'I Will Retrench You Further'


Finally, after a year of industrial negotiations, the Baillieu government and the Community and Public Sector Union (CPSU) have reached a public service wage agreement. The protracted negotiations highlight the considerable animosity that exists between the two groups. Love lost? Certainly not!

Both groups have claimed the result as a victory.

The state’s 36,000 public servants will be pleased with the 15.5 per cent wage increase over 42 months. The outcome means a public servant on an average salary of $65,000 will be almost $10,000 better off by the time the agreement expires at the end of 2015.

A one off payment of $1500 will also be deposited into the accounts of all public servants by the end of the month. In addition, the protection and (in some areas) strengthening of employment conditions will be genuinely welcomed.

Conversely, having to accommodate the significant wage increase will internally vex the Baillieu government. Indeed, the industrial strategy of limiting the growth of wages to 2.5 percent per annum has ostensibly failed.

It now appears obvious that the Baillieu government did not want to resolve the matter quickly. An initial period of conciliation led to an industrial stalemate between the two parties. After months of unproductive talks, and to the displeasure of Baillieu government, a phase of enforced arbitration followed.

Fair Work Australia remained unconvinced that the team of expensive lawyers representing the government bargained in "good faith". Forced to the negotiation table the Baillieu government was left with few options and succumbed to demands it had hitherto refused. However, knowing that 4200 public service positions are disappearing will assuage the Coalition’s momentary discontent.

Yet, most commentary won’t locate the agreement within the context of history. Why should it? Political and labour history is often deemed overly elusive, and of little modern value.

The current round of industrial conflict between the Victorian state government and its employees mirrors events 120 years ago. The similarity between Premier Baillieu’s recent efforts to radically reduce the size and scope of the public service, with the actions of Conservative governments of the early 1890s, is striking.

"The annals of the final decade of the colony of Victoria open under gloomy auspices," wrote historian Henry Turner in 1904. The statement, one of grim reality, describes the hopelessness and despair that gripped the entire community in the 1890s. It was a period of economic catastrophe in which the excesses of "Marvellous Melbourne" gave way to venality and greed.

During the 1880s fantastic sums of money were borrowed and spent on expanding the railway network, financing the building sector and developing the pastoral industry. Real estate prices skyrocketed and Victoria became a sort of speculator’s club.

However, the prosperity was an illusion. By 1890 it had become evident that a property bubble had masked structural weakness in the Victorian economy. The London money market checked the supply of capital to overseas funds. Between 1891 and 1894 a number of major banks and building societies crashed as a result of escalating debt and the subsequent liquidity crisis.

The working class felt the full force of the depression. Many lost their homes and entire life savings. At the height of the depression unemployment reached a third of all wage earners. Those who were able to keep their jobs commonly experienced wage reductions of up to 25 percent.

Between 1890 and 1894 a trio of conservative Premiers, James Munro, William Shiels and James Brown Patterson, attempted to navigate Victoria through the economic crisis. Their principal strategy was to provide oxygen to the myth that the public service was complicit in the calamity. It was convenient for government ministers to indict the public service on counts of greed and fiscal mismanagement.

In hindsight it is evident that a general fear of "state socialism" was commonplace. Concern regarding the size of the public service became a political obsession. This obsession fuelled the general suspicion that labelled public servants as "lazy" and "inept". The public service was considered too powerful and too large.

By 1894 hundreds of public service positions had disappeared. Despite the cautious pleading of the public service union to simply halt the intended wage increments the respective governments chose instead to manipulate the public service under the guise of fiscal responsibility.

Munro was dubbed the "do nothing" Premier. "Making him premier was like placing an alcoholic in charge of the taproom," argues historian John Lack. Shiels and Patterson were no better. Public service retrenchment and cuts to public works expenditure failed to balance the budgets.

On 15 August 1894, a The Age articulated the overwhelming sense of despair: "Everyday is a new peril when an imbecile holds the reins on the box seat of the national coach." Patterson would even tour the countryside declaring "labour could never be got cheaper than at present".

Strong parallels between the experience of conservative premiers of the early 1890s and Ted Baillieu can easily be drawn.

The reluctance of the Baillieu government to build a strong relationship with its workforce is indisputable. By retrenching 15 percent of the public service the Coalition is adopting the political rationale traditionally advocated by conservatives.

The public-choice model of government suggests that the market can meet the state’s social infrastructure requirements more effectively. Clearly, the $900 million of labour hire arrangements held by the Victorian government is indicative of this philosophical disposition.

Perhaps the major difference today is that the Coalition’s actions are publicly housed in slightly more sophisticated rhetoric. We hear that the current "fiscal challenge" is significant and that the state has no other option than to maintain a surplus at all costs to protect the revered AAA credit rating.

For the Coalition another parallel might also be drawn. In the lead up to the 1894 colonial election, Patterson sought political advantage by attacking the public service. He proclaimed to public servants: "I will retrench you further". Moreover, he alleged that the pension system for public servants was "monstrous".

Unable to protect the jobs of public servants throughout the depression, the public service union, despite a near fatal drop in membership, changed its organisational approach and went through a period of initial radicalisation. In a daring move the normally malleable public service union responded to the Patterson government. Union Secretary Ernest Joske warned, "every government which had ignored just claims had been hurled from power".

Throughout the 1890s measures of retrenchment had the effect of politicising the public service by strengthening its ties with the nascent Labor Party. At the 1894 election James Brown Patterson was decisively beaten.

In 1894 the public service vote was small. However, despite the present trajectory of retrenchment the public service vote now holds greater electoral significance. Time will tell what happens at the 2014 state election; history is often repetitive.

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