power to prosecute both employers and employees 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.

PS Should it be judged of assistance to the Commission, I would be happy to appear before it.