The Rulers and Guardians of Industrial Relations

During the first week of the 2010 election campaign the leader of the Coalition, Tony Abbott, was reduced to incoherence as he tried to bury John Howard’s WorkChoices but at the same time preserve some credibility as a reformer in the critical policy area of labour market regulation. The labour market accounts for approximately 70 per cent of the national economy, so the regulatory arrangements which govern its operation are critical to overall economic success. Such incoherence at the highest political level is an outward and all too visible sign of inner intellectual confusion, and if we are to make progress politically, we need to understand how we got to our present pitiable state.

This story began in 1897 at the Constitutional Convention when the Victorian Henry Bournes Higgins, and Charles Kingston of South Australia, supported at the eleventh hour by John Forrest of Western Australia, persuaded the Convention (22 votes to 17) to adopt Section 57:35, granting power to the Commonwealth to legislate for “Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State”.

In November 2006, the High Court upheld John Howard’s WorkChoices Act, continuing that Court’s long-standing preference for extending Commonwealth power at the expense of the states’ constitutional rights. Those of us who were strongly opposed to the extension of Commonwealth power which was at the heart of WorkChoices, and who foresaw, and predicted, that no good would come of it, have been completely vindicated by events since November 2006.

Given the embarrassment which WorkChoices is now generating for the Coalition it is necessary to summarise the implications of the Howard policy and the WorkChoices legislation which was passed by the parliament.

First, John Howard, a Liberal Prime Minister, the leader of a political party with a sixty-year-old structure and platform which was federalist at its very core, passed a bill which wholly rejected the federalist principle that the states were better able than the Commonwealth to organise whatever labour market regulation public opinion deemed to be necessary. Uniformity was the catchcry, and the argument that different states had different arrangements for their own reasons was regarded as obscurantist if not downright reactionary.

Second, Howard established a squad of Canberra-based hit-men, well-paid Commonwealth bureaucrats, whose primary purpose in life was persecuting those small businesses, and their employees, that had inevitably run foul of the new regulatory structure. It is unusual to see a political leader, particularly one who prided himself on keeping in touch with his constituents, establish an institution whose primary purpose was to persecute the people who are the very core of the Liberal Party, the small business sector.

So we now have Julia Gillard’s Fair Work Australia, the very ugly daughter of an ugly father, WorkChoices, and an ugly mother, the High Court in the judgment of the same name. A few months ago, we had the Deputy Prime Minister, as Julia Gillard then was, getting involved in issues concerning the unlawfulness of employing teenagers for one and a half hours after school, when the new, uniform, award stipulated three hours as a minimum.

In reading the commentary on these and related issues I am repeatedly astonished at the naivety of so many of the players who are at the heart of the “system”; and at the “lunatics in charge of the asylum” impression which is created every time they make a statement about whatever industrial relations scandal hits the media.

For example, Heather Ridout, CEO of the Australian Industry Group, said in her pre-budget submission that business is facing “huge challenges” in understanding and implementing the government’s new Fair Work industrial relations system.

Charlie Duynhoven, the proprietor of a bike shop at Terang in western Victoria, who fell foul of the Fairwork Ombudsman for employing teenagers for an hour and a half after school, said he had always endeavoured to uphold the employment laws. The Australian reported:

I always thought we were doing the right thing; there was a bit of leniency in the old award,” he said. Australian Chamber of Commerce & Industry chief executive Peter Anderson said the three-hour minimum engagement rule was an understandable principle. But he said the case highlighted the problem with inflexible award rules.

A spokesman for Workplace Relations Minister Julia Gillard said the new system was fairer. “The government does not think it’s unreasonable to have a set of minimum standards for employees, including the minimum number of hours they can work across Australia, as has been brought in under the simplified modern system.

It is worth while standing back and thinking about the implications of the Deputy Prime Minister spending time and energy defending the government’s policy of outlawing students working for an hour and a half after school at a bike shop in a small country town in Victoria.

How did we get to this situation?

After the 1897 Convention, Alfred Deakin, Billy Hughes and Henry Bournes Higgins (widely regarded as the father of Australian arbitration) joined forces in the new Commonwealth parliament to establish a coalition of protectionists, trade unionists and aspiring labour market regulators, which ultimately triumphed in 1904 with the Commonwealth Conciliation and Arbitration Act.

In February 1870, the eighteen-year-old Henry Bournes Higgins had arrived at Station Pier, Port Melbourne, with his mother and siblings. His father, a Methodist minister, had stayed behind in Ireland to serve out his contracted appointment. Henry suffered from respiratory diseases and it was believed that he would benefit from the warmer climate in Australia. And so he did. He got a job immediately, teaching in a private school in Fitzroy. (This was before the Victorian 1872 Education Act.) He won scholarships to the University of Melbourne and studied Latin, Greek and Roman History. His mother urged him to study law; he graduated in 1875, and was called to the bar in 1876. During this process he lost his faith in Christianity but concealed his loss from his family by writing about it in code. But nature abhors a vacuum and he was taken up by the reigning philosophical fashion of the time, a doctrine (for want of a better word) known as “Idealism”.

James Franklin published a great book on the history of philosophy in Australia (Corrupting the Youth) in 2003. His comments on Higgins are highly relevant to this debate, and in this context he cites David Stove, a pre-eminent figure in Australian philosophy during the second half of the twentieth century:

Nineteenth-century idealism, accordingly, provided an important holding-station or decompression chamber for that century’s vast flood of intellectual refugees from Christianity; or at any rate, for the more philosophically inclined among them. The situation of these people was truly pitiful. The burden of their biblical embarrassments had become intolerable … The problem was how to part with the absurdities of Christianity, while keeping cosmic consolation: no one dreamt of parting with the latter as well (it should hardly be necessary to say), or at any rate no philosopher did.

Higgins continued to conceal his agnosticism, at least from the public, but in secret he became an Idealist, and before long set out on a political career to implement Idealist nostrums on a hapless Australia. It is very difficult, today, to untangle what it was that Idealists actually believed in. But they clearly believed in progress and particularly in the capacity of wise leaders to accelerate progress through benevolent legislation.

It was the master political fixer of the times, Alfred Deakin, who organised the coalition of Victorian protectionists and Sydney Labor politicians under Billy Hughes, which finally, after two failed attempts, succeeded in passing the Conciliation and Arbitration Act through the Commonwealth parliament, on December 15, 1904. This Act, together with the Tariff Act of 1902, ensured that Australia would suffer continuing economic decline from the number one place in the world on per capita incomes which it had enjoyed at the time of Federation.

When the first Commonwealth parliament was elected, Higgins won the seat of North Melbourne, and in 1904 (although not a member of the ALP) served as Attorney-General in the first Labor government under J.C. Watson. He pushed the Conciliation and Arbitration Act through, and was appointed by the Deakin government in 1906 to the High Court, and twelve months later, to the presidency of the Conciliation and Arbitration Court as well. He continued in that role until 1921.

It is relevant at this point to relate the exchange which led to Higgins citing H.R. Nicholls, the octogenarian editor of the Hobart Mercury, for contempt of court in 1911. The incident that sparked Nicholls’s editorial was an exchange between H.E. Starke QC (later Mr Justice Starke of the High Court) and President Mr Justice Higgins, in an Engine Drivers’ and Firemen’s Award case in the Arbitration Court. The exchange went as follows:

Mr Starke: Of all the labour organizations I have ever heard of, Broken Hill and that field seem to be the strongest and about the most tyrannous I have ever heard of. They not only do not do their work but they break their agreements with impunity and they are encouraged by their Unions and by the Government of this country.

Higgins, J: I will not allow you to speak in that way of the Government of this country. You have no right to speak in that way and you will understand I will not listen to it.

Mr Starke: I am entitled to put forward any view for my clients.

Higgins, J: You are not entitled to speak disrespectfully of those above you.

Mr Starke: I am not speaking disrespectfully.

Higgins, J: If that is not disrespectful I do not know what is.

Mr Starke: I spoke of the tyranny of these Unions at Broken Hill.

Higgins, J: I will not allow you to speak in that form of a Government of the country and those above us. If you do not comply with my rules you will leave the Court.

Nicholls’s article was headed “A Modest Judge” and began thus:

Mr Justice Higgins is, we believe, what is called a political Judge, that is, he was appointed because he had well served a political party. He, moreover, seems to know his position, and does not mean to allow any reflections on those to whom he may be said to be indebted for his judgeship.

The article went on to discuss whether, by the words “those above us”, the judge meant the government, or the Broken Hill unions, or the Labor organisation, or the caucus. The article resulted in Nicholls being charged with contempt. The case was heard by three of Higgins’s brother judges of the High Court, Sir Samuel Griffith CJ and Justices Barton and O’Connor, who unanimously dismissed the charge.

Higgins’s biographer, John Rickard, tells us Nicholls became a hero in his native town. Given the mischief and misery the Arbitration Commission has visited upon Tasmania since that date, the enthusiasm of the citizens of Hobart for their editor was well founded.

This exchange between Higgins and Starke gives us a clue to as to where Higgins’s ideas came from. Keynes’s great line about scribblers is relevant here:

the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.

The madman in authority here is of course H.B. Higgins. But the academic scribbler of a few years back is undoubtedly Plato. Higgins would have studied Plato and read The Republic at the University of Melbourne in the 1870s. 

There are many books on the connection between Christianity and Western civilisation, but we can summarise the story by saying that in the days of the Roman empire, at the beginning of the Christian era, the culture wars were between the Greeks and the Jews. Greek was the language of intellectual discourse. But the Greek that was employed then is known to us as Koine Greek, to distinguish it from the Greek of Thucydides, Plato and the great dramatists of Periclean Athens. Koine Greek was the first common supra-regional dialect in Greece and came to serve as a lingua franca for the eastern Mediterranean and Near East throughout the Roman period. It was also the original language of the New Testament of the Christian Bible and of the Septuagint (the Greek translation of the Jewish Scriptures). Koine is the main ancestor of modern Greek.

In The Peloponnesian War Donald Kagan tells us:

For almost thirty years at the end of the 5th century BC (433–404) the Athenian Empire fought the Spartan Alliance in a terrible war that changed the Greek world and its civilisation forever. Only half a century before its outbreak the united Greeks, led by Sparta and Athens, had fought off an assault by the mighty Persian Empire, preserving their independence by driving Persia’s armies and navies out of Europe and recovering the Greek cities on the coast of Asia Minor from its grasp.

This astonishing victory opened a proud era of growth, prosperity and confidence in Greece. The Athenians, especially, flourished, increasing in population and establishing an empire that brought them wealth and glory …

Their young democracy came to maturity, bringing political participation, opportunity, and political power even to the lowest class of citizens, and their novel constitution went on to take root in other Greek cities.

This was the thirty year period when Pericles was the leading politician in Athens, and under his leadership the Parthenon and other buildings were built on the Acropolis; the great dramatists, Aeschylus, Sophocles, Euripides, and Aristophanes were writing for the Athenian audience; Socrates and Protagoras were asking the questions which form the basis of philosophy today; and Herodotus, who is regarded as the father of historiography, wrote an account of the Persian-Greco Wars.           

The Peloponnesian War sprang out of rivalry between Sparta and Athens. But it was also fuelled by ideological passions which gave it the character of a civil war as well as a war between rival city-states. Athens had become a democracy in which all major decisions were made by huge assemblies of the citizens. Sparta remained a tightly controlled oligarchy, a city-state in which those Spartans who were citizens were entirely engaged in military life and preparations for war, and where the helot class, seven times as numerous as the elite, did all the work, including growing all the food. The possibility of a helot revolt was always a problem for Sparta, and much of their military preparations were designed to keep the helots in subjugation. The example of Athenian democracy, and the freedom enjoyed by those who lived under Athenian rule, was therefore a continuing threat to the political stability of Sparta.

The Peloponnesian War was a conflict of unprecedented brutality, breaking through the thin line that separates civilisation from savagery. The atrocities worsened as the war dragged on. And the loss of life and property was immense.

The war ended in 404 BC when Sparta, led by Lysander, defeated Athens in the naval engagement at Aegospotami in the Dardanelles, where the Athenian navy was all but destroyed. Athens had itself contributed to this result in that it had not long before executed six of its most experienced and successful naval commanders for failing to rescue sailors clinging to wreckage and to retrieve the bodies of those who had drowned after the great Athenian victory at the battle of Arginusae.

Plato was born into a distinguished Athenian family in about 428 BC, and was thus in his mid-twenties when Athens was overwhelmed by the Spartans. Democracy in Athens was not universally accepted or admired. Plato’s family had been political and military leaders for several generations, and democracy was a recent development which sorely tried the patriotism of many distinguished Athenian families, including that of Plato.

Socrates had fought as a hoplite in the Athenian army and had tried to prevent the execution of the six naval commanders but was overwhelmed by the passion of the crowd, which was seeking vengeance. He taught Plato as a teenager and Plato used him as an example of the kind of man who should rule the city. Plato makes it clear, especially in his Apology, that he was one of Socrates’s devoted young followers. However, Athenian democracy proved, finally, to be no match for the Spartan oligarchy and highly militaristic culture of that city.

So when Plato wrote his Republic he was writing as the heir to a political tradition in Athens which had been overthrown and rejected by the Athenian Democrats. Plato postulated a world of ideal Forms, which he admitted were impossible to know, but which enabled him to theorise about an ideal state in which justice was the primary goal. Plato’s justice is very different from our understanding of justice:

Our aim in founding the state was not the disproportional happiness of any one class, but the greatest happiness of the whole; we thought that in a state which is ordered with a view to the good of the whole we should be most likely to find justice.

Plato’s Republic is a highly regulated one, presided over by academics created by means of state education, who maintain three non-hereditary classes as required: the tradesmen (including merchants and professionals), the guardians (militia and police) and the philosophers (legislators, administrators and the philosopher-king). Class is assigned at the end of education, when the state sets individuals up in their occupation. Plato expects class to be hereditary but he allows for mobility according to natural ability. The criteria for selection by the academics are the ability to perceive Platonic Forms (the analog of English “intelligence”) and martial spirit as well as predisposition or aptitude.

The rulers and the guardians were to own no property, have no wives or families, were to live in dormitories, and were to mate with selected partners at designated festivals. Babies who were born with deformities of any kind were immediately exposed to die, the number of births was controlled in order to maintain the right population, abortion was commonplace and applied to any pregnancies that were not the result of approved sexual congress, homosexuality was encouraged for the same reasons. All children were regarded as the children of everyone: “The family is therefore to be abolished and the children—whatever their parentage—to be raised by the appointed mentors of the state.”

Many other principles of the ideal state are expressed: the activities of the populace are to be confined to their occupation and only one occupation is allowed (only the philosophers may be generalists). The citizens must not meddle in affairs that are not their business, such as legislation and administration. Wealth is to be allowed to the tradesmen only. The marketplace must not be regulated but left up to them. The guardians and the philosophers are not to own fine homes or cash reserves but receive a small pension from the state.

Perhaps the most important principle is that just as the Good must be supreme so must its image, the State, take precedence over individuals in everything. For example, guardians “will have to be watched at every age in order that we may see whether they preserve their resolution and never, under the influence either of force or enchantment, forget or cast off their sense of duty to the state”.

As Karl Popper has pointed out in The Open Society and its Enemies, Plato’s Republic has become the blueprint for every collectivist lunatic in the history of the West. The Marxists, the Leninists, Hitler’s National Socialists, were all devoted to the state as the instrument for realising their fantasies.

Now we reach the crunch point in this debate about labour markets. The West is built on Christianity, not on Athenian philosophy. When Jesus responded to Pilate’s question, “Art thou the King of the Jews?” he said, “My kingdom is not of this world: if my kingdom were of this world, then would my servants fight, that I should not be delivered to the Jews: but now is my kingdom not from hence” (John 18). With those words Jesus changed the game forever.

The English common law, which we inherited at the time of colonisation, is permeated with Christian ideas. The great parables of the New Testament are stories about people who own property and who appoint managers who fail in their responsibilities; who contract with labourers for a day’s pay; who have children who rebel and go off to a far country and consume their inheritance in riotous living; who look anxiously for lost coins and lost sheep; who sow seed on good ground and on stony ground. This is as far removed from Plato’s Republic as it is possible to be.

The fundamental point about the vision Higgins outlined in his book A New Province for Law and Order, modelled as it is on the Spartan regime which was Plato’s model for his Republic, is that it is totally incompatible with the common law and the legal traditions we have inherited. This incompatibility was manifest in the High Court decision in Kirk v WorkCover, and magnificently expressed in Dyson Heydon’s judgment.                    

In 2004 a book was published entitled The New Province for Law and Order: 100 Years of Australian Conciliation and Arbitration. It was edited by Stuart Macintyre and Joe Isaac. Macintyre was a member of the Communist Party and wrote a history of it. As far as I am aware he has never expressed any regrets about this period in his life. Joe Isaac was Deputy President of the Arbitration Commission when he determined a case involving Jim and Marlene Gibbins, stock carriers who transported live sheep to Portland for export to the Middle East. They were blacklisted by the Australasian Meat Industries Employees Union and meat exporters Borthwicks. Isaac legitimised this agreement with an order from the Commission.

The Gibbinses, with the support of the Victorian Farmers Federation, were able to go to the Federal Court to seek redress, and Justice Reg Smithers not only found for them, but delivered a magisterial rebuke to Deputy President Joe Isaac (although he was not mentioned by name). Here is another clear example of the incompatibility of Higgins’s “new province for law and order” with the common law.

We have a major political and economic problem. Both sides of politics, a huge vested interest, particularly the trade unions, either believe in or obtain marvellous sinecures from this low-grade Platonic attempt at playing Guardian over people who earn their livelihood as employees.

The Liberal Party is now imprisoned by John Howard’s cancerous legacy of WorkChoices. The ALP is basically owned by the trade unions but finds this relationship uncomfortable when in government. That is why Lindsay Fox holds dinners for the Labor leadership at $10,000 per seat, and worse, why both political parties are keen to get the taxpayer to fund their election campaigns. (Which they already do to the tune of about $1 per vote.)

Given that we still have the states in place, both constitutionally and in the loyalties of the citizens, then the obvious way forward is to return all labour market regulation to the states and let them try to work out some sort of accommodation between these two incompatibles, as they used to do.

For the Liberal Party this would mean a return to the basic values of federalism on which the Liberal Party was founded and on which Liberal prime ministers from John Gorton to John Howard have trampled. Unfortunately Tony Abbott is as centralist in his thinking as John Howard. How many disasters does Canberra have to impose on Australian society before the light dawns?

Ray Evans was president of the H.R. Nicholls Society from 1989 to 2010. This article is based on a paper given to the thirtieth conference of the society in April.