Arbitration extinguished: the impact of the Work Choices legislation on the Australian Industrial Relations Commission *.

Abstract

Major limits on the Australian Industrial Relations Commission's role and powers have been introduced by the Workplace Relations Amendment (Work Choices) Act 2005. This new legislation continues the process of 'sidelining' the Commission that was commenced under the Coalition Government's 1996 reform legislation. Under the new laws, the federal industrial tribunal will become primarily a voluntary dispute resolution provider, although it will now have to compete with private providers of dispute settlement services. Even in this main remaining area of jurisdiction, the Commission's capacity to play an influential role will be significantly constrained--as shown by the new provisions for dispute resolution under workplace agreements and the resolution of bargaining disputes, and the limited basis that now exists for implying 'good faith bargaining' obligations. Despite these profound changes, the Commission may yet survive, as the industrial relations parties are likely to opt for it as their preferred provider of dispute settlement services; and if members of the Commission are able to find innovative ways to overcome the strictures imposed by the new legislation.

Introduction

This article will explore the likely impact of the Howard Coalition Government's 2005 workplace reform legislation on the key institution of Australian labour regulation for many years, the Australian Industrial Relations Commission (1). The Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (the '2005 Act'), passed by the Australian Parliament in December 2005, fundamentally transforms this country's traditional industrial relations framework. Most significantly, it introduces a national system of workplace regulation based on the 'corporations power' in the Australian Constitution--leaving behind the system of state-sponsored conciliation and arbitration founded on the Constitutional 'labour power' that has operated since 1904 (albeit in an increasingly diluted form in recent years). The new national scheme of minimum employment standards, individual and collective workplace agreements, the remnants of awards, and rules about (mostly limiting) industrial action and union organisational rights, will apply to all employers that are 'constitutional corporations' and their employees (2) (see further Prince and John 2005; Howe et al 2005).

Another important feature of the 2005 Act is its 'sidelining' of the AIRC, which (in its present and earlier incarnations) has played a central role in the determination of wages and conditions and the settlement of industrial disputes for over one hundred years (see, for example, Kirby 2004). Of course, the Commission's influence has been gradually reduced in the last fifteen years or so, starting with the shift to enterprise bargaining under Australian Labor Party (ALP) Governments in the early 1990s, and continuing through the Coalition Government's 'first wave' of labour law changes in 1996 (see, for example, Dabscheck 2001). The 2005 Act takes this process considerably further by transferring several of the AIRC's core functions to other regulatory bodies, leaving it as primarily a provider of alternative dispute resolution (ADR) services in competition with private ADR providers.

This article will examine these developments and assess their impact on the AIRC. First, it will explore the changes made to the Commission's role and powers by the Workplace Relations Act 1996 (Cth) (the '1996 Act'), and the various ways in which members of the AIRC have 'stepped around' those statutory limits. Secondly, it will consider the main aspects of the 2005 Act relating to the Commission, with particular attention to the new scheme for voluntary dispute resolution. Thirdly, it will examine three areas that illustrate the difficulty that the AIRC will have in playing an effective role under the provisions of the 2005 Act: dispute resolution under workplace agreements, overseeing bargaining and protected industrial action, and the limited scope that now exists for implying good faith bargaining obligations (through the AIRC's powers to suspend or terminate a bargaining period where a party is not genuinely trying to reach agreement). This will be followed by an assessment of the likely impact of the 2005 Act, and whether it will mean the end of the road for arbitration, and the AIRC. Some brief concluding comments follow.

The Effect of the 1996 Act on the AIRC

Restricting the powers and influence of the Commission was a major element of the industrial relations reform package implemented by the Coalition Government through the 1996 Act. This formed part of the Government's overall objective of reducing the role of external 'third parties', such as trade unions and the AIRC, in the processes for determining wages and employment conditions. The scope and reach of award regulation were also limited, leaving employers and employees free to bargain over terms and conditions at the workplace level (see generally Pittard 1997).

The AIRC's role was curtailed under the 1996 Act through the introduction of substantial limits on its dispute settlement and award making powers. It was required to settle disputes by conciliation, and could exercise its arbitration powers as a last resort (3)--and then only in respect of twenty allowable award matters (4). Awards were relegated to a 'safety net' role, and the Commission was required to give priority to the making of workplace agreements (5). Its powers to intervene in bargaining processes were also reduced. During a bargaining period for the negotiation of a certified agreement, the Commission could assist the parties to reach agreement by conciliation, but it could not arbitrate in relation to matters at issue between them (6). Further, the AIRC's specific powers to make orders requiring the parties to bargain in good faith were removed (7).

According to some commentators, these legislative changes succeeded in their objective of marginalising the AIRC's capacity for involvement in the resolution of workplace disputes and the regulation of employment conditions--not least because they resulted in an increasing level of timidity and caution on the part of Commission members to the exercise of their remaining powers. For example, in 2001, Dabscheck pointed to 'the slippage and increasing decline in the role of the Commission' (Dabscheck 2001, p. 278). Commenting specifically on the AIRC's approach to the exercise of its powers to arbitrate following the termination of a bargaining period--and in particular, the position taken by a Full Bench of the Commission in the long-running Hunter Valley Mine Dispute, where it refused to intervene on the basis that the new legislative framework provided for 'industrial warfare'--he concluded that the AIRC was 'an industrial relations regulator which no longer want[ed] to do business' (Dabscheck 2001, p. 290; see also pp. 284-288).

Several other observers (including the present author) detected trends in the opposite direction. For example, Forbes-Mewett et al's study found that, by 2003, the Commission was still dealing with a high volume of matters; industrial parties continued to use its dispute resolution services; and further, they wanted it to play an interventionist role (Forbes-Mewett et al 2003). In addition, some members of the AIRC were clearly attempting to find ways around the statutory 'roadblocks' imposed by the 1996 Act. This could be seen in the significant expansion of the AIRC's role as a 'private arbitrator' under dispute resolution clauses in certified agreements; and in its 'policing' function in respect of bargaining negotiations and protected industrial action, including a brief flirtation with implied good faith bargaining obligations (for detail, see Forsyth 2003; Stewart 2004; Sutherland 2005; and see further below). It was this kind of 'adventurism' that led (at least in part) to the introduction of further significant constraints on the Commission's role in the 2005 Act.

A Few 'Knives in the Back' and Voluntary Dispute Resolution: the 2005 Act and the AIRC

The Government has not abolished the AIRC, but the provisions of the 2005 Act are aimed at achieving its abolition by stealth. The Government has seriously weakened the Commission's authority and standing, by transferring its powers to set minimum wages to the new Australian Fair Pay Commission (8); and by handing over the AIRC's role in approving workplace agreements to the Office of the Employment Advocate (which is not required to scrutinise agreements closely in the way that the AIRC has done in the past (9)). Further, the 2005 Act removes almost all capacity for the Commission to exercise its traditional conciliation and arbitration powers. The AIRC will not, in future, hear Living Wage Cases and other test cases. There is no longer any process for the notification to and resolution of industrial disputes by the Commission (10). New limits are placed on the AIRC's procedural powers (11), and it can only vary awards or make new awards as part of the 'award simplification' and 'award rationalisation' processes (12).

Instead, the Commission is now, primarily, a provider of voluntary dispute resolution services. In announcing the key elements of the Government's industrial relations reform package in May 2005, the Prime Minister indicated that in future, the Commission's focus would be on 'resolving legitimate disputes' (Parliament of Australia 2005, p. 7). The Government's October 2005 WorkChoices document confirmed this, while also expressing the view that parties should resolve workplace problems for themselves. If they could not do so, they would still be able to seek assistance from the AIRC--although private ADR mechanisms would also be made available, in competition with the AIRC (Commonwealth of Australia 2005, p. 39).

These objectives are effected through the provisions relating to dispute resolution processes in Part VIIA of the 2005 Act (13). These provisions set down a model dispute resolution process ('Model DRP'), which is to operate under all federal awards (14), and under all new workplace agreements unless the parties to an agreement adopt a different dispute settlement procedure (15). The first stage of the Model DRP requires parties to try genuinely to resolve the dispute at the workplace level--for example, through discussions between an employee and his or her supervisor, then with more senior management (16). If a dispute cannot be resolved in this way, then either party can elect to pursue an ADR process conducted by a third party agreed to by both parties. Where they cannot reach agreement, the parties can seek assistance from the Industrial Registrar (who must provide them with information about options for dispute resolution); or, if the parties have still not been able to reach agreement within 14 days, a party can apply to have the AIRC perform ADR (17).

The range of ADR processes that parties can utilise include conferencing, mediation, assisted negotiation, neutral evaluation, case appraisal, conciliation and arbitration (18). The parties can choose to have the ADR process conducted by the AIRC or another ADR provider. But there is little doubt which way the Government would prefer the parties to go. For example, the WorkChoices document states that: 'These features help facilitate choice about methods of dispute resolution and encourage parties to consider alternatives to the AIRC.' Further, the Government indicated that it would establish a system of registered ADR providers to 'support genuine choice between the AIRC's dispute settling expertise and other dispute resolution specialists' (Commonwealth of Australia 2005, p. 39) (19).

The Commission, or private ADR providers, could be used to resolve the following three types of disputes under the 2005 Act: disputes that the legislation specifies are to be dealt with under the Model DRP; disputes in bargaining for new collective agreements; and disputes over the application of concluded workplace agreements (that is, where the parties have adopted their own dispute resolution procedure, which provides for the final reference of disputes to the AIRC). These three different types of disputes will now be explored in further detail.

Disputes under the Model DRP

A party can apply to have the Commission carry out ADR in relation to a workplace dispute under the Model DRP where it applies under an award, a workplace agreement (where the parties have not adopted a different dispute resolution procedure), or other provisions of the 2005 Act (for example, disputes about entitlements under the Australian Fair Pay and Conditions Standard are to be resolved using the Model DRP). The AIRC must refuse to conduct the ADR process if the dispute is not one that can be resolved under the Model DRP; or if it relates to an equal opportunity or discrimination matter that is the subject of proceedings under relevant Federal or State legislation. The Commission may refuse to deal with the dispute if the parties have not genuinely tried to resolve the matter between themselves, or have not reached agreement on who should conduct the ADR process (20).

In conducting ADR under the Model DRP, the AIRC: must take all appropriate action to help the parties resolve their dispute; can arrange conferences between the parties, either with or without the Commission's involvement; must act quickly and in accordance with the role specified by the parties and avoid adopting a technical or legalistic approach; can make recommendations about particular aspects of the matter if the parties ask it to; cannot arbitrate the matters in dispute or otherwise determine the rights or obligations of a party (unless all of the parties to the dispute agree that it can do so); and cannot compel a party to do anything, make an award or order, or appoint a board of reference (even if the parties have specified otherwise) (21).

This seems to suggest that the Commission could make binding recommendations to resolve the substance of the dispute, if all parties want it to--but not in the form of enforceable orders. Further, the AIRC's general and specific powers under the 2005 Act do not apply when it is conducting ADR under the Model DRP. Accordingly, for example, the Commission could not use any of its procedural powers when conducting ADR; therefore, it will have no power to summons witnesses, order the production of documents or compel the parties to attend conferences. These powers, and the authority that they have bestowed on the Commission, are the means by which it has been able to act as such an effective dispute resolution body over many years.

Disputes in Bargaining for Collective Workplace Agreements

A party can apply to have the AIRC conduct ADR in relation to matters in dispute that arise in the course of bargaining for a proposed collective agreement (22). But the AIRC can act only where all of the parties agree that the ADR process should be conducted by it (23). The AIRC's powers, and limits on them, when conducting ADR in bargaining negotiations are the same as those that apply to ADR under the Model DRP (see above), with one important exception--the AIRC cannot arbitrate or determine the rights of a party, even if the parties have agreed that it should do so (24). This reflects the position under the 1996 Act--that is, as indicated earlier, the AIRC could conciliate but not arbitrate during a bargaining period--with the difference, of course, that the AIRC can now only conciliate when the parties want it to do so. The AIRC also retains a role in the bargaining process, through its powers to regulate industrial action (see further below).

Disputes under Concluded Workplace Agreements

A party can apply to have the AIRC perform ADR in relation to matters in dispute arising under the terms of a workplace agreement where: the DRP in the agreement confers that jurisdiction on the AIRC (that is, the parties have adopted their own dispute resolution procedure, rather than the Model DRP (25)); and all the required steps under the agreement before referring the matter to the AIRC have been taken (26). This is the equivalent of the 'private arbitration' function under certified agreements carried out by the Commission under section 170LW of the 1996 Act. But he 2005 Act places significant limits on the AIRC's powers when conducting ADR under concluded workplace agreements. These limits will now be explored in further detail.

What Scope does the 2005 Act Leave for the AIRC to Play an Ongoing Role?

As indicated in the foregoing discussion, the 2005 Act slashes away large areas of the AIRC's existing jurisdiction, In addition, the following three examples illustrate that in the main remaining area of the Commission's jurisdiction--voluntary dispute resolution--the tight confines of the new legislative provisions will significantly limit its ability to carve out a continuing sphere of influence.

The AIRC's Dispute Resolution Role under Workplace Agreements

It has just been observed that, under the 2005 Act, the AIRC will still be able to carry out the 'private arbitration' role under concluded workplace agreements that it previously performed under section 170LW of the 1996 Act (27). That provision empowered the Commission to 'settle disputes over the application of the agreement' under certified agreement dispute resolution clauses that provided for reference of such disputes to the Commission. Section 170LW notifications became an increasingly important area of the AIRC's work in the last few years (28)--particularly since the High Court confirmed that the Commission, when arbitrating under this provision, was not limited to the 'allowable award matters' in section 89A of the 1996 Act (29). As a result, the Commission was able to arbitrate in disputes over a wide range of matters that would otherwise have fallen outside of its jurisdiction (30).

Several more recent decisions added to the breadth of the AIRC's powers in section 170LW dispute resolution proceedings, finding that when it exercised this jurisdiction, the Commission could use its extensive procedural powers under section 111(1) of the 1996 Act. For example, the Commission could: summons witnesses, and compel parties to produce all relevant documents (31); appoint an external expert to conduct an investigation and gather evidence for use in the section 170LW proceedings (32); and even go as far as issuing orders akin to interlocutory injunctions, for example, restraining an employer from terminating employees until a dispute over proposed redundancies was determined under section 170LW (33).

The Government, in the WorkChoices document, expressed concerns about the Commission's expansive view of its section 170LW dispute settlement powers:

   Many dispute settling procedures in agreements refer an unresolved
   dispute to the AIRC without specifying how [it] should go about
   handling the dispute. Sometimes the AIRC may adopt processes
   or powers that the parties did not anticipate when they made their
   agreement. Therefore, legislation will provide that the AIRC may
   only exercise those powers expressly conferred on it by the terms
   of the agreement. Absent such a power, the AIRC could not make
   binding recommendations without both parties' consent, nor could it
   make inquiries or issue directions. This approach is consistent with
   a genuine voluntary dispute resolution function. (Commonwealth of
   Australia 2005, p. 40)

This intention is reflected in s 176N of the 2005 Act (34), which cuts down the AIRC's powers when conducting ADR under concluded workplace agreements (the equivalent of section 170LW dispute settlement under the 1996 Act). Under the new provision, the Commission will only have those powers that are conferred on it by the parties under the workplace agreement or otherwise; the AIRC will not be able to make 'orders' (it appears that this is aimed at preventing any appeal against the Commission's findings in this capacity (35)); and the Commission will not be able to use its other powers under the 2005 Act--unless the parties specifically confer those powers on the AIRC in the workplace agreement DRP.

This means that parties to workplace agreements will have to go out of their way to give the Commission binding arbitral powers or the broad procedural powers that the above decisions have found were available to the Al RC when conducting section 170LW arbitrations. Practically, parties are not likely specifically to agree to give the Commission powers, for example, to summons witnesses or order the production of documents--although they could do so by reference to any or all of the AIRC's powers in s 441 of the 2005 Act (36). For these reasons, it is likely that, under the new legislation, ADR under concluded workplace agreements will be a pale imitation of section 170LW private arbitration.

Overseeing Protected Industrial Action in Bargaining for New Agreements

While the AIRC's involvement in the negotiation of new workplace agreements will generally require the consent of both parties (see above), it will also be able to exert some influence through the various provisions requiring it to 'police' protected industrial action taken in support of bargaining claims. In this area, as in many others, the Commission's hands will be tightly bound by specific legislative directions--for example, while the AIRC will still determine applications for orders to stop or prevent unprotected industrial action, its discretion whether to grant such orders has been removed (37); and it will have to take specific factors into account when making a 'workplace determination' after the Minister for Employment and Workplace Relations has exercised the new powers to end strikes in essential services (38).

Recent research has shown that following applications under section 127 of the 1996 Act for orders to stop or prevent unlawful industrial action, the AIRC has frequently settled the underlying dispute by facilitating conferences between the parties (Forbes-Mewett et al 2005, p. 184; see also Munro 2005, pp. 16-17). This research also found a high level of support among industrial relations parties for an interventionist role by the AIRC once a dispute comes before it (see further below). Therefore, when disputes involving industrial action are brought before the Commission under the provisions of the 2005 Act, it is likely to continue to be called upon to assist the parties to broker a deal, before dealing with the substantive application before it.

On the other hand, in future, the scope of and opportunity for conciliation in the AIRC will be limited by several factors, such as the new requirement to determine applications for orders to stop or prevent unprotected industrial action within 48 hours (39) and the new limits on the Commission's powers when conciliating in the bargaining phase (as outlined above) (40). Further, the removal of section 166A of the 1996 Act (which required employers wishing to bring common law tort actions against striking workers first to submit to conciliation in the AIRC for up to 72 hours), and the new provision enabling employers to bring court proceedings for an injunction where a union is engaging in 'pattern bargaining' (41), will mean that many disputes will not come before the Commission at all, but will instead be fought out in the courts.

Good Faith Bargaining? Suspension or Termination of a Bargaining Period where Parties are not Genuinely Trying to Reach Agreement

The Commission will also have a role in the negotiation phase through its powers to suspend or terminate a bargaining period (42), which has the effect of ending the parties' rights to take protected industrial action in support of their bargaining claims. New grounds for the suspension or termination of bargaining periods are added: where one of the parties is engaging in 'pattern bargaining' (43); where a 'cooling off' period is considered necessary, having regard to (for example) the duration of the industrial action (44); or where industrial action is harming third parties (45). And again, the Commission must suspend or terminate the bargaining period when one of the statutory grounds is satisfied (that is, its discretion in these cases under section 170MW of the 1996 Act has been removed).

One of the pre-existing grounds for suspending or ending a bargaining period that has been retained under the 2005 Act might be thought to provide some scope for Commission involvement in the bargaining process--that is, where a party has not genuinely tried to reach agreement before taking protected industrial action or is not trying to reach agreement (46). Applications to the Commission under the equivalent provision in the 1996 Act have been relatively rare (47). Its potential for enabling the AIRC to scrutinise bargaining tactics was illustrated, however, in a December 2004 decision relating to the bitter pay dispute between the Australian Nursing Federation and the Western Australian Government. In that case, Deputy President McCarthy ended the union's bargaining periods after finding that its claims and conduct in the negotiations evidenced an 'all or nothing' approach rather then a serious attempt to reach agreement--for example, the union had not substantially moderated its claims over several months of negotiations and had delayed reaching an agreement by using the media and political tactics rather than seriously responding to the Government's offers (48).

It is not difficult to envisage innovative members of the AIRC using its power to suspend or terminate a bargaining period, where a party is not genuinely trying to reach agreement, to develop a 'code' of fair bargaining practices. Commissioner Smith's early decisions in the long-running bargaining dispute over employees' rights to union representation in bargaining negotiations at Sensis (the directory arm of Telstra) demonstrate the willingness of some members of the AIRC to develop 'good faith bargaining' principles (49). A Full Bench of the AIRC subsequently overturned Commissioner Smith's findings that parties had an implied duty to bargain in good faith under the 1996 Act (50). But it is important to bear in mind the ultimate outcome of the Sensis case--that is, the Full Federal Court's ruling in May 2005 that by denying the employee negotiating team access to assistance from the Community and Public Sector Union, Sensis had not acted as a 'fair-minded employer' (51). The Federal Court therefore recognised an essential element of good faith bargaining--a party's right to choose by whom it wants to be represented and to have that representative recognised by the other party (52).

The Commission's capacity to impose de facto 'good faith bargaining' obligations on the parties--through its powers to suspend or terminate a bargaining period where a party is not genuinely trying to reach agreement, under section 107G(2) of the 2005 Act (53)--will be constrained, however, by section 106B(6) of the 2005 Act (54). Section 106B (55) defines 'pattern bargaining', for various purposes in Part VC of the Act (56), as: where a negotiating party to two or more proposed collective agreements is seeking common wages or conditions in those agreements through a course of conduct extending beyond a single business. Section 106B(3) of the 2005 Act (57) provides a defence to pattern bargaining where a party is 'genuinely trying to reach agreement' for a single business, or part of a single business. And whether a party is genuinely trying to reach agreement is to be determined by reference to various factors set out in s 106B(4) (58), including whether the party is:

* (a-c) showing a preparedness to negotiate an agreement that takes into account the particular circumstances of the business, and allowing working conditions to be determined at the workplace level

* (d) 'agreeing to meet face-to-face at reasonable times proposed by another negotiating party'

* (e) 'considering and responding to proposals made by another negotiating party within a reasonable time'

* (f) 'not capriciously adding or withdrawing items for bargaining'.

The duties imposed on bargaining parties by paragraphs (d)-(f) above are similar to those that make up the suite of statutory good faith bargaining obligations found, for example, in South Australian and Queensland industrial legislation (59). Section 106B(6) of the 2005 Act (60), however, provides that s 106B (61) 'does not affect, and is not affected by, the meaning of the term 'genuinely trying to reach an agreement" as it is used elsewhere in the 2005 Act. In other words, the 'good faith bargaining factors (62)' cannot be taken into account when the Commission is considering whether to suspend or terminate a bargaining period because a party is not genuinely trying to reach agreement under section 107G(2) of the 2005 Act (63).

This will make it very difficult for the AIRC to imply good faith obligations under the 2005 Act, as some of its members did under the provisions of the 1996 Act. That said, it is possible that other aspects of good faith bargaining not included in s 106B(4) of the 2005 Act (64) could be factored into the Commission's view of whether a party is genuinely trying to reach agreement under s 107G(2) (65)--for example, whether parties have disclosed relevant and necessary information, acted openly and honestly, adhered to agreed negotiating procedures, outcomes and commitments, and so on (66). Overall, in light of the above analysis, the door is left only very slightly open for the Commission to make orders going to the fairness of bargaining processes under the 2005 Act. The adoption of such an approach by the AIRC is therefore less than likely, particularly when it is considered that some members of the Commission are quite ambivalent about the concept of good faith bargaining (67).

An Assessment of the Likely Impact of the 2005 Act on the AIRC

It is clear that conciliation and arbitration, as these concepts have traditionally been known and practiced in Australia, have been virtually extinguished by the passage into law of the 2005 Act. There can be little doubt that this legislation is also intended to deliver a series of devastating blows to the AIRC that will ultimately lead to its demise (68). As a former senior member of the Commission, the Hon. Paul Munro, recently stated, the Government's (then only briefly articulated) reform proposals constituted: '... a messy and devious way to effectively terminate the functional life of an institution that has been embedded in the Australian culture from the Constitution onwards as integral to societal and industrial balance' (Munro 2005, p. 2).

There can be no doubt that the AIRC's role and influence will be significantly reduced under the new laws. With the removal of its discretion in many areas and tight guidance as to how it should exercise its few remaining powers, the Commission will 'be transformed into an agency required to implement government decisions' (Davis 2005). The departure, in early 2006, of Vice President lain Ross to take up a career in private legal practice represents another blow to the Commission's standing, particularly if other senior members of the Commission follow suit (69). But it is less clear whether the Government will succeed in its purpose of achieving the 'de facto abolition' of the Commission. There are two main factors that, in the present author's view, will prevent this from occurring, and enable the AIRC to 'cling to life' in spite of this latest legislative onslaught. First, there is considerable evidence to suggest that industrial relations parties and the broader community are strongly attached to the AIRC. The consistently high levels of public support for Australia's traditional wage-fixing arrangements and the importance of an industrial relations 'umpire' (see, for example, Pusey 2003, pp. 48, 145-153) probably explain the Government's decision not to abolish the Commission outright. The Government is clearly trying to steer industrial relations players away from the AIRC, through the Model DRP and the provision of private ADR options (see above; see also Ruddock 2005). But the parties will 'vote with their feet' under these new provisions, and the AIRC is likely to remain the preferred choice for assisting employers, workers and unions to obtain practical outcomes to workplace disputes.

This view is supported by recent research findings based on a combination of surveys, interviews and focus groups with parties involved in proceedings under sections 99 and 127 of the 1996 Act (see Forbes-Mewett et al 2005). For example, the research found that members of the AIRC often play a highly interventionist role in order to settle disputes that come before them under these provisions; and that approximately two-thirds of respondents supported the Commission playing this kind of activist role, including just over 90 per cent of employer representatives (Forbes-Mewett et al 2005, p. 183). In fact, these and other data identified in the research pointed to 'employer support not just for a continuing role for the AIRC but indeed for a strengthening of the powers of the AIRC in the future', (P. 187) (70). Both employer and union respondents expressed the view that parties are 'inadequately skilled' to resolve disputes for themselves: 'In brief, for the foreseeable future, an external, dispute-resolving body was perceived as being necessary to assist the parties in their industrial relations interactions; workplace-based structures were simply not sufficiently developed.' (P. 186, see also pp. 187-188)

These findings clearly have important implications for the Government's new emphasis on devolving dispute resolution to the workplace level, and the opening up of private ADR options. In relation to the latter, the research found some support among industrial relations parties for the concept of external mediation on a 'user-pays' basis as an alternative to the AIRC. Concerns were also identified, however; for example, some parties considered that the AIRC was 'simply a more appropriate recourse [sic] for dispute resolution', and were 'less likely to accept the mediator's suggestions, when compared with the authority of the AIRC. Overall ... use of an external mediation service or agency was not attractive to a significant majority of interviewees.' (Forbes-Mewett et al 2005, p. 186, see also p. 181)

While these findings suggest that parties are likely to be reluctant to utilise the private ADR options made available under the 2005 Act, other research points to a considerable expansion in the use of ADR to resolve many different types of workplace disputes in Australia over the last twenty years or so (for detailed discussion, see Van Gramberg 2006). The Government has for some time flirted with the idea of private mediation of workplace disputes (71), and recently experimented with the concept through the Small Business Mediation Pilot Programme introduced in May 2005. Under this Programme, Victorian-based small businesses and their employees could elect to have disputes that would normally be heard by the AIRC dealt with by an accredited external mediator free of charge (see further Department of Employment and Workplace Relations 2005). No information about the operation of the Programme has been made publicly available. Interim and final reports by an independent consultant, scheduled for August and December 2005 respectively, have not been released. Therefore, it is not known whether this new private mediation option has been used to any significant extent by the parties (but one possible explanation for the 'information vacuum' surrounding the Programme is that it has not been successful, but the Government does not wish to draw attention to this as it would undermine the broader shift to ADR under the 2005 Act).

In summary, while the Government wants parties to resolve disputes for themselves at the workplace level, and choose private ADR providers to assist with dispute resolution where necessary, experience under the 1996 Act suggests that industrial relations players are still fairly dependent on the AIRC; that they are cautious about involving private mediators; and that, for these reasons, they will continue to draw upon the Commission's dispute settlement services under the 2005 Act. The many 'unknown' factors about the new private ADR option reinforce this conclusion--for example, the costs involved, who will bear them, and the potential power implications of these arrangements (such as the possibility of bias in favor of the employer if it 'foots the bill', or the barriers to access if employees have to meet some of the costs--see Van Gramberg, Chapter 6).

The second factor that will contribute to the AIRC's survival, despite the substantial limits on its functions and powers under the new legislation, is that the Commission itself will want to ensure that it plays an influential role. As many of the decisions referred to in this article demonstrate, several Commission members have been willing to push against the boundaries imposed on the AIRC by the 1996 Act. As a result, the Commission, although weakened, has adapted better than many observers expected to the changed legislative and policy environment since 1996 (Forbes-Mewett et al 2003; Forsyth 2003; Long 2002).

On this basis, the Commission can be expected to fight a 'rearguard action' again this time around. A further indication that it will do so can be found in AIRC President Justice Geoffrey Giudice's spirited defence of the Commission's role in its most recent Annual Report, where he stated that:

   As well as being the most common method of dispute resolution,
   conciliation is also the most effective. Now more than ever,
   conciliation is the Commission's core method of operation and the
   exercise of conciliation functions is a critical element in the
   facilitation of agreement-making and the maintenance of industrial
   stability. It is in the public interest that the Commission's role
   in preventing industrial disputes by promoting stable workplace
   relations and harmony in industry should be encouraged. (AIRC 2005,
   p. 9; emphasis added)

More recently, Justice Giudice has indicated that changes will be made to the AIRC's operating procedures, with a view to making it more 'user-friendly' and 'responsive' to the needs of the parties. These changes will include holding a series of 'user briefings' and conducting surveys to obtain feedback from parties about how the Commission's processes can be made more accessible; providing guidance to parties on how the AIRC can assist them with dispute resolution; and 'facilitating choice of member' where the parties agree that they want a particular Commission member to provide dispute resolution services (see Workplace Express, 2006b). Further, the Commission has issued a series of 'fact sheets' dealing with its remaining areas of jurisdiction under the 2005 Act (72). In the fact sheet on 'Assisting with dispute resolution', it is stated that:

   Dispute resolution has been a primary function of the [AIRC]
   throughout its century-long history. Members of the Commission are
   experienced in a wide range of [ADR] techniques. They are used to
   helping employers and employees resolve workplace disputes and
   can suggest means of resolving differences that may not have been
   immediately apparent to those directly involved.

Clearly, then, the AIRC is positioning itself to compete with private ADR providers under the 'Work Choices' legislation by improving its internal procedures and emphasising the considerable dispute resolution experience and expertise of its members. These factors may also contribute to the AIRC's survival under the new legislation.

Overall, however, the 2005 Act clearly poses a much greater threat to the AIRC than did the 1996 Act. This latest legislative attack challenges the Commission's traditional reasons for existence, and (as the above analysis has shown) leaves far less room for the Commission to maneuver. Members of the AIRC will have to be more innovative then ever if they are to overcome the features of the 2005 Act that positively discourage the Commission from playing a meaningful and effective role in the resolution of workplace disputes.

Conclusion

This article has explored the impact of legislative change on the AIRC, commencing with a discussion of the limits on its role and powers introduced by the 1996 Act; and the more substantial reduction of the AIRC's functions under the 2005 Act. The Commission's main remaining role as a provider of voluntary dispute resolution services, in competition with private ADR bodies, was then outlined. A closer examination of three areas--dispute resolution under workplace agreements, overseeing bargaining and protected industrial action, and the limited scope for even the most determined of Commission members to find a basis for good faith bargaining--revealed the extent of the difficulties that the AIRC will face in attempting to play an influential role under the 2005 Act.

An evaluation was then provided of the overall impact of the new legislation on the AIRC. This indicated that while the 2005 Act clearly signals the 'end of the road' for the Australian conciliation and arbitration system, the AIRC does not necessarily face the same fate. But the Commission's prospects of survival will depend on the continued willingness of industrial relations parties to utilise its dispute settlement expertise; and the capacity of its members to find ways around the statutory 'roadblocks' imposed by the provisions of the 2005 Act.

In the longer term, much hangs on the outcome of the 2007 Federal election: if elected to office, the ALP would restore the AIRC's powers 'to deal with any industrial matter' (see further ALP 2004), while a re-elected Coalition Government could be expected to limit further the Commission's functions, and perhaps even take the final step of abolishing the institution altogether. In conclusion, it is to be hoped that the Commission can again confound its critics and prove its resilience, as it still has a vitally important role to play in Australia's workplace relations system.

References

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Anthony Forsyth, Department of Business Law and Taxation, Monash University 

Endnotes

* This is a revised version of a paper delivered to a Queensland Industrial Relations Society Seminar on the Federal Government's 'Work Choices' legislation on 9 November 2005. Thanks to my colleague at Monash University, Carolyn Sutherland, for her helpful comments on that paper; and to my colleagues at Corrs Chambers Westgarth in Melbourne for their insights on some of the issues addressed in this article.

(1.) To be referred to herein as 'the AIRC', or 'the Commission'.

(2.) Other employers and employees are covered by the national scheme established by the 2005 Act, for example, those in the federal public sector, Victoria and the Territories.

(3.) 1996 Act, s 89(a).

(4.) 1996 Act, s 89A.

(5.) 1996 Act, ss 88A(b) and (d)(i), and 88B(2).

(6.) 1996 Act, ss 170N, 170NA.

(7.) These powers applied under s 170QK of the Industrial Relations Act 1988 (Cth), and were inserted by the Industrial Relations Reform Act 1993 (Cth).

(8.) See 2005 Act, Part IA. The 2005 Act amended and re-numbered the 1996 Act, with effect from 27 March 2006. The equivalent provisions of Part IA of the 2005 Act are now found in Part 2 of the re-numbered 1996 Act.

(9.) See 2005 Act, s 83BB(1)(e); re-numbered 1996 Act, s 151(1)(e).

(10.) Except in a five year transitional phase in respect of parties to federal awards where the employer is not a constitutional corporation: see Schedule 13 of the 2005 Act; re-numbered 1996 Act, Schedule 6.

(11.) See, for example, section s 441 of the 2005 Act (re-numbered 1996 Act, s 111), a trimmed-down version of s 111 of the (pre-reform) 1996 Act.

(12.) See 2005 Act, Part VI; re-numbered 1996 Act, Part 10.

(13.) Re-numbered 1996 Act, Part 13.

(14.) 2005 Act, s 116A; re-numbered 1996 Act, s 514.

(15.) 2005 Act, s 101A; re-numbered 1996 Act, s 353. The Model DRP becomes a term of all federal awards in existence at the time the 2005 Act commences operation, and all new awards made thereafter; in contrast, the dispute resolution provisions of pre-reform certified agreements, and section 170LW of the (pre-reform) 1996 Act, continue in operation after the new legislation commences, while the Model DRP becomes a term of any new workplace agreements made thereafter (unless the parties to an agreement adopt a different procedure).

(16.) 2005 Act, s 174; re-numbered 1996 Act, s 695.

(17.) 2005 Act, s 175; re-numbered 1996 Act, s 696.

(18.) 2005 Act, s 176A; re-numbered 1996 Act, s 698. This provision appears to apply only to ADR conducted by the AIRC, but it surely must relate to any form of ADR under the Model DRP, regardless of who performs it. The various forms of ADR referred to are discussed in the Explanatory Memorandum to the Workplace Relations Amendment (Work Choices) Bill 2005 (Cth) (the '2005 Bill'), pp. 345-346.

(19.) See further 2005 Act, Part VIIA, Division 6; re-numbered 1996 Act, Part 13, Division 6. These provisions contain little detail about how private ADR is to operate under the 2005 Act; further clarification was expected, but was not forthcoming, in the Workplace Relations Regulations 2006, which also commenced operation on 27 March 2006.

(20.) 2005 Act, ss 173, 176B-176C; re-numbered 1996 Act, ss 694, 699-700.

(21.) 2005 Act, s 176D; re-numbered 1996 Act, s 701.

(22.) Under Part VC of the 2005 Act; Part 9 of the re-numbered 1996 Act.

(23.) 2005 Act, ss 176G-176H; re-numbered 1996 Act, ss 704-705.

(24.) 2005 Act, s 1761; re-numbered 1996 Act, s 706.

(25.) Under s 101A of the 2005 Act (s 353 of the re-numbered 1996 Act), a workplace agreement dispute settlement procedure must be 'about matters arising under the agreement'; if the agreement does not have its own dispute resolution process, and the parties fall back on the Model DRP, then under s 173 (re-numbered s 694), the dispute must be one 'about the terms of a workplace agreement'.

(26.) 2005 Act, ss 176L-176M; re-numbered 1996 Act, ss 709-710.

(27.) The description of this as 'private arbitration' will now have to be re-visited, given that (as outlined above) truly 'private' ADR providers are able to perform ADR services in this and other dispute resolution situations under the 2005 Act.

(28.) The Commission dealt with 549 section 170LW applications in 2001-02, with the number rising each year to 841 in 2004-05: AIRC 2005, p. 62.

(29.) CFMEU vAIRC (2001) 178 CLR 61.

(30.) See, for example, MUA v Australian Plant Services Pty Ltd (2001) 50 AILR 4-511; SDAEA v Big W (AIRC Full Bench, PR924554, 12 November 2002); FSU v GIO Australia Ltd (AIRC Full Bench, PR928618, 12 March 2003); for detailed discussion, see Stewart 2004, pp. 262-270; and Sutherland 2005.

(31.) See, for example, CEPU v Telstra Corporation (AIRC, PR933892, 2 July 2003), discussed further below.

(32.) See, for example, MEAA v ABC (AIRC, Full Bench, PR961251, 11 August 2005).

(33.) See Vice President Lawler's decision in CEPU v Telstra Corporation (AIRC, PR933892, 2 July 2003); confirmed on appeal in Telstra Corporation v CEPU (2003) 128 IR 385, although the Full Bench found that Lawler VP should not have made an interim order in that particular case.

(34.) Re-numbered 1996 Act, s 711.

(35.) See p. 353 of the Explanatory Memorandum to the 2005 Bill.

(36.) Re-numbered 1996 Act, s 111.

(37.) See section 111 of the 2005 Act (re-numbered 1996 Act, s 496), replacing s 127 of the (pre-reform) 1996 Act; under that provision, the AIRC would consider whether industrial action, although 'unprotected' or unlawful, was so 'illegitimate' as to justify the granting of a s 127 order, see Coal and Allied Operations Pty Ltd v AMWU (1997) 73 IR 311.

(38.) See generally Part VC, Divisions 7-8 of the 2005 Act; re-numbered 1996 Act, Part 9, Divisions 7-8. The list of factors includes 'how productivity might be improved in the business' and 'the employer's capacity to pay': 2005 Act, s 113D; re-numbered 1996 Act, s 504.

(39.) 2005 Act, s 111 (5) and (6-8); re-numbered 1996 Act, s 496(5) and (6-8), requiring an interim order to be made if the application cannot be determined within 48 hours, unless 'it would be contrary to the public interest' to make an interim order; the desirability of further conciliation could conceivably fall within this 'public interest' exception.

(40.) For example, the Commission will not be able to exercise its procedural powers under s 441 of the 2005 Act (re-numbered 1996 Act s 111) when conciliating in a bargaining period. This reverses the effect of the decisions in CPSU v Telstra Corporation Limited (2000) 48 AILR 4-292, in which a Full Bench of the AIRC found that its statutory procedural powers (particularly to give directions to the parties in an industrial dispute) applied not only when the Commission was arbitrating, but also in conciliation; and Sensis Ltd v CPSU (2003) 128 IR 92, where a Full Bench confirmed that the AIRC could exercise those powers when conciliating under s 170NA of the 1996 Act (for example, it could give directions to resolve disputes between the parties about who should represent them in bargaining negotiations, and to ensure that fair processes are adopted); see further below.

(41.) 2005 Act, s 111A; re-numbered 1996 Act, s 497.

(42.) Under ss 107G-107J of the 2005 Act (re-numbered 1996 Act, ss 430-433), replacing s 170MW of the (pre-reform) 1996 Act.

(43.) 2005 Act, s 107H; re-numbered 1996 Act, s 431.

(44.) 2005 Act, s 1071; re-numbered 1996 Act, s 432.

(45.) 2005 Act, s 107J; re-numbered 1996 Act, s 433.

(46.) 2005 Act, s 107G(2); re-numbered 1996 Act, s 430(2), replacing (pre-reform) 1996 Act, s 170MW(2).

(47.) Apart from the ANF decisions (discussed below), the main decision considering the operation of s 170MW(2) of the 1996 Act is Australian Industry Group v AFMEPKIU (AIRC, Print T1982, 16 October 2000), where Justice Munro found that union 'pattern bargaining' claims are likely to result in a finding that the union is not genuinely trying to reach agreement with all employers (a note referring to Justice Munro's decision was subsequently inserted in s 170MW(2) by the WR Amendment (Genuine Bargaining) Act 2002); other relevant cases include Ecol Industries t/a Novaloc v CFMEU (2004) 54 AILR 100-193(11); Pacific National (NSW) Pty Limited v ARTBIU [2005] FCA 1740 (8 November 2005), considering s 170MP of the 1996 Act, which had a similar effect to s 170MW(2); and the cases discussed in Lee 2005, pp. 40-42.

(48.) Minister for Health v ANF (AIRC, PR945670, 8 December 2004); the decision was overturned on appeal due to a jurisdictional error (that is, McCarthy DP's failure to provide the ANF with a fair hearing); but McCarthy DP's finding that the s 170MW(2) grounds for terminating the bargaining periods were satisfied, was not disturbed by the appeal decision: see ANF v Minister for Health (AIRC, Full Bench, PR956130, 2 March 2005).

(49.) CPSU v Sensis Pty Ltd (2003) 53 AILR 100-005; CPSU v Sensis Pty Ltd (2003) 53 AILR 100026(58). Decisions by other members of the Commission finding or assuming that good faith bargaining obligations existed under the 1996 Act (despite the express removal of the AIRC's former powers to make good faith bargaining orders, see above), include: Peerless Holdings Pty Ltd v AMIEU (1997) 42 AILR 3-619; Application by Joy Manufacturing Co Pty Ltd (2000) 48 AILR 4-341; AMIEU v Peerless Holdings Pty Ltd (2000) 48 AILR 4-351 (16); AFMEPKIU v CoDesign Plus Pty Ltd (AIRC, PR901451, 23 February 20021); Re Consolidated Meat Group Pty Ltd (AIRC, PR916493, 8 April 2002); see also the decisions referred to in Stewart 2004, p. 258.

(50.) Sensis Ltd v CPSU (2003) 128 IR 92; see also Jet Care Pty Ltd v ALAEA (AIRC, PR934761, 15 July 2003).

(51.) Sensis Pty Ltd v Members of the Full Bench of the Industrial Relations Commission [2005] FCAFC 74 (12 May 2005).

(52.) The tensions between these rights, and a party's freedom to choose the form of agreement they wanted to adopt under the 1996 Act, were resolved differently by the Full Bench of the AIRC and the Federal Court in the Sensis case; the Court found that a direction that a CPSU representative be allowed to represent employees in the negotiations would not deprive Sensis of the opportunity to pursue a s 170LK agreement.

(53.) Re-numbered 1996 Act, s 430(2).

(54.) Re-numbered 1996 Act, s 421 (6).

(55.) Re-numbered 1996 Act, s 421.

(56.) Re-numbered 1996 Act, Part 9; for example, pattern bargaining could lead to the granting of an injunction stopping or preventing the relevant industrial action under s 111A of the 2005 Act (renumbered 1996 Act, s 496), or termination of the bargaining period under s 107H (re-numbered 1996 Act, s 431).

(57.) Re-numbered 1996 Act, s 421(3).

(58.) Re-numbered 1996 Act, s 421(4).

(59.) These three items are included in the 'best endeavours bargaining' obligations applicable under s 76A of the Fair Work Act 1994 (SA); two of the three are also found in the examples of 'good faith negotiations' in s 146 of the Industrial Relations Act 1999 (Qld).

(60.) Re-numbered 1996 Act, s 421(6).

(61.) Re-numbered 1996 Act, s 421.

(62.) This is the present author's description; section 106B(4) of the 2005 Act (re-numbered 1996 Act, s 421 (4)) does not use this terminology.

(63.) Re-numbered 1996 Act, s 430(2).

(64.) Re-numbered 1996 Act, s 421(4).

(65.) Re-numbered 1996 Act, s 430(2).

(66.) See, for example, Fair Work Act 1994 (SA), s 76A; Industrial Relations Act 1999 (Qld), ss 146 and 149(5)(d).

(67.) This is demonstrated by McCarthy DP's decision in Minister for Health v ANF ((AIRC, PR945670, 8 December 2004, discussed above), where he rejected the notion that the obligation to try genuinely to reach agreement under s 170MW(2) of the 1996 Act imported a duty to bargain in good faith, but also found that case law drawn from good faith bargaining jurisdictions could be useful in determining whether a party is (or is not) genuinely trying to reach agreement.

(68.) For an example of the Coalition Government's disdain for the Commission, see Robb 2005; more vitriolic critiques have emanated from bodies such as the HR Nicholls Society, see for example Evans 2002.

(69.) It should be noted that Vice President Ross rejected any suggestion that his departure from the Commission was a response to the changes to ts role effected by the 2005 Act: see Workplace Express 2006a.

(70.) For example, employer respondents were significantly more likely to disagree with the propositions that there should be an external dispute resolution process as an alternative to the AIRC; that the Commission should restrict itself to conciliation; and that it should not have greater power to compel parties to participate in dispute resolution processes.

(71.) See eg Reith 1998; and Schedule 4, Part 1, and Schedule 5 of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, proposing the introduction of 'compulsory' and 'voluntary' streams for conciliation of disputes in the AIRC, with matters that were to be the subject of 'voluntary conciliation' made subject to a $500 fee if the parties chose conciliation by the Commission, and offering them the option of private mediation by an accredited workplace relations mediator.

(72.) These fact sheets are available at: www.airc.gov.au.