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The Life and Work of Richard John Seddon

Chapter XV. — Conciliation and Arbitration.—Boards of Conciliation

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Chapter XV.
Conciliation and Arbitration.—Boards of Conciliation.

A tangled mass of diversity of opinion has sprung up around the scheme of conciliation and arbitration. It is the principal feature of the labour laws, the most important industrial experiment represented on the colony's Statute Book, and the most advanced step the colony has taken in industrial legislation.

It is good, it is bad; it is successful, it is unsuccessful; it is effective, it is ineffective; it is beneficial, it is injurious— according to the standpoint from which it is viewed. With many men it is a cherished conception; with many others it is a derided piece of empiricism. When it first came into operation, both industrial parties expected great things from it. On the one hand it would bring in a reign of industrial peace. Conciliation would take the place of the sour-visaged strike, and disastrous disputes would be superseded by honied words and compromises. On the other hand, it would kill industries, stifle enterprise, and chase capital out of the country, and the day that it became law would be as the day that came to lay the land waste.

The Act, as passed, establishes several Boards of Conciliation for industrial districts, and one Court of Arbitration for the whole colony. These two bodies are the principal features of the scheme. The Boards, which make recommendations, represent voluntary action. The Court, which makes awards, represents the principle of compulsion, and all the plenary and punitive powers of the Supreme Court. It has been described as the most powerful Court in the British Dominions. As far as its special functions are concerned, its powers are unlimited. All the ramifications of the colony's industrial life page 239 come within its jurisdiction. Its scope has been widened in later years to include railway men, shopmen, clerks, farm labourers, and almost all wage and salary-earners. Great enterprises hang upon its awards, and its decisions directly or indirectly reach all classes of the community. By its operations prices are raised and lowered. There is hardly any corner of the social life of the colony that has not felt its influence. It deals with all questions relating to work done by any workers, and with the privileges, rights, and duties of employers and employés in any industry. The hours of work, the employment of children, the age, qualification, and status of workers, and the terms and conditions of their work, come within its jurisdiction. When it made its first appearance on the Statute Book, it boldly introduced itself, in the face of the accumulated prejudice of many years, as “an act to encourage the formation of Industrial Unions and Associations,” and it did not attempt to hide the fact that its mission was to interfere between master and man and to enter into industrial disputes.

Mr. Reeves, its author, spent laborious days and weeks in sketching his scheme. The statutes of England, America, and Australia were searched for precedents. What was considered bad in them was thrown aside, and what was deemed good was taken, and was fused into the main idea. “This Bill,” Mr. Reeves was once heard to remark, “has been drafted and drafted, and I have been so dissatisfied with some parts of it that I have altered it again and again.”

The most effective opposition to the measure came from the nominated Upper House (the Legislative Council), but the feeling against it found loudest expression in the House of Representatives, where the doctrine of non-interference was strongly upheld.

An Arbitration Bill was drafted by Mr. Reeves as early as 1891, when the Liberal Government came into office. It was circulated amongst members, but the majority of them did not receive it with much favour, and as the Government was busy with other questions at the time it was not forced on to the House of Representatives. In the following year, however, Mr. Reeves brought down a complete scheme for adjusting labour page 240 disputes between Trades Unions and Employers' Associations. It took no notice whatever of disputes between employers and bodies of men who were not legally associated. Mr. Reeves believed that disputes of that nature were not large enough to call for State interference. He could not see how an award would be enforced against nebulous clusters and mere shifting groups of units, and he provided that although an employer might be the unit on one side, only a union must be the recognised unit on the other.

The Act divides the colony into industrial districts. In each district a Board of Conciliation, composed of equal numbers of employers and workers, with an impartial chairman, may be set up. At the request of any party to an industrial dispute, the Board is to call the other parties before it, and, after hearing the case, to make a recommendation, which may or may not be accepted by the parties to the dispute. Each Board has full power to take evidence and compel attendance, but its decision is a recommendation, not an award.

If the recommendation is not accepted, either party to the dispute may appeal to the Arbitration Court, which is a tribunal. It consists of a president, who must be a judge of the Supreme Court, and two assessors. One of these is elected by associations of employers, the other by a federation of Trades Unions. The Court is unfettered by precedent and it settles its own procedure. Its awards have the same force as decisions of the Supreme Court. There are therefore many Boards of Conciliation, but only one Court of Arbitration.

The Act, as its first title announces, deliberately encourages workers to organise. At the same time it deprives them of the right to strike. “When, in obedience to the law,” Mr. Reeves said, “they renounce striking and register as industrial unions, it does not seem amiss that they should receive some special consideration. Their exertions and outlay in successfully conducting arbitration cases benefit non-unionists as well as themselves, though the non-unionists have done nothing to help them. Non-unionists must get the same pay as unionists, and unionist strikes are abolished.”

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It was the compulsory clauses in Mr. Reeves's Bill that were assailed with the greatest vigour when the measure was introduced. Hardly any exception was taken to the Conciliation Boards, but the Arbitration Court was regarded with something more than dread. “Who but a lunatic,” demanded one member of the House of Representatives, “would invest money in an industry in this colony if that industry is to be subject to the verdict of an irresponsible and presumably incompetent tribunal?”

Expressions of that nature found a ready echo from many members. “This legislation,” they said, “will not tend to the conciliation of the classes, but to their estrangement.” “The object is to resuscitate and re-establish unionism.” “The Bill has been introduced at the dictation of unionists and under their guidance, and disastrous results must follow. It will throw back the cause of labour and of conciliation. It will bring about fresh strife and trouble. It will be the death-knell of unionism, and of the proper representation of the industrial classes in the struggle that will always exist between capital and labour. It is not conciliation; it is coercion; it is monstrous; it is a mischievous thing; it is a sham.”

In the Legislative Council there were drawn up five “Reasons” why the compulsory clauses should be struck out. It was held that Courts of Arbitration, with compulsory powers, were not so likely to effect a settlement of an industrial quarrel as were Boards of Conciliation; the power of inflicting fines given to the Courts in the Bill seemed to be quite unsuitable for the settlement of trade disputes; Courts of Arbitration without the power of enforcing awards would resemble the Courts of Conciliation provided for in the Bill, and would, therefore, be unnecessary; there was reason to believe that the Boards of Conciliation would be more successful in the settlement of disputes if no Courts of Arbitration were in existence; if voluntary Boards of Conciliation did not go to the root of the conflict between capital and labour there was no likelihood of Courts of Arbitration, armed with such unsuitable powers as the infliction of fines, doing so; therefore, the Courts were not needed.

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Three times Mr. Reeves prepared a complete and comprehensive Bill. Three times he withdrew it, twice in disgust at the manner in which it was mutilated by members of the Legislative Council, whom he, in a fit of tartness, denounced as “a little handful of domineering nominees.”

In 1892 and again in 1893, the House of Representatives passed the Bill with the conciliation and arbitration clauses complete. On both occasions the Legislative Council cut out all provisions dealing with arbitration. But compulsion was Mr. Reeves's standard of faith, and rather than see the measure become law in a mutilated form, he reluctantly moved for its discharge from the order paper. The result of the general election in 1893 convinced the Legislative Council that the measure was desired by the country, and in the session of 1894, when it was submitted to the nominated chamber for the third time, the constitutional practice was adopted, and opposition was offered no longer. The Bill was passed with its compulsory clauses complete, but, although it was then placed on the Statute Book, it did not come into force until New Year's Day, 1895.

The scheme in operation has wholly fulfilled the anticipations of neither friends nor enemies; but it has justified the opinions of the former much more than those of the latter.

It was thought by its originator that most of the work would be done by the Boards of Conciliation. The Court was to be merely a stand-by. The powers given to it were so far-reaching that its constitution was regarded with fear, and it was thought that only in exceptional cases would its great powers be exercised. In 1894 Mr. Reeves said: “I do not think the Arbitration Court will be very often called into requisition; on the contrary, I think that in 99 cases out of 100 in which labour disputes arise they will be settled by the Conciliation Boards.” He also, evidently, placed his faith in the Boards, which were to be the main part of the machinery. In the following year, 1895, however, after he had had a few months' experience of the attitude adopted towards the Act by a section of the employers, he modified this opinion and pointed out that the Boards were not an indispensable part of the scheme, as the Act could be worked without them.

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Strangely enough, it is the compulsory portion of the Act that has withstood all attacks, while the conciliatory portion has partially broken down. After the Act had been in operation for some years, its critics brought the full force of their attacks to bear upon the Boards, which they saw were the weaker part. The Boards designed by Mr. Reeves were unpaid bodies. When the Legislative Council, in 1894, inserted an amendment in the Bill providing for the payment of members of the Boards, he opposed the proposal, and, as he was supported by the House of Representatives, it was struck out. He left the colony to go to London in 1896, and the Government then decided that members of the Boards should be paid a fee of £1 1s. for each day they sat.

This has helped to bring about the undoing of the Boards, as it placed a powerful weapon in the hands of their enemies. When the Boards were arraigned before Parliament and charged with having failed to discharge their duties, it was alleged that members stirred up strife with the object of bringing about disputes so that there should be more work for the Boards and more fees for the members. There seems to be some truth in the allegation as far as one Board at least is concerned, but it is unjust to make the charge general. Judge Backhouse, who was appointed by the Victorian Government a Royal Commissioner to inquire into the New Zealand scheme, says that it is clear to him that some members of the Boards entirely failed to appreciate their functions. In taking an active part outside in furtherance of the claims of one of the parties, he finds that they became partizans out and out, rendering their bodies Boards of Irritation rather than Boards of Conciliation. He believes that the adoption of these reprehensible methods is partly due to this “vicious system of payment by fees.”

The workers have always favoured the Boards. They have not ceased to fight against any curtailment of the functions those bodies were given in the original scheme. Throughout the Act's operation, the workers have maintained that the Boards are highly desirable. They say that the very informality of the proceedings before the Boards is a high recommendation to men who have not been trained to appear before a page 244 tribunal. They meet members of the Boards, and the representatives of the employers at the meetings of the Boards, man to man and face to face across the table. No lawyers are allowed without the consent of both parties. The chairman is not “Your Honour.” Free and open discussion is not hampered by plaguey points of law and technicalities. Question is answered by question, and sometimes jest is intermingled with earnest. “Now then, Jack, haven't I always treated you well?” was the question a master hairdresser put to a hostile witness at a meeting of the Canterbury Board. In the Court, on the other hand, the President sits in his wig and gown, and the proceedings necessarily partake somewhat of the dignity and stiffness of an ordinary civil sitting of the Supreme Court. While employers declare that the Boards are worse than useless, workers are almost unanimous in maintaining that the Boards' work on the whole is well done, and that they are very necessary. An influential manufacturer at the head of one of the largest organisations of employers in the colony has frequently stated that the Boards have failed to conciliate. This opinion has been endorsed by many other employers. The employers' representative on the Court, at a sitting in Christchurch, said that the business of that tribunal was to undo a good deal of mischief done by the Boards. On the following day, however, when his statement was challenged, he modified it by explaining that he had meant to say that the mission of the Court was to make peace.

In the House of Representatives, the Boards in operation were denounced as unbusinesslike, mischievous, and sordid institutions. It was alleged that members prolonged cases in order to secure more fees. These extravagant attacks were courted by one of the Boards, which was composed of men who gained the respect of neither employers nor workers; but in districts where the members are carefully selected, the Boards and their decisions are above reproach.

After the critics had been hammering at the Boards for some time, they were asked to name a substitute. Amongst the most feasible suggestions was that there should be established in each district a Board of Experts, consisting of twenty-four page 245 employers and twenty-four workers. Each party to a dispute would appoint one of these experts to watch its interests. The members of the Board, meeting together, would elect two more of their number, and these four experts, with a Stipendiary Magistrate as chairman, would be the body to deal with the disputes.

Another suggestion came from Mr. Justice Cooper, one of the Presidents of the Court, who considers that the Boards, as originally constituted in regard to representatives of the two parties, could be retained if there were chairmen with legal knowledge.

But the workers oppose these suggestions, and several others, which have been put forth by the employers. As to an Expert Board, it is urged that experts are almost sure to be partisans. The Court already has power to call in expert advice to help it out of a difficulty, and the Boards may take the same action. But even in that limited sphere, experts have not been a success. There was a dispute a few years ago in connection with the Christchurch tailoring trade. The Court, finding that a mass of technicalities was involved, called in the assistance of two experts. The Act provides that one of them must be nominated by each party. The experts in this instance were given full and explicit instructions by the Court to take the proposed log, deal with each item, and report to the Court what, in their opinion, was a fair allowance. The experts studied the items, which numbered about one thousand, for more than a month. When the report was presented to the Court, the employers promptly declined to agree to it and asked that it should be set aside. The plea they made was that their own expert was incompetent. The Court refused to set aside the report and accepted the experts' advice.

When a case affecting the bookbinders of Wellington was considered, the Court again sought guidance from experts. “I had to call in the help of experts,” the President said later on, “but, unfortunately, they disagreed upon every item.” The proposal to establish Boards of Experts, therefore, had to be thrown overboard.

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As time went on, however, it became clear that the status of the Boards was not satisfactory. Something would have to be done to change their constitution or amend it. No opportunity of throwing discredit on the Boards was lost. As has been stated, they can summon witnesses and compel persons to attend their sittings. Employers, acting under compulsion, put in an appearance when cited, but many of them openly announced their intention of ignoring the recommendations, and of taking the disputes on to the Court, no matter what the nature of the Boards' conclusions might be.

An outcry was raised throughout the whole colony in 1901 when it was reported that no fewer than 400 employers in one trade had been summoned before a Conciliation Board. That body was denounced on all sides. It was asserted that the employers were being persecuted, and Mr. Seddon startled the colony by stating that the unions were “riding the thing to death.” Later on, however, it was explained that at first only a few of the employers were cited. They insisted that the citation should be extended, and they forced the union to cite four hundred, ostensibly to bring all the employers into line, but really, it was reported at the time, to bring the Boards into disfavour.

A leading boot manufacturer complained that one of the Boards dealt with the bootmakers' log, containing hundreds of items, considered all the conditions submitted by both sides, took voluminous evidence, and came to a decision in about the same time that an ordinary man would take to read the documents submitted. The Court, he added, spent double the time over the dispute, although the differences had been narrowed down to three points. He therefore inferred that the Board had performed its duty in a perfunctory manner.

Dissatisfaction grew, until the opponents of the Boards succeeded in partially superseding them and brushing them away. A clause was inserted in the Act providing that a Special Board of Conciliation may, on the application of all parties to a dispute, be set up to meet an emergency or deal with any special case. These bodies have the same constitution and powers as page 247 the ordinary Conciliation Boards, but all the members, except the chairman, must be experts in the trade in which the dispute has occurred, and when the dispute has been settled they vacate office. Up to the present time, no application has been made for setting up any of these Special Boards.

That was the first blow to the Conciliation Boards. The second blow came in 1901, and a pathway was then opened up for completely ignoring them. Previously, it was impossible for a dispute to reach the Court without first going through one of the Boards, and being referred from a Board to the tribunal. The amendment of 1901 allows disputes to be taken straight to the Court on the application of either party. This step was first taken in committee of the House of Representatives. The amendment was moved by a member who is a private employer of labour, at an early hour of the morning, after an all-night sitting, and it was carried by a thin and jaded House. As soon as the amending Bill was passed through committee, and was reported, Mr. Seddon expressed his deep regret at what had been done.

“This is bound to cause friction with the workers,” he said. “It will create a feeling of resentment, because they will consider that they have now no opportunity to conciliate. It would have been wiser if we had provided that both sides should consent to a case going to the Court before the Board could be superseded.” There was still some hope that the Boards would be saved from the slight the House placed upon them. The Legislative Council had consistently and strenuously opposed arbitration and supported conciliation. Conciliation had been practically struck out of the measure. Would the Upper House insist upon its retention, bringing forth five cogent “reasons,” showing that the Boards would be “more successful in the settlement of disputes?” This was in Mr. Seddon's mind when the amendment was sent to the Legislative Council. He had bowed to the will of the majority in the House, but he felt convinced that the members of the other chamber would be consistent throughout and would refuse to agree to the sweeping change.

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But those who once would have nothing but conciliation would now have nothing but arbitration. In the face of almost frantic appeals from friends of conciliation in the chamber, the amendment was passed, and the Bill was sent back to the House of Representatives. It was then that Mr. Seddon found expression for his feelings.

“It is not for me,” he declared bitterly, “to attribute motives, or to say anything disrespectful of those who have practically abolished the Boards, taking upon themselves this grave responsibility. But I have asked myself: Is it a means to an end? Is there a desire to do away with conciliation and to force us to have nothing but the Court, with a view to ultimately repealing this labour legislation? Time alone will solve that problem. I do not say that those who differ from me on this point are wrong; but the departure is of a very serious nature, and if a conflict is provoked by forcing parties to the Court, the responsibility must be upon other shoulders, not upon mine, or upon the shoulders of those who represent labour in this Parliament. The only reason given for this important change is that there have been shortcomings in the administration of this part of the law. It is not a good reason, it is not sufficient.”

It was not very long before the usefulness of the Boards, in one respect at least, was clearly demonstrated. The Court immediately became congested with a mass of business with which it could not deal. It travelled from one end of the colony to the other. While it was away in the north, scores of cases awaited its attention in the south. Unionists cried out against it for not dealing with its business more expeditiously, and blame was heaped upon it for a dilatoriousness that it did not display.

The discovery was then made that the Boards had performed very important duties. It is impossible to set down the results of their work in figures. A statement of the number of recommendations they made, and the number of those recommendations that both sides accepted, would not give an adequate idea of what they accomplished. They dealt with masses of conflicting evidence, narrowed differences, swept away page 249 technicalities, and reduced chaotic disputes into compact cases, which could be grasped by the Court without the expenditure of much time and trouble.

No Board dared to refuse to hear any witness brought forward, for fear of laying itself open to a charge of being prejudiced against one side. In some cases, between 50 and 60 witnesses were called before Boards, the evidence of one duplicating that of another. When these cases were taken from the Boards to the Court, the numbers of witnesses were reduced to six or seven, whose evidence had been shown by the proceedings before the Boards to be important and essential. By means of the Boards, the Court was sometimes able to settle in an hour a case to which it now has to give days.

The proceedings of the Board have often been watched with close attention by men who have come to New Zealand to inquire into the working of the Act. A brief sketch of these proceedings will be interesting.

When a dispute has been referred to a Board, the Clerk of Awards for the district appoints a time for the hearing. Up to the present time, nearly all the citations have come from the workers. The union submits a statement of claim. In most cases the claim contains four prominent items, namely, wages, hours of labour, rate of overtime pay, and the proportion of apprentices that should be allowed to the number of journeymen. There are generally many minor points of difference, arising from the nature of the particular business carried on; but these are the items that evoke most discussion. In their general character, all statements of claim are very similar.

The leading delegate of the workers explains the position from the union's point of view, and urges reasons for granting the men's demands. He deals with the statement item by item. In touching on wages, he shows, sometimes by elaborate sets of figures, that the colony is prosperous, that the industry is flourishing, or at any rate, is in a better position than it was some years previously, and that the employers are able to pay higher wages than the existing rate. The hardships of the men are described, and if the trade is a dangerous one that fact is pointed out. The evils of boy labour are depicted. A plea page 250 is put in for lads who are learning the trade, and who, it is urged, should receive proper instruction instead of being allowed to pick up information in a hap-hazard manner.

Then, item by item, the statement is gone through by one of the employers' delegates. He agrees to some of the items, but opposes others. He controverts the assertions of the other side. The industry, he affirms, cannot afford to pay higher wages; it is suffering from the effects of importations from other countries, where labour is cheap; foreign competition is keen; the local industry is heavily handicapped even under existing conditions; it cannot stand the strain of further disabilities; the workers are treated very well; their demands are exorbitant, absurd, or extortionate; and so on.

Witnesses for both sides are examined and cross-examined. This stage of the proceedings generally occupies a great deal of time, owing, to a large extent, to the duplication of evidence and the inexperience of the examiners. The chairman is not strict, and does not insist on an observance of the ordinary rules for taking evidence. When the evidence is concluded, delegates for both sides sum up, much on the same lines as those taken in addressing the Board.

The Board may at once sit privately to consider what recommendation it should make; it may postpone its recommendation pending a possible settlement of the dispute by arrangement; or it may appoint a committee of its members to endeavour to promote that object. If a mutual arrangement is come to, it is embodied in an “industrial agreement,” which is forwarded to the Court, and is given the same force as an award.

But if all attempts to bring about an agreement fail, the Board takes the dispute in hand. It deals with each item separately, and makes a recommendation. It simply recommends the parties to adopt its decision as an equitable adjustment of the case. The recommendation sets forth the period during which the settlement proposed should remain in force. That period must not be less than six months or more than three years. If both parties accept the recommendation it becomes law. If either party is dissatisfied with the Board's recommendation page 251 as a whole, or with any item, it can refer the whole case, or the disputed point, to the Court, and the Board's connection with the dispute is then at an end.

In practice, however, the Boards, useful though they proved themselves to be, have been thrust aside. They are still brought into requisition occasionally, but, as has been shown, they failed to do what was expected of them, and the bulk of the business that ought to go to them is now passed straight on to the Court. As some recompense for the treatment they have received, the opinions of the Board, by an amending Act, instead of being mere recommendations, are given legal force, in default of an appeal against them to the Court. The Boards, therefore, have in a way been made courts of first instance.

Before leaving the Boards it will not be out of place to quote the words of Mr. Justice Cooper at Christchurch, after an attack had been made on them. He said:—

“I would be very sorry if there was any impression in the public mind that the Boards are not a necessary part of the Act. They are very necessary. They are capable of bringing the men and the employers together, and in many instances they have succeeded in conciliating.”

Continuing, he said that he thought his colleagues would agree with him that the Canterbury Board of Conciliation had done very good work, and he, for his part, would be very sorry to see the Boards abolished. He spoke for his colleagues as well as himself when he said that the Boards were an inherent feature of the Act, and, as far as he knew, they had done their work faithfully and well.