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Data collected throughout 1997 by the Productivity Commission comparing international container stevedoring performance, for the same ships and trades, indicated that Australia's charges were generally higher, productivity lower and services less reliable than overseas. With the exception of bulk grain loading, other areas of traditional stevedoring also performed relatively poorly. And it found that marine service and port infrastructure charges were in total two to three times greater than at overseas ports, noting that only some of this reflects cost-recovery pricing in Australia.
Together with other problems in the transport chain, this under-performance was not only resulting in higher direct costs to shippers, but also significant indirect costs from delays and unreliability which could have been reduced. Overall, the international benchmarking revealed significant scope for improvement in Australia's performance.
The Howard government, before being elected in 1996, had promised significant industrial relations reform. In January 1997 it substantially amended the Industrial Relations Act, and renamed it the Workplace Relations Act 1996. The stated aim of this legislation was to foster individual choice in workplace bargaining by reducing the powers of external organisations - particularly trade unions - to intervene. In addition to reducing the powers of the Australian Industrial Relations Commission to arbitrate disputes, the Act also introduced individual statutory employment contracts. These were known as Australian Workplace Agreements or AWAs. The watering down of collective bargaining provisions was a source of objection for many workers and unions.
Australian waterfront productivity had been an issue of concern since the 1980s. Patrick sought to improve productivity by creating redundancies and reducing overtime entitlements for its permanent employees, as well as hiring more contract employees on a casual basis. The MUA came about through the amalgamation of 2 unions, the Seafarers Union of Australia- the SUA, and the Waterside Workers Federation or WWF. The MUA Maritime Union of Australia was born from this background and retained a heavy union presence on the waterside.
A prospective employee must also be a card carrying member of the MUA. A non Union workforce was encouraged to compete against the MUA and required new legislative changes.
After the legislative introduction of Australian Workplace Agreements, a number of stevedoring operators toyed with bringing individual contract workers into their workforces, but abandoned their plans in the face of strident union opposition.
One company sought to recruit former and current Australian Defence Force members to counter the MUA. Fynwest Pty Ltd began an active recruiting campaign and employed former and current members of the SASR Australian Special Air Service Regiment, 3RAR Paratroopers, 4RAR Commandos and other military specialists to become stevedores. The were also other persons who had been recruited from Private Military Companies, such as Sandline and the Control Risks groups. These men were later tagged as Industrial Mercenaries by the media and public.
Investigations by media revealed that in December 1997, an Australian stevedoring company, Fynwest Pty Ltd, was recruiting current serving and former Australian Defence Force personnel to work as non-union stevedores. Dubai in the United Arab Emirates offered international standard training for the former defence members. The plans of Fynwest was to be a hire labour company for the Asia Pacific region and to take the newly trained Stevedores back to Australia for use in a non-union dock workers training program. The MUA was 'tipped off' about the planned Fynwest operation and took the matter to the media who met the departing Fynwest employees as they boarded a flight to Dubai and questioned their 'tourist' status. Intense criticism and the threat of international industrial retaliation forced the Dubai Government to cancel visas for the Fynwest company employees. The Australian government denied all knowledge of the plan, despite still-serving defence personnel being involved, and evidence provided by some of these members that the government was actively involved in supporting this training of a non-union stevedoring group to work back in Australia.
On 8 April 1998, the Patrick Stevedoring Company made a startling and controversial decision to sack all its unionised workers and liquidate its assets (essentially becoming insolvent). As the media and general public were confronted with this development, it was claimed that the government had known about, and supported, this mass sacking. Minister Reith gave a doorstop interview at midnight as the private security guards hired by Patricks to evict their employees descended on the waterfront; Minister Reith reading from a prepared brief stated that they fully supported Patricks in their action. 
The company cited lack of productivity and profit as the reason behind the sacking, as well as a desire to "clean up" the waterfront. They seized on the government's tentative Workplace Relations Act 1996 as a means to do it.
However, when the media turned up at the docks the following morning, they discovered that the docks were fully operational, with a full staff installed - The majority with lower wages and fewer guarantees of working conditions. These workers had contracts with a different company - a company owned by the same people as the recently announced insolvent Patrick Corporation. The original Fynwest Employees were also present, these former defence force men were on a far higher financial consideration.
This matter was soon seized by the Australian Council of Trade Unions (ACTU) as a plot to 'squeeze' them out of the workforce, part of the Howard Government's overall plan. They started a vigorous and eventually successful campaign to have this matter brought to justice, and the case made its way to the High Court.
The case went before the Federal Court with Justice North finding in favour of the union. He found that the company had deliberately restructured their corporate structure with the sole intent to dismiss their unionised workers. The company with the support of the government appealed this decision to the full bench of the Federal Court which upheld Justice North's earlier decision. The company were not happy with the 4 Federal Court justices' decisions, appealed to the High Court of Australia with the government's support. The full bench of the High Court found in the MUA's favour, that the company had carried out a corporate restructure with the sole intent to dismiss their unionised workforce.
The MUA and Patrick negotiated a new work agreement which was adopted by the company and workers in June 1998. The agreement specified a near-halving of the permanent workforce through voluntary redundancies, the casualisation and contracting out of some jobs, smaller work crews, longer regular hours, company control over rostering, and productivity bonuses for faster loading. While the union retained the ability to represent maritime workers, the company achieved significant changes to work practices as it desired. Workplace Relations Minister Peter Reith stated at the time "There appears to be a number of reforms which will satisfy the seven benchmark objectives which is very important."
The non-union workers who had been employed to break the union were dumped by their employer at the conclusion of the dispute. Many workers of the non-union group claimed they were still owed thousands of dollars in unpaid wages, and successfully sought payment of the unpaid wages through the courts. In contrast the original Fynwest men who were on an annual salary of around $120,000AUD also walked away with bonuses and commissions of around $50,000.00AUD each upon cancellation of their contracts.
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