I refer to your memorandum of 17th May, 1939, referring to me a letter received from the General Secretary-Treasurer of the Amalgamated Clothing and Allied Trades Union of Australasia suggesting that the Commonwealth Court of Conciliation and Arbitration should be given discretionary powers to enable it to award preference to unionists in the clothing industry, and requesting my advice for the purposes of the report to be furnished to the Prime Minister.

Sub-section (1.) of section forty of the Commonwealth Conciliation and Arbitration Act 1904 –1934 empowers the Court by its award, or an order made on the application of any organization or person bound by the award, to direct that as between members of organizations of employers or employees and other persons (not being sons or daughters of employers) offering or desiring service or employment at the same time, preference is, in such manner as is specified in the award or order, to be given to such members, other things being equal. Sub-section (2.) of the section provides that whenever, in the opinion of the Court, it is necessary for the prevention or settlement of the industrial dispute, or for the maintenance of industrial peace, or for the welfare of Society, to direct that preference shall be given to members or organizations as in paragraph (a) of sub-section (1.) of the section provided, the Court shall so direct.

In Anthony Hordern’s case (47 C.L.R. 1) the High Court, with two dissentients, held that the section was a limitation on the general power of the Court. It is also clear from that case and from Gilchrist’s case (34 C.L.R. 482) that the provisions of section eighty-one A over-ride section forty. Section eighty-one A provides that nothing in any award or agreement shall operate to prevent the employment of returned soldiers or sailors. As it may be assumed, I think, that there is no question of the Commonwealth departing from this policy of preference to returned soldiers this limitation may be disregarded.

The other limitation resulting from the view taken by the High Court forms the crux of the present question. Were there no provisions in the Act relating to preference to unionists there can be little doubt that the general power of the Court to make awards settling industrial disputes would include a power to award unconditional preferences to unionists where that is a matter concerning which there is an industrial dispute. The Court having held that section forty limits this general power, however, the effect is that the Court can do no more than order preference to unionists other things being equal.

Particularly in an industry such as the clothing trades this limitation confers on an employer a discretion which considerably minimises the benefit of the provision.

The question of ‘sweating’ in the clothing trades has been prominent for a number of years. On the 14th November, 1928, and again on the 6th October, 1931, the matter was reviewed in reports by the Industrial Registrar. Both reports recognised the probability that there was considerable ‘sweating’ in the industry but doubted the power of the Commonwealth or of the Commonwealth Court to remedy the matter. This was partly by reason of the limitation of the Court’s power to grant preference to unionists but principally by reason of the fact that a great number of employers were not covered by the Federal Award and, in view of the law as stated by the High Court at that time (i.e., in Alderdice’s case (41 C.L.R. 402) and the American Dry Cleaning Case (43 C.L.R. 29)), could not be bound by award unless they employed unionists. Apart, therefore, from helpful measures such as the appointment of inspectors the general conclusion of the reports was that legislation by the States was necessary.

Since that time, however, the decision in the Metal Trades case has been given (54 C.L.R. 387) which clearly establishes that if there is a dispute between an organization of employees and any employers as to the terms and conditions upon which non-unionists should be employed, the Court has jurisdiction to make an award governing the terms of employment of those non-unionists. Much of the previous difficulty as to casting obligations upon employers of non-union labour, has now disappeared, but the problem of policing the awards in their application to such employers, still remains. It is asserted, and there appears good reason to believe that the assertion is justified, that by the granting of preference to unionists the policing of the awards would be greatly facilitated.

It matters not how the Act might be amended so as to confer powers upon the Court, the discretion must, by reason of the Constitution itself, remain with the Court, and the tendency of the Court has always been against the insertion of the preference to unionists clause in awards, the Court considering that so long as an employer observed an award he should be free to select his employees. That the position in the clothing trades is exceptional, however, is shown by the fact that Drake-Brockman, J., inserted an absolute preference to unionists clause in the Clothing Trades Award but the provision was held invalid by the High Court because it exceeded the power conferred by section forty.

It may, therefore, be presumed that if the power given the Court were absolute, it would be used, at least in an absolute form, only in these exceptional cases. Consequently it does appear desirable that the Court should have the power to insert the absolute preference to unionists, where necessary to prevent or settle an industrial dispute, without the limitation of the words ‘other things being equal’.

In a memorandum of the 2nd September, 1936, suggesting numerous amendments to the Act, the Industrial Registrar suggested that the position might be met by a new
sub-section (3.) of section forty reading as follows:

(3.) The preceding sub-sections of this section shall not apply to the hearing and determination of any matter within the cognizance of the Court in which the claims of either party raise the issue whether preference of employment shall be given to members of any organization a party to the matter but in such a matter the Court subject to section 81A of this Act may make such order or award on that issue as it deems just and proper in the circumstances.

In a deputation before the then Attorney-General (now the Prime Minister) on 26th October, 1938, representatives of the Clothing Trade Union suggested that the provisions of the Act relating to preference to unionists might be repealed leaving the general power of the Court to make awards preventing or settling disputes applying.

Both these amendments would no doubt achieve the objective, but I have submitted to the Attorney-General a recommendation that the position might more surely and simply be achieved by amending paragraph (a) of section 40–

1. by omitting the words ‘manner as is’ and inserting in their stead the words ‘manner and in such cases as are’; and
2. by omitting the words ‘, other things being equal’.

The Court would then have power to ‘direct that, as between members of organizations of employers or employees and other persons (not being sons or daughters of employers) offering or desiring service or employment at the same time, preference shall, in such manner and in such cases as are specified in the award or order, be given to such members’. The Attorney-General has approved of this recommendation.

With reference to your further memorandum of the 19th May, 1939, forwarding for my advice a report on the question, received by the Prime Minister from the Industrial Registrar, I am generally in accord with the suggestion that the States be requested to consider legislation on the lines indicated by the Industrial Registrar, but I feel that the policy of the Commonwealth in connexion with the suggested amendment to section 40 of the Commonwealth Act should be decided upon before any action is taken to communicate with the States.

[Vol. 32, p. 223]