John Howard’s brave new industrial-relations world will create a brave new constitutional world if he’s successful.
But to be successful, it will require an enormous extension of Commonwealth power. This is ironic, if not hypocritical, coming from the Coalition which has championed states’ rights for so long.
Much of the Howard plan is clearly within Commonwealth power; but much of it breaks new ground which could easily be challenged in the High Court.
First to some history. Before federation there were two schools of thought about industrial relations. One was that the Commonwealth should deal with the lot. The other was that the states should deal with it. The result was a compromise that has caused an incessant thwarting of the political will of both sides of politics. Attempts under various guises over the past 90 years to extend or contract the power have ended in failure.
The compromise was that the Constitution gave the Commonwealth 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”.
Now, that is not a general power over industrial relations. If it were, Howard would have no difficulty. Because the power is limited, the Commonwealth over the years has contrived an industrial-relations system that is within power. The power has two restricting elements. It is restricted to üconciliation and arbitration and to preventing interstate disputes.
So the Commonwealth could do nothing about a dispute restricted to an sole employer and his gardener, for example. The way round it was to permit the growth of craft-based or industry-based unions. These would have members in different states, thereby ensuring that every potential dispute with that union would have an interstate element.
But John Howard wants to get rid of the craft-based unions and replace them with enterprise ones. However, many enterprises are confined to one state. Moreover, his system of common-law workplace contracts removes a large part of the element of “”conciliation and arbitration” from the industrial-relations arena. The power is for conciliation and arbitration (presumably by a court or tribunal) to prevent disputes not for the creation of contracts to prevent disputes.
Under the existing system of nation-wide craft-based unions, the Industrial Relations Commission could set working conditions throughout the nation, at least among employers with workforces large enough to attract union attention.
The High Court has said that this regime indicates a Commonwealth intention to “”cover the field”. This means that state legislation conflicting with the Commonwealth regime is inoperative.
This could spell legal trouble for Howard. Upon election, he clearly has the power to strip away compulsory unionism, craft-based awards and the powers and perks of the commission, the unions and employer organisations. What the Commonwealth giveth, the Commonwealth can taketh away.
However, once the old regime is stripped down, it leaves room for the states to re-enter the fray, and with perhaps more restrictions than imagined under the pre-existing Commonwealth regime.
Constitutionally, the Commonwealth have never been able to apply rulings of the commission on pay and conditions generally as a “”common rule”. They can only apply to members of organisations who are parties to an award (unions and employers). The award only applies to the parties. The state commissions, however, have power to make common rules which apply to everyone employed in an industry whether parties to an award or not. The only thing holding back the state common rules applying more widely is the existing federal structure. Once it goes, the state common rules would apply, on their face, to many more employees.
Howard’s policy document says no-one will be brought within a state common rule on the lapse of a federal award. However, it is difficult to see how he can get away with this constitutionally, unless he has some very artful lawyers drafting his legislation.
That is true, also, of his minimum conditions in workplace agreements. Howard says that minimum conditions must apply to all workplace agreements and that they must contain dispute-resolving clauses and various other things. However, the High Court has struck down this approach as beyond the Commonwealth’s industrial-relations power. It has said the commission cannot apply common rules to employees and employers who are not members or registered organisations. If a commission cannot do it, neither can the Parliament by direct legislation.
Mr Howard’s artful lawyers will have to look at other heads of power to achieve his aim, notably the corporations power and perhaps the territories power. (Neither the ACT nor the Northern Territory have been granted power over industrial relations).
The law could say “”a corporation shall” or “”a corporation shall not” do certain things with respect to workplace agreements. The High Court would probably uphold the general themes of Howard’s scheme that way. However, that would only cover people employed by companies. But as Howard himself admits, most employment is done by small business much of which is done as sole trading or partnership, not as a company.
Constitutional lawyers will be looking with some fascination at the way Howard proposes to legislate to cover a common-law contract between a sole trader or partnership which does business in only one state and a single employee.
Can he use the taxation power, perhaps, in the way it is used to force employers to provide superannuation and to spend on training? The law might apply a higher rate of tax to non-complying employers. The High Court is yet to decide on whether the tax power will stretch this far.
Can he coerce sole traders and partnerships by denying them business with the Commonwealth Government unless they comply?
Leaving the economic and social merits of the Howard scheme, ninety years of constitutional legal history is against him.
He can strip down the present system and provide all sorts of nasties for those who want to remain in it. He can set up an free employee advocate to pursue common-law claims for employees in state and federal courts because the Commonwealth can spend money on whatever it likes. But where he comes unstuck is his attempt to write minimum terms into employment contracts between sole traders or partnerships and their employees.
As a practical matter, however, he will get a lot of breathing space. This is because if there is to be a constitutional challenge, of its nature, it must come from a sole trader or partnership where Howard is on his weakest constitutional ground. Of their nature, sole traders and partnerships are small and do not have the money to launch High Court actions, with perhaps one exception _ legal partnerships.
John Howard has never been an admirer of the administrative capacities of the states. He clearly has a mission to set right industrial relations in Australia and would not like to see a states’ rights argument get in the way. Politically, he has to put in the minimum-conditions parts of the policy. Legally it may have difficulties, but politically it is astute because if the states or employers challenge them, it will be egg on their face rather than John Howard’s.
In the meantime, his system may have two beneficial side effects. Lots of people with small claims and free legal advice might start forcing the state courts to get more efficient. Secondly, the appalling state of general employment law might be rectified. Employees have virtually no rights under common law. Little attention has been paid to this because unions have used other tactics to enforce rights. That has resulted in two extremes: the over-protected unionist and the unprotected others. Perhaps Howard’s scheme can remove that disparity.