― 475 ―

29. Chapter XXIX. Conciliation and Arbitration.

EVERY time a more than usually severe industrial struggle took place the question was discussed of how to provide a means whereby these troubles should not only be settled, but absolutely prevented. The ignorant partisan of the employers would simply settle it to his satisfaction by urging that workmen should not go on strike—that such a thing was wrong and injurious to society. The self-evident and sensible plan of the parties meeting and coming to terms, or in the event of disagreement submitting it to arbitration, was seldom adopted. The workers' side was always prepared to come to terms in that way, but the employers in most cases objected. Many of the unions provide for such a course in their rules, and in connection with gold mining in Victoria the plan has been successfully carried out for many years. In other industries, however, and especially in the larger undertakings which are in the hands of companies, it was seldom that the employers would agree even to meet the workmen; and after they became organized and adopted the freedom-of-contract craze they declined on principle. No doubt it is natural for both parties, where they feel that they have a good case or are confident of winning the fight, to prefer to hold out rather than allow any outsider to come in and decide for them.

  ― 476 ―

The extensive area and large interests involved in the big maritime struggle brought the question up in a new light. Every effort at conciliation had failed, and it was seen that it was necessary, if a way could be found, that some tribunal should be set up which would prevent such troubles coming upon the community. As a result of the report of the Royal Commission which investigated the causes of the maritime strike in New South Wales, legislation was passed providing for the appointment of a Board of Conciliation for the settlement of industrial disputes. The Board was appointed and remained in existence for four years, but proved a failure. It was clear that if parties who always had the option of meeting, and who could, if they desired, appoint arbitrators of their own choosing, failed to adopt that method, it was not likely that they would voluntarily call in the board set up for such cases. In South Australia a somewhat similar board has done a little, but it has not had much call upon it.

The weak point under any system of the kind lay in the fact that whilst there was a law legalising and enforcing any contract or bargain made between individuals or companies, there was none to enforce any decision or agreement arrived at between a trade union and employers. The idea of compulsory conciliation was the first step in advance that was to compel the parties to meet—or, at any rate, to make the refusing side meet the other in cases where they objected to doing so willingly. How to make the awards compulsory and binding was the difficulty, and yet it was seen that unless they were

  ― 477 ―
so it was but little use enforcing conciliation, as the side which thought it had the best of the fight would stand firm.

The father of the present system of Compulsory Arbitration was the late Hon. Charles Cameron Kingston, for some years Premier of South Australia, and afterwards a member of the Commonwealth Parliament. He introduced a bill in the South Australian Parliament on 12th December, 1890, the preamble of which read: “An Act to encourage the Formation of Industrial Unions and Associations, and to Facilitate the Settlement of Industrial Disputes.” The bill contained 85 clauses. It provided for the granting of a block of land by the Government for the purpose of erecting a hall to be called Conciliation Hall. This was to be in or near the city of Adelaide. The erection could be either partly or wholly paid for by the Government. Unions could register, and would then become subject to the Board of Conciliation and be bound by their own rules and by industrial agreements and awards, and for default were liable to a penalty not exceeding £20. Agreements were binding on all concerned under a penalty, in case of an organization, of £500, and in case of an individual of £50. Provision was made for the appointment of Boards. Private Boards could be appointed, and there were two systems of Public Boards—one local, the other a central or State Board. In all cases the agreements arrived at, whether by the private or the public board, were to be registered and would then have the force of law and could be enforced. Fines not exceeding £20, with a term not exceeding

  ― 478 ―
three months' imprisonment in default, was a provision; and, most important of all, lockout or strike was declared illegal, with penalties of £500 in the case of an organization, and £20 in case of an individual being guilty of either. This brief outline indicates the general lines of the proposed measure.

Public opinion was not yet ripe, however, and so it failed to become. law until 1894, but it bore fruit in New Zealand, where, in 1892, the Hon. W. Pember Reeves, taking Mr. Kingston's measure as his guide, framed and passed a bill which was assented to on 31st August, 1894, and came into force on January 1st, 1895, and which has had the effect of making Maoriland noted as the country without strikes. The measure had been thrice rejected by the Legislative Council, but was sent up a third time and passed. The preamble to Mr. Reeves' Act reads, “An Act to encourage the formation of Industrial Unions and Associations, and to Facilitate the Settlement of Industrial Disputes by Conciliation and Arbitration.” This has since been shortened, and the title now reads, “An Act to Facilitate the Settlement of Industrial Disputes by Conciliation and Arbitration.” The Act provides for two Courts—one for Conciliation, the other for Arbitration. If the award of the Conciliation Board, as it is termed, is not accepted, the parties go to the Arbitration Court, whose award must be accepted, as it is enforceable by law. The Act was amended in October, 1895, and again in October, 1896; November, 1898; in 1901, and 1908. New Zealand, having a democratic

  ― 479 ―
Government, lost no time in remedying defects in the Act brought out in working or making alterations required to meet changing conditions.

There has been no thought in New Zealand of reverting to the old and barbarous method of strikes. It has been asserted by opponents of the measure, who are in all cases employers, that the Act has not yet had a trial. That is because the decisions have been mostly in favor of Labor. “Wait,” they say, “till New Zealand meets depression and wages have to come down, and the Act will fail.” What these croakers overlook is the fact that the colony has taken such steps as will prevent depression, and is finding out how to keep things on the up grade by wise legislation. When Labor secures full control in Australia, enforced poverty will assuredly disappear.

West Australia followed the example of New Zealand in 1900, but amended the Act in 1902 by dropping Conciliation Boards. In 1900 the Hon. B. R. Wise introduced a measure into the Parliament of New South Wales. Mr. Wise, however, made a distinct departure, as he provided at once for Compulsory Arbitration only. He was of opinion that the history of the working of the Act in New Zealand showed that the Conciliation Boards seldom effected a settlement, and that they caused delay and added unnecessarily to cost. He failed to pass the measure through the Upper House in 1900, but he was nominated afterwards to that Chamber, and the measure was eventually passed in 1901. During the interval Judge Backhouse had been sent to New Zealand as Commissioner to make

  ― 480 ―
inquiries, and his report helped to put the measure through. Mr. Wise, instead of closely following the New Zealand Act, drafted his bill in a more condensed form, and it has broken down in a number of points under test cases, where it obviously does not carry out the intention of the Legislature. He foolishly allowed lawyers to appear in the Arbitration Court, and this provision at once made it technical in administration. The Labor Party in Parliament and the trade unions worked hard to get the measure passed, but in the meantime decisions adverse to unionism had been given by the courts of the old world, and these stimulated opposition to the bill.

Owing to the fact that the first decision given under the Act was favorable to Labor a dead set was made against it by employers, and on every point where its jurisdiction could be tested cases were taken to other Courts, and the Act has had no chance to carry out what it was intended for. The Act, in spite of these drawbacks, did much good. It raised wages and shortened hours in many industries. The Court had so much work to do that it was unable to overtake it, which of itself was evidence of there being a mass of felt injustice to be remedied. The admission of the legal gentlemen, whilst it was really a godsend to some of them, has proved costly to the unions, and has in some cases left them short of funds.

The judges in the other courts seemed eager to get opportunities to declare the Act ultra vires on any pretext, and some of them did not hesitate to extend their functions by making speeches from

  ― 481 ―
the bench condemning such legislation. Their purely technical and biased legal minds have no sympathy with the spirit which should underlie the administration of such an Act as Arbitration. It was never intended that there should be any appeal, but the lawyers soon found a way to get to the other courts, and then we had the spectacle of the clear intentions of the Parliament being upset and reversed by judge-made law. For how much of this we can blame the draftsman no one can say, but we can see clearly enough that had there been a Government in power which had the slightest sympathy with Labor the defects in the Act would have been remedied long ere this. The Government and the employers rejoiced to see the Labor organizations tied up. They could not strike under the Act, and they could not get their grievances remedied except in some minor degree and in special cases. The Acting-Judge of the Court put the position very clearly when he made the following remarks:—

“The court,” said his Honor, “had provided that when contracts were within its jurisdiction contract prices should be fixed, so as to give an average competent workman at least the minimum wage prescribed for a day's work. It seemed probable, looking at the recent decision in the Haberfield case, that none of the mine contracts were within the court's jurisdiction, but that they must be decided on the facts. The real protection of men against contracts being used to reduce

  ― 482 ―
their earnings was that it would not suit either the employers to attempt it, or the men to submit to it. It was just the sort of thing about which strikes occurred. Strikes were usually considered to be industrial disputes, and accordingly when the Act on the one hand forbade strikes, and on the other created a tribunal to settle ‘industrial disputes,’ it was thought at first that one was a substitute for the other, and that the domains of each were the same. When the Legislature said ‘Don't strike, but go to the court,’ it was thought that the court was to settle what a strike would have settled. That view was now shown to be superficial. A critical analysis of the wording of the Act had revealed that the incautious use of the words employer and employee in the definition of industrial matters had upset everything. The raising of a dispute was now like self decapitation. In consequence of recent discoveries of the true meaning of the Act access to the court was blocked. The area of its operations was narrowed almost to a vanishing point; its freedom of movement checked with bonds, and all its actions paralysed. When this was the condition of the tribunal which was to end strikes, could anyone wonder that strikes were not ended? The principle of settling industrial troubles by tribunal might be very mischievous and quite impracticable. As to that, his Honor said nothing whatever, but if it were necessary to

  ― 483 ―
try it before condemning it, then he thought it was not condemned by anything that had happened since he had been on the court, for it had not been tried; it had not been possible to try it.”

By an amendment put in by the Legislative Council the Act only remained in force until 1908, hence the more it was made a failure the more the friends of the capitalists rejoiced, as it gave them alleged arguments against re-enactment and amendment. That is one of the reasons why there was such active opposition. The capitalistic Wade Government introduced a new measure to take the place of the old one, and based it upon a Wages Board system. The strong opposition of the Labor Party made them depart from this to some extent, and the measure passed in a mixed form. The strong anti-union feeling of the Government and their following led them to pass a measure which favors the non-unionist more than the unionist, so instead of bringing peace it has led to war, as many unions refused to recognise the Act at all, and it is quite clear it will have to be reconstructed before it will work and prevent the evils of strikes or lock-outs.

Victoria was the first colony to pass a Factory Act. That was in 1873. In 1891 an Act providing for Councils of Conciliation was passed, and it came into force in 1892. It was of no use, however. The Factory Act was amended in 1885, again in 1893, and in 1896 the new principle of provision for wages boards was introduced. The main Act dealt

  ― 484 ―
with hours, sanitation, condition of workshops, etc., and fixed a minimum wage for beginners of 2s. 6d. per week. The wages boards were to fix wages and regulate the number of apprentices, etc. The boards are constituted of an equal number of employers and employees, the full board to appoint its chairman. The number may be from four to ten on each side. The Act limited its term, but was re-enacted with some amendments in 1900 and continued until 1902, when it lapsed on the dissolution of Parliament. At that time there were thirty-eight special boards under the Act, and they had done some very good work. They had raised wages in the furniture trade by 66 per cent., and in seventeen other trades the average increase was 21 per cent. in the seven years. The Act was again passed in 1903, but with important changes. A board could not be appointed unless a resolution had passed both Houses of Parliament. Under the previous Act a resolution of either House would do. The boards had to be constituted of actual employers and employees engaged in the industry, and there was an appeal allowed to a court in the person of a Supreme Court Judge. The wages board system was adopted in South Australia, but it could not be set in force until the regulations had been laid on the table of both Houses and approved. The Legislative Council refused to approve, so the Act was a dead letter.

We have thus in Australia the two systems side by side, and it must be readily admitted that each has been an improvement on old conditions. Employers who realise that something in the way

  ― 485 ―
of means to avoid strikes is forced on them favor the special board system, as it leaves more power in their hands. As the workers' delegates are in their employ they have the power to discharge, and have not scrupled to use it on several occasions. In more than one case the whole of the members of the board lost their positions shortly after an award was made. This is the main drawback, and the principal reason the workers are more in favor of the Compulsory Arbitration Court system.

Of the two I think the latter much the better, provided of course that the Act is so framed that it carries out the work it is intended to perform. The court is composed of one representative from each side elected by delegates of the whole of the unions registered, and the president is a Supreme Court Judge. With a good Act the whole question of its success rests upon the judge. He must be a man with special qualifications for such a position. He must be well acquainted with economic questions and the ideas and aspirations of Labor, as well as have a knowledge of business methods and a wide, general knowledge of the technicalities of the various occupations and enterprises.

With such a president the great advantage over the other system lies in the fact that the court takes cognisance of the relationship of one trade to another. If the cost of production is raised in one industry it often affects the cost in another. One industry makes an article required for production in a second industry, and hence in all awards the court has to allow for that fact. It may be that an award in a new case will necessitate the

  ― 486 ―
revision of an award given in some other industry. This position cannot be taken up under the wages board system, as each trade deals only with its own troubles. Again, there is the power of the court to make a common rule, thus securing fair competition amongst employers, and putting the workman into the position that he cannot get a job by undercutting his fellow in wages, but must get it by his superior skill. With preference to unionists the Act is safeguarded by the members of the union doing the policing themselves and securing due enforcement, and preventing the unscrupulous employer dodging the law to his own advantage and to the disadvantage alike of his competitor and his employees.

The maker of anything to sell would secure the market by the high quality of his goods rather than by the lowness of the selling price. The sweater disappears under the system, Labor becomes more fully organized, and, at the same time, strikes do not occur to upset industry. The investor knows exactly what labor will cost him, and, further, he is assured of settled conditions both as to the labor he may engage, and also as to the fact that there will be no falling off in the purchasing power of the masses, which is inevitable under the old regime of non-interference with strikes and lock-outs. The condition of industry to-day is constantly changing owing to the extension of machinery and applied science, hence some power which possesses continuity must be always ready to revise awards and adjust them to the new and altered

  ― 487 ―
circumstances. Here again, the court is superior to the wages boards.

We have gone beyond the period when the objection to interference with the management and control of any person's business is worth discussion. In a score of ways it has been found wise to interfere with private enterprise, because failure to do so brought other evils of a far worse kind. The more or less powerful organization of each side renders the risk of industrial war too great, and the people see that there is no justification for permitting two parties to upset the whole well-being of society and cause suffering to the innocent when there is a better way out. That there are difficulties is inevitable. The competitive system is in itself bad, and it cannot be expected that any system dovetailed into it will work smoothly or with satisfaction. It is a question of the lesser of two evils, and the better way is certainly that of industrial peace, with the guarantee that, whilst the court does nothing to secure to the worker his full share of production, it at any rate stops the sweater and provides a living wage, leaving the future in the hands of the masses themselves to bring about such alterations as will abolish the foolish system under which they now live and toil.

The trade unionist did not advocate Compulsory Arbitration without realising that he, too, was surrendering a very large and important portion of long-fought-for liberty. The strike had proved to be a powerful weapon, and it was long ere he was prepared to hand over his destinies to a Supreme Court Judge who, he knew, had come from

  ― 488 ―
a different stock, and who had never shown any sympathy with him or his class. In the person of the late Chief Justice Higinbotham and one or two others we have had examples of men in whom the masses would willingly place their welfare, but such men are rare in any country. West Australia had experience of a wrong choice being made in appointing the president of the Arbitration Court. It speaks volumes for the loyalty and long-suffering patience of the Australian unionists that they have waited so long for an amendment and administration of the law on the lines found to have been so beneficial in New Zealand.

The capitalists are slow to learn that they can no longer rule everything. The future will have more of the collective bargaining, and they will be forced to obey the law in a way they have never yet done. Industries which cannot pay a decent wage must close up, as the president of the New South Wales Court (Judge Cohen) frankly declared in a case where employees were worked from 90 to 100 hours per week for a wage of ten shillings and poor food. The employer had pleaded that if he paid more he would have to close up and go out of business. The fight against the Act was mainly to render it ineffective and so dishearten the unions that they may weaken in strength. The Act led to a very large increase in the membership of existing unions as well as the formation of new ones.

In twenty out of twenty-two cases in New South Wales preference to unionists had been conceded voluntarily by employers. The Employers' Union

  ― 489 ―
then took a hand and opposed the granting of preference, not because it is any disadvantage to employers—indeed it is often a good thing for them —but because they are afraid of the political power of the unions. This came out when the Arbitration Bill was before the Commonwealth Parliament. They even succeeded in getting a clause inserted in that bill limiting the power of the court to grant preference—in fact, prohibiting it if the union had political objects. The Federal Act is limited by the Constitution to disputes extending beyond the boundary of any one State. The Act is based on similar lines to that of New South Wales, but provides power for the president to try conciliation first and seek a settlement that way before letting the case go to the Court. The president is a Judge of the High Court of Australia. Each party can appoint an assessor to sit with the judge, but they are not in the position of the members of the late Court in New South Wales. The Court has done good work already. Constitutional limitations in a legal sense leave us uncertain as to what are its full powers.

The arbitration method has come to stay in Australia, and it is only a matter of a short time when Labor will become politically strong enough to make the Act what it was intended to be, and thus provide a peaceful means of avoiding strife, leaving the Labor unions free to devote their time, their money, and their energies to securing permanent and lasting reform by means of political action. Employees in the great pastoral industry have been working for the past two years under an

  ― 490 ―
award of the court, and the relations between employers and employees are excellent. I have elsewhere called attention to the principle laid down regarding wages, and here will add another illustration.

In the Broken Hill case decided in 1909 by the Federal Arbitration Court, Justice Higgins, in granting the demands made by the miners, made the following observations:—

“Now, the first condition in the settlement of this industrial dispute as to wages is that at the very least a living wage should be secured to the employees. I cannot conceive of any such industrial dispute as this being settled effectively which fails to secure to the laborer enough wherewith to renew his strength, and to maintain his home from day to day. He will dispute—he must dispute—until he gets this minimum even as a man immersed can never rest until he gets his head above water. Nor do I see any reason yet for modifying my view of a living wage as expressed in the harvester case. In finding a living wage I look, therefore, to find what money is necessary to satisfy the moral needs of the average employee regarded as a human being in a civilised community. In the present case it is reassuring to find that counsel for the company, the general manager, and even the chairman of directors, notwithstanding his strong prepossessions in favor of the inexorable laws of demand and supply, all assented to the doctrine that no man ought to be asked to work for less than a living wage. The result of this admission is that I may proceed to consider the prices of necessary

  ― 491 ―
commodities at Broken Hill and at Port Pirie, in order to ascertain what is the least sum that will enable an unskilled laborer to live in the sense to which I have referred. For Broken Hill the company offered 7s. 6d. per day, and the union asked 8s. 7½d. per day, the wages paid by the company and other companies in 1907-8 and still paid by the nine companies. For Port Pirie the company offered 7s. 2d. per day, while the union asked for 8s. 3d. per day, the wages of 1907–8.…The main struggle of the case has been with regard to a living wage, and with regard to the financial position of the company. No evidence has been adduced to show that any of the men who have been receiving more than unskilled laborers' wage are overpaid.

“There is no evidence, for instance, that if 8s. 7½d. is a proper wage for a trucker, the wage of 9s. 1d. is too great for a tool man, nor the wage of 10s. too great for a miner (on wages). In this case, during the time an unskilled laborer got 7s. 6d. the miner (on wages) got 9s. When the unskilled laborer got 8s. 7½d. the miner (on wages) got 10s. I think that, having fixed the wage for the unskilled laborer at 8s. 7½d., I may reasonably leave the minimum wage of the miner (on wages) at 10s., and similarly, with the other skilled employees.… The proprietors, in an inquiry such as this is, would seem to ascertain first the wage to be paid to the unskilled laborer, then the proper wages to be paid to those who have extra skill, on the assumption that the employers can pay whatever wages are proper, and then to hear any evidence and consider any arguments adduced, to show that the employer

  ― 492 ―
ought not to be asked to pay such wages. First of all, is an employer who is poor to be ordered to pay as high wages as an employer who is rich? Now, without laying down a rule absolute and unconditional, under all the circumstances I strongly hold the view that, unless the circumstances are very exceptional, the needy employer should, under an award, pay at the same rate as his richer rival. It would not otherwise be possible to prevent sweating of employees, the growth of parasitic enterprises, and the spirit of industrial unrest—unrest which it is the function of this Court to allay. If a man cannot maintain his enterprise without cutting down wages which are proper to be paid to his employees —at all events the wages which are essential to their living—it would be better he should abandon the enterprise. This is the view independently adopted by Mr. Justice Gordon in Adelaide, and by Mr. Justice Burnside in West Australia. It is not the function of this Court to foster slackness in any industry, and if ‘A,’ by his alertness and enterprise, and by his use of the best and most recent appliances, can make his undertaking pay on the basis of giving proper wages to his workmen, it would be most unjust to allow ‘B,’ his lazy and thriftless rival, to pay his workmen lower wages. In short, the remuneration of employees cannot be allowed to depend on the profits actually made by his individual employer. This proposition does not mean that the possible profits or returns of an industry as a whole are never to be taken into account in settling wages. For instance, the fact that an industry is novel and that those who

  ― 493 ―
undertake it have at first to move very warily and economically, might be favorably considered so long as every employee gets a living wage. I can well understand that workmen of skill might consent to work in such a case for less than their proper wages, not only to get present employment, but in order to assist an enterprise which will afford them, and their comrades, more opportunities for employment hereafter. For this purpose it is advisable to make the demarcation as clear and as definite as possible between that part of the wages which is for mere living, and that of the wages which is due to skill, or to monopoly, or to other considerations. Unless great multitudes of people are to be irretrievably injured in themselves and in their families, unless society is to be perpetually in industrial unrest, it is necessary to keep this living wage as a thing sacrosanct beyond the reach of bargaining; but when a skilled worker has once secured a living wage he has attained nearly to a fair contractual level with the employer, and, with caution, bargaining may be allowed to operate.”