Thanks to President George W Bush’s intervention yesterday, a court injunction has halted the shutdown of the US west coast docks, which threatened cargoes of Australian agricultural exports. Judging from his response to the
10-day-old waterfront dispute, Simon Crean has failed his first real test to truly reform the Labour Party.

After the special ALP rules conference last week-end Simon Crean declared victory after reducing union representation inside Labor forums from 60 to 50 per cent. He then claimed Labor could now move ahead to develop policies under an exciting agenda of "security, opportunity and community for all". But would he be allowed to do a Tony Blair, who recently told the UK Labour Party conference he would further increase private sector involvement in public schools and hospitals despite strong union opposition?

Consider his reaction to the decision by the thuggish Maritime Union of Australia to send union representatives to help picketing US longshoremen on the US west coast who have been preventing the loading and unloading of about 200 ships, including some carrying exports of Australian produce. Prime Minister John Howard called on Crean to condemn the MUA involvement. Yet the Labor leader refused to denounce the rogue union, claiming this wasn’t a strike by workers but a lock out by employers.

Such a reaction confirms that union influence in the ALP is as strong as ever - and as resistant to technological improvements essential to raising living standards. In reality, the lockout would not have happened but for the MUA’s union mates in the US deciding to go slow, resulting in a 60 per cent reduction in productivity. And why did the union go slow? Mainly because employers refused to accept compulsory union membership of those proposed as employees on new technology to (eventually) replace clerical workers earning over $200,000 a year. Even the employers’ offer to guarantee existing clerks work and pay until they retire could not bring the US union around.

This despite both parties agreeing that new technology was needed to improve West Coast ports’ efficiency which, according to the Board of Inquiry, "lags behind ...other ports in the United States and around the world". Sounds a bit like the improvements needed on the Australian waterfront and so strongly resisted by the MUA in 1998 - but which have now led to productivity improvements. Perhaps Crean has forgotten the MUA claim that it was impossible to reach the target of 25 container lifts per hour set by the then-minister for workplace relations, Peter Reith? Well, he should read the Bureau of Transport Economics report for Sept 2002 showing a highest-ever average crane rate of 26.6 and a rate consistently above 25 since the second half of 2000.

The crucial policy issue Mr Crean needs to address is whether his "new" Labor can support any measures to reduce the grossly over-regulated labour market. Labour lawyer, Breen Creighton, correctly told a recent conference of his profession that, despite some curtailment of award-making powers, the Industrial Relations Commission still plays an extremely important role for the true believers in regulation by maintaining a safety net, as a player in dispute resolution, and in the enterprise bargaining process.

Contrast this with the emphasis in the 2002 IMF report on Australia on the need to sustain the structural reform effort "particularly in the area of industrial relations, where the benefits in terms of employment and growth were likely to be significant". It highlights minimum wages as "very high in Australia relative to other advanced economies". And it concludes that "reducing the role of awards in setting minimum wages would enhance employment prospects for low skilled workers".

[Following in square brackets was omitted from published article: Again, Treasury Secretary Ken Henry told the business symposium at the Economists Conference of the considerable potential for Australia to increase work force participation and, thereby, to reduce the large social welfare and health bills that will otherwise force governments to increase taxes substantially as the population ages.] If Crean’s "new" Labor faced off the union movement as Blair’s new Labor has done, Australia might even be able to raise its participation rate to UK levels, adding another 300,000 or so to the labour force.

The Howard Government has tried, on many occasions, to pass deregulatory legislation in that reform graveyard that’s called the Australian senate. Indeed it’s trying (again) to reduce the regulation of dismissals, which is widely regarded both here and overseas as a major inhibitor for employers considering taking on additional workers. Might Crean's new "freedom" allow the passage of at least one piece of legislation that would add to employment?

Of course, what’s really needed is to eliminate the IRC’s legal regulatory powers and convert it into a mediatory body like the UK's Advisory Conciliation and Arbitration Service. Unlike the IRC, that body has established a reputation as an impartial mediator and it encourages both employers and employees to settle disputes internally.

Is it too much to hope, Mr Crean, that new Labor could grasp such a nettle? Don’t hold your breath.