Toll Holdings’ port and rail spin off company Asciano Group (AIO) made its debut on the Australian stock market last week. AIO contains Pacific National, the Patrick container ports and also the combined port operations and stevedoring businesses of Toll and Patrick, assets in total worth $8 billion. It is the latest incarnation of the now booming Patrick Stevedoring, the company that was at the centre of Australia’s waterfront reform crisis of 1998, recently dramatised by the ABC in the mini-series Bastard Boys.
The story is told in greatest detail by two Sydney Morning Herald journalists Helen Trinca and Anne Davies in their book “Waterfront: The Battle That Changed Australia”. Australian ports are a stevedoring duopoly, consisting of the locally-based Patrick and the British firm P&O Ports. The word ‘stevedore’ comes from the Spanish ‘estibador’ meaning ‘a man who stuffs (ships)’. In common Australian usage, it now refers to the owners and operators of the port while the workers are ‘wharfies’. In 1998, the waterfront was the scene for a massive battle between the two that had political, economic and legal consequences still felt today.
At the time, Australian ports were entirely manned by wharfies of the Maritime Union of Australia (MUA). In November 1997, an anonymous Canberra bureaucrat rang MUA national secretary John Coombs tipping him off about a plan to reform the Australian waterfront. The caller told Coombs the Army was going to train military men in Dubai to do dock work. The caller claimed the Government was behind the secret plan. Bizarre as it sounded, Coombs had to take the story seriously. 18 months earlier, Australia had a change of government to the right and the new John Howard administration made it clear waterfront reform was a top priority. Breaking the power of the union that that ran the waterfront since World War II, was the key.
Coombs briefed Greg Combet, then an assistant secretary of the Australian Council of Trade Unions (ACTU) who previously worked for the MUA. Both men were committed to the union, but both knew change was inevitable on the docks. The new government had changed laws on secondary picketing and both Patrick and P&O Ports were making noises labour costs had to be reduced. Patrick’s then boss Chris Corrigan was particularly determined to reduce his workforce. Corrigan was a successful merchant banker who now wanted to tame the waterfront. His problem was he didn’t have the money to pay for redundancies.
Coombs got more concrete information in writing from his mole. On letterhead of a company called Fynwest Ltd was a recruiting contract for a training program in Dubai. There was also background on the two men behind Fynwest, ex-military men Mike Wells and Peter Kilfoyle. Coombs and Combet took the information to the Federal Labor Party to raise in parliament. On the day the recruits were due to leave the country, Opposition leader Kim Beazley addressed Peter Reith, minister for Workplace Relations in Question time (Hansard - pdf). Beazley asked “Is the minister aware that the first contingent of a substantial force of up to 70 men, recruited through advertisements in the Army publication Army, is scheduled today to fly out to Dubai for three months training, operating stevedoring equipment in order to be deployed on the Australian waterfront early in 1998? What knowledge do you have of this covert operation to recruit a force of industrial mercenaries from the ranks of the military? When did you first become aware of it? Peter Reith responded, “The answer is I am not aware of it at all”.
The minister for defence Ian McLachlan also denied the army were involved in the operation. The Canberra press gallery smelled a rat and went ballistic. Another media pack ambushed the short-haired Dubai trainees leaving at Melbourne airport. Their civilian dress did little to disguise their obvious army-ness. The following morning Chris Corrigan was interviewed on radio. Corrigan admitted he was irritated by union practices and institutionalised rorts but he claimed the parliamentary debate was the first he had heard of the Dubai venture.
Corrigan was lying. He was desperate to increase productivity on the wharves. In the first six months of 1997, he had lost $3.6 million in Melbourne alone and estimated he needed to shed 80 workers there. He also wanted to clamp down on overtime which workers regarded as part of their normal wage and which they often deliberately stalled jobs to make happen. The newly elected Coalition government was interested in a showdown with the unions. In its early days it commissioned a report about the waterfront problems. It identified monopoly unionism as the main problem. The Patrick / P&O Ports duopoly was only seen as a secondary issue and not pursued. The report advocated the engineering of a dispute as a catalyst for change. The government made overtures to the two stevedores.
The international operator P&O was not interested. It was too frightened it would attract a worldwide ban from the international maritime union. But local operator Corrigan was more amenable. What they needed was a trigger to sack the entire workforce which was not related to their employment and therefore not illegal. Peter Reith was the key government player in making it happen. To manage the project, he brought in Stephen Webster, a consultant for Australia’s richest men, Richard Pratt. It was Webster who hired Wells and Kilfoyle to put together the army team for Dubai.
Corrigan supported the government plans but wanted the commonwealth to foot the redundancy bill to finance the downsizing of his operation. He worked with Wells to compile a list of 260 people he would need to run the ports in Melbourne, Sydney, Brisbane and Fremantle. Corrigan would provide the trainers. Fynwest looked for men from engineering and electrical corps to manage the equipment and learn the operation quickly. In December 1997, the government agreed to fund the Patrick redundancies and Fynwest gave the go ahead to send 76 men to Dubai. Two days later, Labor dropped the bombshell in parliament.
On the day after, Prime Minister Howard side-stepped questions about knowledge of the operation and pledged his support for waterfront reform. Meanwhile John Coombs went to London where he got support from the International Transport Workers Federation (ITWF). Coombs and an ITWF rep met the United Arab Emirates ambassador and threatened his country with a maritime boycott if they supported the Dubai operation. It worked. The Dubai Port Authority pulled the plug and revoked the army men’s visas. The plan had collapsed and it seemed, the threat to the union was over. But it was just beginning – the farmers became the new players.
An increasingly desperate Corrigan turned his attentions to the National Farmers Federation (NFF) as his next hope. The NFF had track history. It was founded in 1979 in response to the live sheep confrontation the previous year when farmers stormed Adelaide docks to load sheep despite union resistance. Bulk shipping carried half of Australia’s $22 billion farm exports but the rest was container trade which operated far below world’s best practice. NFF president Don McGauchie became convinced the farmers would have to enter stevedoring themselves to solve the problem. Corrigan contacted the NFF and asked if they would run Webb Dock in Melbourne. In the weeks to follow, Corrigan, McGauchie, Reith and Webster would meet to discuss the venture. The farmers created a new stevedoring company called PCS. Their plans became public after police leaked details of the security operation to Trades Hall.
As the storm broke in January 1998, Corrigan proceeded with plans to clear Webb dock in advance of the PCS takeover. By the end of the month, the dock was in the hands of a private security company and the union was locked out. Greg Combet realised the union could not organise a secondary picket for fear of legal action under trade practices law. But they shut down the other docks anyway. At this stage, the union was contacted by a young industrial lawyer named Josh Bornstein. Bornstein rang Combet to ask what his legal strategy was. Combet had to admit they didn’t have one. One of Bornstein’s colleagues suggested the union had a case for conspiracy. Because Patrick had leased dock space to the farmers, Corrigan was conspiring with them to diminish the workers’ terms and conditions.
The farmers began to move into the empty terminal in February to conduct training. They had to run the gauntlet of an angry picket. It was tense and intimidating but not violent. Meanwhile the Fynwest people who were now out of the loop, were angry. They were not wanted by the PCS people so contacted the MUA and told them they had documents and taped conversations that could link Corrigan and the government to the Dubai operation.
On 6 February, Patrick went to the Industrial Relations Commission (IRC) looking for an order to force the wharfies to go back to work. The union called Corrigan as a witness who admitted he had talks with the NFF about Webb Dock where they discussed dismissing the entire unionised workforce. The IRC agreed the strike was illegal and ordered the wharfies back to work. But armed with Corrigan’s dynamite admission, the union now had the grounds for the conspiracy case. They asked Julian Burnside QC to join the team to represent them in court. The union ignored the IRC recommendation and continued picketing Webb Dock. By March the dispute had cost Patrick $2 million. It was now rumoured that Patrick would sack its workforce at Easter. The question, according to the worried union, was how would they get away with it?
On the week before Easter, the union went to the Federal Court asking for an injunction to stop Corrigan sacking his workers. Before they could get to court, Corrigan pushed the go button. On the night of 7 April 1998, security men in balaclavas with dogs arrived on the docks by boat. They told the workers they were no longer wanted and locked them out. At the same time in Canberra, 11pm on a Sunday night, Peter Reith issued a press release advising the media Patrick had restructured its business and terminated existing contracts with its current labour hire companies. Reith promised the sacked workers would receive $270,000 in compensation.
The following day, the parties met in the Federal Court in Melbourne. Patrick said they had appointed an administrator to the labour hire companies. This was a significant move. Under corporation law it is impossible to continue an action against a company in administration unless permitted by a court. Patrick argued the workers had not been dismissed but the company had simply ended the labour hire agreements with the subsidiaries that employed the men. Burnside argued the co-incidence of the timing of the dock seizure and Reith’s press release was too convenient and called it a ‘bottom of the harbour’ scheme. Justice Tony North issued a temporary injunction to stop the sacking with a view to hearing full arguments after Easter. Despite the legal setback, Corrigan pushed ahead with his plans to stevedore a ship at Webb Dock. Over the Easter weekend, the PCS operators unloaded the government-owned ship Australian Endeavour in Sydney. The ship’s crew were MUA members but couldn’t strike in sympathy with their wharfie brothers due to the tough new industrial laws on secondary boycott. Corrigan posed at the dockside for a media opportunity to bask in this success.
On the Tuesday after Easter, the legal team were back in court. Julian Burnside developed the conspiracy case. He argued Patrick had started with a share buy-back, then sold the four employer companies to other companies within the business before selling all their assets to yet another Patrick company. No one was sure if the companies were paid for these transactions and $300 million was unaccounted for by the administrators. Burnside argued the only reason the men were sacked was that they were members of the MUA. He asked for an injunction to prevent the next phase of Patrick’s plan. A barrister for the farmers said that PCS’s business would be destroyed if the unions won their injunction. The case adjourned for two days.
On the Thursday, the court reconvened. Justice North refused to hand down a decision claiming the issue were complex and adjourned again until ‘the weekend and if necessary beyond’. The pickets remains strong and Corrigan was angry that police wasn’t moving them on. But the police argued if the picket was peaceful and did not restrict access to the site, it was lawful. Union officials did their utmost to stop angry members from taking more violent action that would undermine their case. The picket was having success. Apart from Brisbane, very little cargo was being moved from Patrick’s docks. An attempt by 500 police to move the protesters at Melbourne during the night was thwarted by a large picket supported by a second group of a thousand workers which surrounded police who withdrew in defeat.
North was not ready with his decision until Tuesday. He ordered Corrigan to take back his union workforce pending a full trial to decide if he had broken the law. He also said there was a prime facie case for conspiracy. But union celebrations were short-lived. Patrick sought an urgent appeal set for the following day. The appeal process took two more days. At 7.30pm that evening they decided to televise their verdict live on television. The three judges found North’s reason for judgement ‘free from apellable error’. The union had won again. But once again, Patrick fought on. They found a High Court justice Kenneth Hayne at 8.45pm who granted a stay until the following morning. The next day Justice Hayne extended the stay saying the High Court would hear the appeal on Monday.
The legal teams traipsed off to Canberra for the High Court ruling. For the first time in the court’s 97-year history all seven judges sat on an application for special leave to appeal. Patrick argued the Federal Court did not have the power to grant an injunction at this stage. They also said Justice North had effectively rewritten Patrick’s contracts to force it to use the union workforce exclusively. Their third argument was it was unfair to force administrators to run insolvent companies. Burnside, for the unions, reposted that the court had ample powers to prevent the conspiracy. The High Court finished hearing submissions on the Thursday and promised to deliver judgement on the following Monday. On that day, six of the seven judges upheld Tony North’s judgement and found in favour of the union and ordered Patrick to pay costs. PCS was out of business.
It seemed at first a great win for Coombs. However a majority made alterations to the orders which left it in the administrator’s discretion whether or not to resume trading. Peter Reith spun this as a defeat for the unions saying “there’s no way the administrators can keep trading... the wharfies will be out on their ear well before this reaches a trial”. The government pressurised the banks to wind up the companies and lay off the men. Coombs agreed for the men to return to work without pay to overcome this problem. They would not claim wages until the company had the money to pay them. On 7 May, the MUA returned to work in Melbourne. Corrigan used the redundancy money to extract concessions in wages and conditions.
Half of Patrick’s staff accepted those redundancies. The union’s day-to-day power on the docks was severely eroded. Corrigan did well. The dispute cost him $60 million but the new work practices would save him that same amount annually. His overtime and wages bill were halved. Managers now ran rosters not the union and the men could be asked to work 12 hours a day without claiming overtime. The redundancies financed in soft loans of $150 million from the Government. Patrick eventually passed on that cost to the stevedoring companies so there was little benefit to exporting and importing companies. By 2006 Patrick was making after tax profits of $145.1 million.
The Government claimed a victory of sorts with the end of rorted practices and a union-dominated workplace. It then turned the screw on the media whom it claimed was biased in the dispute. Senator Richard Alston bombarded the ABC with complaints of bias objecting to specific items. The ABC commissioned a Philip Bell report to refute the claims. The Opposition released papers in parliament in July 1998 to prove the conspiracy case but by then, no-one cared. The waterfront dispute was over.