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The Pamphlet Collection of Sir Robert Stout: Volume 81

VII.—Judge Backhouse's Report

VII.—Judge Backhouse's Report.

If hopes are dupes, fears may be liars.

We have been studying the working of a unique experiment in labour legislation, t!:e outcome of which is being closely watched by other countries. In New South. Wales a bill embodying the principle of compulsory arbitration (but without con-cliiation provisions) passed the Legislative Assembly last year, but was lost in the Council. Now, it is perfectly clear from the expressions used by the then Premier, Sir W. J. Lyne, that when he undertook the great responsibility of introducing a measure of such tremendous importance he must have been quite ignorant of the real nature and outcome of our act. It is indeed comical, and says little for the statesmanship of New South Wales, and indeed of the other Australian colonies, that their politicians should be so ready to slavishly follow the example of New' Zealand in this and other matters. It reminds one of our own action during the last Melbourne boom, when New Zealand was sunk in depression and we thought of nothing but studying and imitating the means by which the supposed marvellous prosperity of Victoria page 20 had been brought about. But it is not merely the supposed success of our labour legislation as a means of advancing the prosperity of the colony that has made it so attractive to Australian politicians, but rather its proved effectiveness in securing for the Seddon Ministry the support of the Labour party, and a long term of office. This is sufficient to account for the New South Wales Industrial Arbitration Bill, and for the infamous conduct of the first Commonwealth Government in introducing into their programme, for the sake of securing the Labour vote, two such momentous measures as compulsory arbitration and old-age pensions. If anything further were necessary to confirm thinking people in New Zealand in their opposition to federation the fact that the first Federal Ministry should consist of men capable of paltering with such subjects should be sufficient. The attitude of Mr B. R. Wise, Attorney-General of New South Wales, on this subject is difficult to understand. Here we see a pronounced individualist and author of an able book against Protection, advocating a measure which involves infinitely more of State interference and regulation of industry than does mere Protection. The position of Mr Reeves, the author of the New Zealand act, was very different: he described himself as "a straightout socialist" (whatever lie may be now), and I think it is perfectly clear from the extracts from his speeches given in my first paper that even the socialistic Mr Reeves would never have fathered our act if he could have foreseen chat it would be perverted into a system of State regulation of industries; one thing is certain—the New Zealand Parliament would not have passed it in 1894. When Mr Wise introduced his bill first he probably intended it, as Mr Reeves intended his bill, merely as a means for the prevention and settlement of strikes, and he was probably not aware of the fact that our act had never been applied to the purpose for which it was intended, when he referred to the success of our act in justification of his action. But he cannot urge that excuse any longer, for he cannot fail to see, even through the opaque medium of Judge Backhouse's report, that our system is not one for the prevention of strikes. The members of the New Zealand Legislature thought they were enacting a measure "to facilitate the settlement of industrial disputes" (in the words of the preamble); they find they have created a perfect Frankenstein's monster. If, in spite of our experience, Mr Wise persists in the attempt to foist upon his country an act which must inevitably be perverted as ours has been, then great indeed will be his responsibility; but, if by reason of the political exigencies of his party he should refuse to read the lessons to be derived from our experience, then the terms adequate to characterise his conduct would be such as no statesman would like to have applied to him.

Turning now to Judge Backhouse's report, the first thing that occurs to one is the strange fact that a judge should have been sent upon such a mission rather than an experienced business man. It shows clearly that those who selected him must have thought that what he had to report upon was a system for the settlement of real disputes, and not one for the regulation of industry. It is much to be regretted that the judge has failed to make it clear that he realised the difference between what he expected to find and what he actually did find. The omission renders his report not only of comparatively little value, but positively, misleading. He refers over and over again to "the principle of the act," and informs Ms Government and the people of the colony that in New Zealand "a very large majority of the employers interviewed are in favour of the principle of the act "; and yet he nowhere points out the divergence from the principle in actual practice—that, in point of fact, the principle has never been applied at all. The principle of which the employers approve is that for which the act was intended, not that to which it has been perverted. If the judge were to return to New Zealand he would find that the employers are only now realising what the act means in its actual application, and that they are as far as possible from approving of it; he would find, instead, that the feeling is rapidly spreading in the community that if the act continues to be abused it must become a curse and a nuisance, instead of what it was intended to be—a blessing. If the judge had exercised any penetration and sagacity he could not have failed to discover that what he found in operation is not a system for the settlement of industrial disputes (in the ordinary and proper sense), but one essentially the same as that existing in Victoria; the differences being that in Victoria the boards are serving the purposes for which they were created (for good or for ill), whilst our boards and court are serving a very different purpose from that for which they were created. And the Victorian system is much more rational m conception than ours. What is the reason that our system places a Supreme Court judge at the head of the Court of Arbitration, is simply that his function was intended to be the settlement of strikes ana ([,Spu likely to issue in strikes. Is it to be supposed that, if the New Zealand Legislature had intended to create an authority regulating all the conditions of industry, it page 21 would have chosen a judge for the purpose? There no presumption that a judge has any qualifications for the discharge of such "function. If Judge Backhouse had realised the real nature of the system he could not have failed to note the absurdity of committing to a court of any kind the regulation of industries As a tribunal for the settlement of real disputes, a court consisting of a Supreme Court judge and two members Presenting the contending interests might suit well enough; but to commit to a single individual, merely because he happens to be a Supreme Court judge, with an associate on each side for the purpose of pulling him in opposite directions, would be a supreme act of folly. This is what we have done in New Zealand, but we have the excuse that it is not what we intended; we did not foresee the possibility of the judge having to play the part of Governor-general of Industries, which the unions have imposed upon him. Judge Backhouse says: "There is one matter about which both sides are emphatic—namely, the necessity of having a Supreme Court judge as president of the court, and he leaves it to be inferred that this is on account of some special fitness in such a president; but the reason is simply that a judge is independent of the Executive. That any Parliament should, with full knowledge of the facts, deliberately follow our example is simply inconceivable. The unfortunate thing is that there is nothing to show that Judge Backhouse realised clearly the significance of the fact that the system he found in actual operation was something quite different from what he came to report upon; and that he professes to find in the system actually existing answers to questions regarding a system that has never existed. The judge says "the act has prevented strikes of any magnitude," and the statement will no doubt be seized upon by his Government as justifying their action; in point of fact, the words are meaningless in relation to a system that has nothing to do with the prevention of strikes. The statement is therefore misleading. Again, the judge says "the act has, on the whole, brought about a better relation between employers and employees than would have existed if there were no act.' Now, if by these words the judge means to say that relations are more friendly now than they were before the act, how is he to reconcile it with the fact stated by him-self that in less than five years 109 disputes have come before the boards, and that in only about a third of them was conciliation brought about. Formerly, the relations were generally friendly, but now they are just as friendly as those of litigants usually are. If the judge means that relations are now more friendly than they would be if the act were to be repealed, he is probably right, for the simple reason, that under the operation of the act labour has passed from the stage in which it enjoys and appreciates freedom into that in which it has become used to the exercise of tyranny.

If the New South Wales Government had appointed as its commissioner a business man of some perspicacity, who could see the true inwardness of our system for himself, instead of a judge, who merely summarises what he was told, we should probably have received some fresh light upon the subject, and found him arriving at some such conclusions as the following:—
1.That he found in operation a system' totally different from that which he expected to find, and from that which the-New Zealand Parliament intended to set up.
2.That the same thing will inevitably happen in New South Wales if an act should be passed on the lines of the New Zealand act.
3.That the experience of New Zealand affords no guidance as to the practicability of schemes for the settlement of industrial disputes by compulsory arbitration; but that it shows conclusively that it is impossible to combine in the same scheme conciliation and compulsory arbitration.
4.That a permanent tribunal set up for the settlement of industrial disputes will inevitably be perverted into a means of regulating all industries, if the workers are accorded the right of invoking the intervention of the court in any dispute; and that the way to avoid this is to adopt the Massachusetts system, under which it lies with the Conciliation Board to constitute itself a legal tribunal, in case of the failure of conciliation.
5.That the New Zealand experiment is valueless except for negative conclusions, inasmuch as the period of six years that the act his been in actual operation has been one of gradually increasing prosperity.
6.That the presumption against the success of any scheme for the arbitrary regulation of industry is fortified by the New Zealand experiment, inasmuch as it has largely increased the cost of living.

It only remains to add that the writer did his best as a member of the Legislature to secure the passing of the act; that he believed it would prove a beneficent measure, and still believes it would have so proved had it not been perverted to improper uses; that he has watched it closely from its inception, hoping against hope that it might yet fulfil its promise and justify the expectations of its author; that he has been reluctantly driven to the con- page 22 clusion that it is proving, and must more and more prove, a curse instead of a blessing; the the best thing that could happen would be the repeal of the act, but that this is impossible because of the domination of organised labour; that the trade unions, by persisting in their abuse of the system by using it as a means of tyrannising over employers and others, will sicken and disgust the community, and that when dull times come the act will be allowed to fall into desuetude. The experiment presents a remarkable illustration of the truth of Machiavelli's saying, "Let no man who begins an innovation in a State expect that he can stop at his pleasure, or regulate it according to his intention." Judge Back-house concludes his report upon the act with the following words: "Whatever may be the result, the world owes a debt of gratitude to New Zealand for having undertaken the task of demonstrating whether it is possible or not to settle industrial troubles by compulsory arbitration." If the judge had exercised some judgment and perspicacity, he might have earned the gratitude of his colony by pointing out that, although Now Zealand undertook the task, she has failed to perform it, or even to attempt performance; and that, instead of admitting her failure, she tries to delude herself and others into the belief that she has successfully performed the task she undertook: "her faith unfaithful makes her falsely true." As to the motives of the author of the measure there can be no doubt, but the outcome show6 how true it is that the highest motives lead the beet of men to the most doubtful of policies.


Printed at the Otago Daily Times Office, High Street, Dunedin.