The literature

There are broadly two key approaches to labour enforcement in the literature: historical and organisational. The historical approach examines Australian enforcement at a federal level over time, predominantly focussing on enforcement activities by federal labour inspectorates since their commencement in the mid-1930s (Bennett Reference Bennett1994; Goodwin and Maconachie Reference Goodwin and Maconachie2007, Reference Goodwin and Maconachie2011, Goodwin Reference Goodwin2003). Other contributions to this approach have examined the role played by trade unions, labourist judges and policy in federal Australian enforcement over time (Flanagan and Clibborn Reference Flanagan and Clibborn2023; Hardy and Howe Reference Hardy and Howe2009; Lee Reference Lee2006; Quinlan and Sheldon Reference Quinlan and Sheldon2011; Schofield-Georgeson Reference Schofield-Georgeson2022a).

The organisational approach, by contrast, predominantly focuses on the enforcement activities of the Fair Work Ombudsman (FWO) or federal inspectorate, since the re-invigoration of federal enforcement in 2006 (Hardy and Howe Reference Hardy and Howe2017; Hardy et al Reference Hardy, Howe and Cooney2013, 566, 581; Landau et al Reference Landau, Cooney, Hardy and Howe2014). This approach emphasises how contemporary politics and legislation, as well as departmental policy, inspection and litigation strategy, affect various types of regulatory outcomes in the realm of labour enforcement.

The historical approach is arguably more critical, where its method enables comparison and observation of clear political patterns, derived from longitudinal data and economic history. Yet this is not to dismiss the organisational approach, which is arguably more impactful than the historical approach because its methods necessarily involve researchers working with the federal inspectorate. This approach has seen researchers learn from their embeddedness to assist with trialling and advising on regulatory strategy. Both approaches make insights that have been crucial to the development of the research in this article.

This historical literature provides a range of useful schematics with which to analyse enforcement. Bennett, for example, examined award enforcement by the federal wage inspectorate throughout the late 1970s and 1980s (Bennett Reference Bennett1994, 145–164). Her study focused on enforcement processes such as inspection and prosecution policy and its consequences for cooperation with the inspectorate by employers and unions, as well as remedial action taken by the inspectorate in the form of fines, arrears collected, and deterrent strategy. Enforcement was contextualised against a background of inspectorate powers, funding and political interference. Bennett (Reference Bennett1994, 164) concluded that enforcement agencies are largely political constructions whose efficacy reflects the perspective of a reigning government and the political hue of their enabling legislation.

In the mid-2000s, Goodwin and Maconachie largely replicated Bennett’s approach but arrived at a different conclusion. They found that governments of all persuasions fund or defund and dictate inspectorate policy based on other, non-ideological reasons, such as political convenience (Goodwin and Maconachie Reference Goodwin and Maconachie2007, 534–541). They nevertheless added an intricate and multi-dimensional analysis of federal wage enforcement processes (Goodwin and Maconachie (Reference Goodwin and Maconachie2007)). In their first and most comprehensive article on the subject, Goodwin and Maconachie (Reference Goodwin and Maconachie2007) explored the operations of the federal inspectorate between 1952 and 1995, charting employer evasion of entitlements and its relationship to shifting enforcement practices. This study also provided the most comprehensive description of the federal legislative and institutional enforcement framework. It examined three specific aspects of inspectorate strategy: (i) inspections; (ii) prosecutions; and (iii) monetary recovery. As to inspections, Goodwin and Maconachie concluded that a transition from ‘routine’, in-person inspections to complaint-based, ‘quick and cursory’ telephone checks diminished breach detection over time. As for the official ‘last resort’ prosecution policy, they described how it fluctuated between a weak persuasive compliance model and a strong insistence compliance model (Goodwin and Maconachie, Reference Goodwin and Maconachie2007, 535). And with respect to monetary recovery, they show how it was used as a substitute for prosecution from the 1980s onwards. Their methods were largely quantitative, drawing upon departmental statistics to establish numbers of award inspections, monetary complaints, prosecutions, charges laid, convictions, penalties and arrears recovered. These methods and types of data (where available) have been replicated in this study. Where possible, qualitative data regarding inspectorate policy and strategy has also been sought, although this information is nearly non-existent, with little archival material on the subject and only snippets of fading memory from a small handful of long-retired practitioners in the jurisdiction.

Nevertheless, the historical literature has focused exclusively on the enforcement of wages and entitlements under federal awards by a federal wage inspectorate. The author knows of no other research regarding modern State wage enforcement by an inspectorate and trade unions.Footnote ¹ Extrapolating from their work in the federal jurisdiction, Goodwin and Maconachie claimed that ‘from 1906, monitoring and enforcement were neglected’ and that ‘unions provided the only form of enforcement for the bulk of the first 50 years of the … operation’ of the Conciliation and Arbitration system with ‘the role historically ascribed to unions approximat(ing) that of the official regulatory agency’ (Goodwin and Maconachie Reference Goodwin and Maconachie2011, 63). This claim has been repeated most recently by Flanagan and Clibborn (Reference Flanagan and Clibborn2023, 344, 354). Relying on this notion, Australian industrial relations and legal scholars have repeated the claim that minimum standards enforcement wage is either unproblematic or of little interest (Bennett Reference Bennett1994, 145; Isaac and McCallum Reference Isaac and McCallum1989, 308). And general histories of the State industrial jurisdiction have neglected the subject (Markey Reference Markey1988, Reference Markey1994; Patmore Reference Patmore1991). To be fair to industrial scholars, the picture of the federal inspectorate that emerges from the historical enforcement literature is that of a relatively small-scale operation. This has led to an alternative claim that collective bargaining, rather than enforcement, was solely responsible for the relatively high standards of living and lower rates of social inequality enjoyed by Australian workers throughout the mid- twentieth century (Flanagan and Clibborn Reference Flanagan and Clibborn2023, 354; Isaac Reference Isaac2018; Senate Economics References Committee (hereafter ‘SERC’) 2022, 22; Schofield-Georgeson Reference Schofield-Georgeson2022a, 70).

While the federal inspectorate was comparatively insignificant during this period, the findings of this study suggest that inspectorates within the states were significant features of the conciliation and arbitration system, broadly defined, from the early twentieth century. Fresh evidence presented here ascribes much more industrial muscle to State inspectorates than has hitherto been understood, elevating the importance of industrial inspectorates to enforcing the outcomes of bargaining, agreement-making and standard-setting. As shown below, throughout the twentieth century, a majority of underpaid Australian wages were recovered by State inspectorates in State industrial jurisdictions, not at the federal level. If the example of NSW is extrapolated to other Australian states over the same period, a picture of labour enforcement on a massive scale begins to emerge – at least by comparison with the efforts of the current federal regulator (FWO).

Organisational enforcement approaches, by contrast, have emphasised the efficacy of the current regulator and its reinvigoration in the post-Work Choices era (Hardy and Howe Reference Hardy and Howe2017; Hardy et al Reference Hardy, Howe and Cooney2013; Landau et al Reference Landau, Cooney, Hardy and Howe2014). Following the work of regulation and labour enforcement theorists (Ayres and Braithwaite Reference Ayres and Braithwaite1992; Baldwin and Black Reference Baldwin and Black2008; Gunningham Reference Gunningham2007), organisational enforcement researchers have documented a strategic regulatory ‘mix’ of compliance and deterrence measures, based on the now familiar enforcement ‘pyramid’ prescribing escalating severity for repeat or egregious regulatory breaches (Hardy and Howe Reference Hardy and Howe2017; Hardy et al Reference Hardy, Howe and Cooney2013;). Deterrent measures such as prosecution and litigation are reserved for the worst offenders, while compliance measures such as enforceable undertakings, investigations and industry campaigns comprise the overwhelming majority of the FWO’s work (Hardy and Howe Reference Hardy and Howe2017; Hardy et al Reference Hardy, Howe and Cooney2013; Landau et al Reference Landau, Cooney, Hardy and Howe2014). Enforcement scholars have demonstrated a significant increase in FWO litigation – from six prosecutions between 2005 and 2006, to the adoption of an internal policy to litigate between 50 and 60 matters per annum – which appears to have been sustained since 2006 (Hardy et al Reference Hardy, Howe and Cooney2013, 566, 581). Problematically, however, this amount of litigation has been celebrated as ‘the most energetic and possibly best-resourced award enforcement agency that we’ve ever had’ (Vice President of Fair Work Australia, Graeme Watson, quoted in Hardy, Howe and Cooney, Reference Hardy, Howe and Cooney2013, 566–567). While likely the best resourced, the data in this article casts doubt on the ‘energetic’ nature of the current inspectorate’s approach to enforcement – litigation in particular.

In addition, the organisational literature has confirmed a waning trend in trade union underpayment litigation (Hardy and Howe Reference Hardy and Howe2009). This is predominantly due to declining union density, restricted rights of entry, and anti-union legislation as well as a more powerful and better resourced government inspectorate (Landau et al Reference Landau, Cooney, Hardy and Howe2014, 9). Union officials have also perceived themselves to be operating within an increasingly litigious environment (Landau et al Reference Landau, Cooney, Hardy and Howe2014, 40–42). Conversely, however, the data provided here confirms a steep decline in union underpayment litigation from a significant volume of union prosecutions in the State jurisdiction in the mid-twentieth century. It would appear that the current federal underpayment jurisdiction is far less litigious, despite an increase in industrial legislation designed to regulate trade unions – likely giving trade unionists the impression of shifting to increased litigiousness (Schofield-Georgeson Reference Schofield-Georgeson2022b).

Regulation theorists such as Braithwaite have sometimes treated the disappearance of comprehensive regulation, represented by the former state industrial jurisdiction, as a mere ‘shift’ in regulatory approaches, toward a ‘smarter’, ‘leaner’ and ‘mix’ of considerably more lenient sanctions (Braithwaite Reference Braithwaite2005, 1–2; Gunningham et al Reference Gunningham, Grabowsky and Sinclair1998, 42–47; Hawkins Reference Hawkins2002). As Braithwaite observed, direct regulation gave way to a form of regulation in which markets and private ordering, self-regulation and corporate governance took precedence over direct state intervention (2005, 1–2). However, as three recent major public inquiries have found, the relative disappearance of direct regulation such as investigation, litigation and prosecution has resulted in regulatory failure and its reinstatement is sorely needed (Banking Royal Commission 2019, 207–210; Price-Gouging Inquiry 2024, 10; SERC 2022).Footnote ² The demise of direct regulation has broadly coincided with, or even precipitated, widespread corporate fraud, price-gouging, underpayment of workers and ‘wage theft’ (SERC 2022). Indeed, as regulatory theorists concede, without direct regulation such as prosecution and litigation, ‘less coercive policies at the lower end of the (enforcement) pyramid lose their credibility’ (Gunningham Reference Gunningham2007, 389). Clearly, regulators will never be resourced to prosecute every breach. However, the data presented here regarding the activities of the former state inspectorate provides a useful comparator, indicating a need to increase prosecution and litigation within the ‘responsive regulatory mix’ (Baldwin and Black, Reference Baldwin and Black2008; Weil Reference Weil2008) deployed by the current wage inspectorate.

NSW wage enforcement: institutions and law over time

Australian labour inspectorates date back to the 1830s when authorities established under the Factory Act 1833 (UK) were replicated in NSW, dealing mostly with health and safety, working hours and child labour (Quinlan and Sheldon Reference Quinlan and Sheldon2011, 12–14). A combination of ‘light touch’ regulation and a paucity of inspectors and prosecutions rendered inspection a legal nicety (Quinlan and Sheldon Reference Quinlan and Sheldon2011). The commencement of systematic and direct labour inspection coincided with large-scale state intervention in the labour market through the conciliation and arbitration systems enacted by the Australian colonies in the 1890s. In 1896, the NSW Department of Labour and Industry oversaw the administration of a variety of new industrial legislation (Agreements Validating Act 1902 (NSW); Trades Hall and Literary Institute Act 1893 (NSW)(56 Vic., No.10); Apprentices Act 1894 (NSW)(57 Vic., No. 22); Factories and Shops Act 1896 (NSW)(60 Vic., No. 37); Conciliation and Arbitration Act 1899 (NSW)(62 Vic., No. 3); Early Closing Act 1899 (NSW)(62., No. 38)), but none yet expressly provided for the prosecution or recovery of underpayment at work.

An increase in strike activity in NSW in 1907, together with a large-scale industrial disturbance at BHP in Broken Hill (Markey Reference Markey1994, 103–104), saw the conservative Wade State Government hastily enact coercive industrial legislation in the form of the Industrial Disputes Act 1908 (NSW). As Markey (Reference Markey1994, 104) put it, Wade was ‘a lawyer who had previously represented coalowners’ and ‘charged the miners with conspiracy’. The Act ensured that leaders of striking unions were quickly gaoled. However, coercive labour legislation enacted against labour may sometimes contain the seeds of protective labour legislation to be used against capital (Schofield-Georgeson Reference Schofield-Georgeson2022a). Accordingly, the Industrial Disputes Act contained limited provisions enabling recovery of money payable under awards, in addition to quasi-criminal penalties for breaching orders and awards made by the Court under the Act (NSW Hansard 1908, 85–89). It also provided for a new industrial magistrate’s court to make such orders, along with an inspectorate to enforce them. Labor MPs proposed more expansive powers for the inspectorate (NSW Hansard 1908, 85–89)Footnote ³ but these would ultimately wait until 1912, when they were eventually enacted by the Labor McGowen Government under its Industrial Arbitration Act 1912 (NSW).

No wage inspectors were appointed under the Industrial Disputes Act, until Labor won Government in 1910. Shortly after, in May 1911, the Department of Labour and Industry created an ‘Investigation Office’, staffed by a single inspector. ‘By the end of the year 1911’, the Office reported, ‘the demand for inspectorial services had increased to such proportions that it was deemed advisable to appoint a larger staff’ (IG 1912, 690–691). Five further specialist inspectors were appointed before the staff of the Chief Inspector of Factories (tasked with policing the Factories and Shops Act) and Early Closing Acts Inspectorate were merged into the Investigation Office. A total of 27 inspectors worked across NSW with one permanently stationed in Newcastle. The size of the NSW Investigation Office in 1912 is roughly comparable to that of the federal inspectorate in the mid-1960s (Department of Labour and National Service 1964).

The Investigation Office was specifically tasked with investigating, recovering and prosecuting overwhelmingly monetary breaches of awards and obligations imposed by the Act. Investigation was initiated by complaint and routine inspection. The inspectorate worked closely with trade unions, in many cases prosecuting matters on their behalf. As the Investigation Office put it, ‘cases of facts submitted by secretaries of unions as justifying prosecution without official inspection were also to be reviewed, and accepted for departmental action at the discretion of the Investigation Officer’ (emphasis added) (IG 1912, 690). And by 1918, around half of all underpayment matters litigated by the inspectorate were received from trade union secretaries in this manner (IG 1918, 113). Another core function was to require ‘first time’ and small-scale offending employers to repay money and enter into enforceable undertakings instead of prosecution (IG 1918, 113–118). The inspectorate was clearly applying the logic of proportionality to enforcement, nearly a century before regulation theory. In so doing, the Inspectorate ‘mixed’ strategies of compliance and ‘suasion’ with a strong dose of deterrence – indicated by the sheer volume of matters litigated (discussed below).

In 1912, the Industrial Arbitration Act adopted and expanded two key provisions from the Industrial Disputes Act 1908, regarding ‘breach of an award’ (s50) and ‘recovery of wages’ (s49). Over the ensuing century, both provisions became the statutory workhorses of the underpayment jurisdiction. Payments were pursued against errant or stubborn employers under s49, while dishonest and unreasonable employers were prosecuted under s50. Section 50 breaches captured conduct that was broader than underpayment, but monetary breaches were the subject of around 95% of such prosecutions.

In the late 1930s, a post-depression revival of the NSW economy was met by an upsurge in industrial action (Markey 1993, 203). The conservative United Australia Party State Government of Alexander Mair responded by overhauling the NSW industrial framework. The Industrial Arbitration Act 1940, contained tough new measures, punishing striking workers with imprisonment and increasing fines on trade unions and workers tenfold. Wage ‘recovery’ and ‘breach of award’ were shifted to sections 92 and 93 of the new Act. The Act was replicated by the conservative Dunstan Government in Victoria (Victorian Government, 1941, 207). Meanwhile, the work of the inspectorate continued unimpeded, despite an apparent shift in inspectorate policy, focussed more on compliance and arrears recovery than prosecution. Numbers of prosecutions nevertheless remained high by contemporary Australian standards.

In 1991, the neoliberal Greiner Government dramatically reformed recovery and breach legislation in its Industrial Relations Act 1991 (NSW). The new recovery and breach provisions, under ss151–156 (recovery) and s166 (breach) of the Act were described by the President of the NSW Industrial Relations described as ‘legalistic’ and technical (NSWIRC 1992, 9–10). Prosecutions and recoveries drastically declined throughout the 1990s, likely due to structural labour market reform and new public management approaches to departmental organisation, rather than the immediate result of the Greiner legislation. Indeed, the Greiner Government’s recovery and breach provisions remained mostly unchanged by the Labor Carr Government in its Industrial Relations Act 1996 (NSW). They were nonetheless shifted to ss365–369 (recovery) and s357 (breach) of the Act, where they remain. Following the Commonwealth takeover of industrial relations in 2006, State recovery and breach provisions fell into disuse and the role of the state inspectorate devolved to the Commonwealth (the FWO).

NSW labour inspectorate data

This project collated four key datasets from available material associated with the Investigation Office of the NSW Department of Labour and Industry and NSW Chief Industrial Magistrate. These are: (i) a tally of underpayment claims (commenced and proven) heard by the NSW Industrial Magistrate’s Court between 1912 and 1960; (ii) a comparison of the volume of underpayment litigation commenced in NSW and the Commonwealth between 1912 and 2022; (iii) a comparison of the volume of underpayment litigation conducted by the NSW Investigation Office, Commonwealth Inspectorate and NSW trade unions between 1912 and 2022; and (iv) a comparison of arrears collected by the NSW Investigation Office and the Commonwealth Inspectorate between 1912 and 2022.

1. (i) General and Inspectorate Underpayment Claims and Convictions

This chart in Figure 1 records underpayment litigation in NSW from 1912 to 1960. It is collated from the most accurate and complete set of monthly statistical data reported by the Investigations Office and Industrial Magistrate’s Court (IG 1912–1960). The chart plots four variables: (i) all underpayment litigation commenced in the jurisdiction, including breach of award matters; (ii) underpayment litigation commenced by the inspectorate, including breach matters; (iii) all recovery litigation found proven or resulting in conviction; (iv) underpayment litigation, commenced by the inspectorate, found proven or resulting in conviction. It is important to note that underpayment litigation commenced by the inspectorate is a sub-category of ‘all underpayment litigation’. It is not additional.

Figure 1.

General and Inspectorate Underpayment litigation in NSW: Commenced and Proven.

One of the most striking and original features of this graph (and others in this study) is its longitudinal scope. It reveals that all underpayment litigation conducted by the inspectorate, unions and individual workers, generally followed a similar trajectory, occurring in peaks and troughs over time. Such similarities between the volume of inspectorate and general underpayment litigation demonstrate empirically that for much of the twentieth century, wage enforcement was guided by underlying social and economic conditions. Rather than being manipulated for any particular ideological purpose, inspectorate prosecution policy in this period appears to have been moulded more by labour market conditions. This trend confirms Goodwin and Maconachie’s observation of the federal inspectorate until the late 1990s: that the work of the inspectorate, while open to manipulation by governments for immediate political gain, has mostly been performed independently of government (Goodwin and Maconachie Reference Goodwin and Maconachie2007, 534–541).

Another salient feature of this chart is the high volume of matters litigated by the inspectorate. Indeed, the almost feverish volume of litigation and arrears collection (discussed below) until the 1990s, is one of the standout features of this research. No less important is the close contour between inspectorate litigation and proven or successful claims. This contour suggests that inspectorate litigation was more successful than underpayment litigation commenced by trade unions and individual litigants. Such success is likely the result of a ‘last resort’ prosecution policy (referred to above), as well as careful selection of litigation matters. The fact that union and individual claims met with more mixed success also shows that the jurisdiction was not a particularly ‘easy’ or biased one in favour of employees. Accordingly, the NSW Investigation Office appears to have combined high rates of litigation with high rates of success.

1. (ii) Underpayment Litigation Over Time in NSW and the Commonwealth

Figure 2 compares all underpayment litigation commenced in both the NSW and Commonwealth industrial jurisdictions. To be clear, it does not merely count underpayment litigation commenced by the inspectorate, but also that of unions and private litigants. It depicts a stark contrast in the volume of matters heard in NSW compared to the federal jurisdiction.Footnote ⁴ This, in turn, demonstrates that the focus on federal underpayment litigation in the historical enforcement literature has ‘missed the forest for the trees’. Clearly, the overwhelming majority of Australian underpayment litigation has been conducted by the States, not the Commonwealth. This discovery suggests that any longitudinal view of Australian labour enforcement must consider the high volume of underpayment matters prosecuted in state jurisdictions, alongside federal enforcement.

Figure 2.

General Underpayment litigation: NSW and the Commonwealth.

Problematically, outside of New South Wales, other Australian States do not appear to have kept official statistics recording industrial prosecutions in any level of detail.Footnote ⁵ The Victorian Year Book from 1925 to 1926 recalls that, ‘the interests of the factory worker as regards wages … now receive a large amount of attention. Government inspectors prosecute employers wherever underpayment is found’ (Victorian Government 1926, 355). Calculating the volume of all State underpayment litigation throughout the twentieth century would require collating data from court records in State jurisdictions outside NSW – an extremely time-consuming exercise. And, as in NSW, in other States there were few references to the activities of the State industrial jurisdiction toward the end of the twentieth century.

There is a gap in the Commonwealth data on the graph from the late 1990s to mid-2000s. This gap denotes the abolition of the federal Arbitration Inspectorate by the Howard Government in 1997. During this time, the work of the federal inspectorate was outsourced to four State inspectorates. Their work was overseen by a new federal Office of Workplace Services (OWS).Footnote ⁶ It remains unclear whether federal underpayment matters were litigated or where they were heard during this time. Data from these sources remains unknown until the annual reporting year 2005–2006 when the OWS litigated six matters.

1. (iii) NSW, Commonwealth and Union Underpayment Prosecutions

Goodwin and Maconachie and others have documented the dominant role played by trade unions in prosecuting underpayment claims in the federal jurisdiction before the establishment of a federal inspectorate in the early to mid-twentieth century (Reference Goodwin and Maconachie2011, 63; Bennett Reference Bennett1994, 136–144; Bray and MacNeil Reference Bray and MacNeill2011; Hardy and Howe Reference Hardy and Howe2009). Figure 3, below, demonstrates that trade unions played a similar role in NSW throughout the same period, prosecuting more matters than the NSW inspectorate. Importantly, the volume of trade union underpayment litigation documented below is exclusive of a similarly high volume of union claims brought in the federal jurisdiction over the same period. But unlike union activity in the federal jurisdiction, Figure 3 demonstrates that trade union litigation was supported by a high volume of litigation brought by the State inspectorate. This reflects the close relationship between unions and the NSW Investigation Office, described in the State inspectorate’s founding articles (IG 1912, 690). Enforcement litigation by the federal inspectorate, by contrast, was always comparatively minimal in number.

Figure 3.

Underpayment litigation Commenced by NSW Trade Unions; the NSW Inspectorate; and the Commonwealth Inspectorate.

Data delineating NSW inspectorate from trade union litigation is unavailable for a significant span from the late 1950s to the late 1980s. Nevertheless, the volume of all NSW underpayment litigation (outlined in Figure 2 above) demonstrates that the work of both unions and the NSW Investigations Office remained high, compared to the efforts of the Commonwealth throughout this period. These figures suggest that the work of the NSW inspectorate continued at a similar pace until the impact of structural labour market reform in the mid-1980s.

Around 95% of private or ‘non-inspectorate’ underpayment claims were brought by a trade union in the relevant industry. This is documented by detailed records tabling complaints to the inspectorate and Industrial Magistrate’s Court by industry, published throughout the early twentieth century (e.g., IG 1912, 713).Footnote ⁷ Detailed record-keeping was abandoned a few years into the work of the Investigation Office, although complaints tabled by industry were maintained until the 1960s. Contemporary inspectorates could learn much from the level of detail and categories of data maintained by the NSW Inspectorate between 1912 and the early 1950s. From the 1960s to the 1980s, data relating to the identity of litigants has been sourced from court files (NSW State Records).Footnote ⁸

The same data also names defendants. In this respect, it shows that employers within particular industries were more inclined to underpayment. These included the clothing and garment industry, butchering, farriers (blacksmithing) and retail sector (shop assistants).Footnote ⁹ Underpayment complaints by the clothing, meat and retail unions were the most sustained throughout the twentieth century. In this respect, little appears to have changed, particularly in the retail sector.

High levels of union prosecutions are attributable to a range of factors. First and foremost was high union density throughout the period (Markey Reference Markey1994, 565–568), enabling members easy access to union officials who were well-resourced to address complaints expeditiously and responsively. Second and relatedly, was general state support for trade unions, manifest in a range of laws and institutions. These included rights of entry in awards and statute and standing to recover wages and penalties (e.g., Industrial Arbitration Act 1940 (NSW), s 129 (union rights of entry), s94(union rights to recover wages/penalty for breach).Footnote ¹⁰ The power of unions to recover penalties or request a ‘moiety’ appears to have been used to great effect by unions in NSW throughout the period. A bundle of well-selected underpayment matters could prove rewarding for the prosecuting union, much like the operation of a debt collection agency. Despite the existence of moiety provisions in contemporary legislation (Fair Work Act 2009 (Cth), s546(3)), union rights of entry remain tightly restricted under present industrial laws, and union enforcement has declined. Other factors associated with this decline have been said to involve a general shift in trade union governance from ‘servicing’ and ‘organising’, towards merely organising union members – a transition that took place under resourcing constraints as density declined from the 1990s (Landau and Howe Reference Landau and Howe2016; Schofield-Georgeson Reference Schofield-Georgeson2022b, 55, 64–68).

There are three spikes in State Inspectorate activity throughout the early twentieth century. These align with the implementation and consolidation of the Investigation office under the Labour McGowen Government in 1912, as well as each electoral term of the Lang Labour Government in NSW in 1926 and late 1930s. While litigation ebbed and flowed during these terms – occurring at high levels under conservative governments (e.g., the term of the Greiner Government in the late 1980s and early 1990s) – the spikes augment Goodwin and Maconachie’s claim that enforcement is contingent upon political convenience. Bennett’s claim about the ideological underpinnings of enforcement is made markedly clear by the steep decline in litigation from the outset of the neoliberal Howard-era.

Figure 3 also contains the first archival statistical data regarding Commonwealth prosecutions before the 1960s.Footnote ¹¹ As depicted, Commonwealth prosecutions remained low throughout the entire period, relative to the State system. The increase in prosecutions under the Whitlam Government, briefly continued under the Liberal Party Government of Malcolm Fraser, has been the cause of some celebration in the work of Goodwin and Maconachie (Reference Goodwin and Maconachie2007, 527). However, the new data presented here shows that there was a slightly larger number of prosecutions during the term of the federal Chifley Labour Government in the mid-to-late 1940s.

1. (iv) Arrears collected by NSW and Commonwealth Inspectorates over time

Figure 4 compares the amount of arrears collected by the NSW and Commonwealth inspectorates over time. The numbers on the chart are not dollar amounts. To merely present dollar amounts would be meaningless, due to dramatic fluctuations in inflation, annual wages and growth in the size of the target workforce over time. Accordingly, the numbers represented by each column in this chart express arrears as a rationalised ratio. This number accounts for three variables within each jurisdiction: (i) number of workers; (ii) average annual wages;Footnote ¹² and (iii) inflation (with all dollar/imperial amounts adjusted for inflation as at 2021)Footnote ¹³. On one side of the ratio is the amount of arrears collected by the inspectorate in each period, divided by the annual average wage in each jurisdiction throughout the period. Both amounts have been adjusted for inflation. On the other is the amount of arrears collected by the inspectorate in each period (adjusted for inflation), divided by the average size of the workforce in each jurisdiction throughout the period. The final ratio has been rationalised to a single number. This is the number that appears above each column in the chart.Footnote ¹⁴ The final adjusted ratio of arrears collected by the NSW and Cth inspectorates provides a fair and accurate comparison of wage recovery efforts over time.

Figure 4.

Ratio of Arrears Collected by Inspectorates.

From the early 1980s, the Federal inspectorate began to prioritise the collection of arrears over litigation and prosecution (Goodwin and Maconachie Reference Goodwin and Maconachie2007, 528–532).Footnote ¹⁵ Arrears collection is now the mainstay of the current wage inspectorate – the Fair Work Ombudsman (FWO) (FWO 2009–2022; Goodwin and Maconachie Reference Goodwin and Maconachie2011, 55, 77; Hardy and Howe Reference Hardy and Howe2009, 315–318).Footnote ¹⁶ Since 2021, the FWO has boasted of a dizzyingly high volume of arrears recouped by its inspectors, recovering in excess of a billion dollars over two years (Workplace Express (hereafter ‘WE’) 2023). This is illustrated by the last two columns on the chart above. Most of these recovered underpayments have been self reported by a handful of large employers such as Woolworths and universities (WE 2022; FWO 2022). This compliance-centred approach is set to continue returning hundreds of millions to Australian workers on an annual basis (WE 2022a; FWO 2022). Significant arrears have also been recouped through a comparatively small volume of litigation commenced against a number of large employers (WE 2022b). In 2022, the FWO initiated 137 cases and finalised 393 (FWO 2022). It is clear that ‘strategic enforcement’ is underway.

Yet these results are less significant when compared to the amount of arrears collected by a single state inspectorate in the mid-twentieth century. The arrears data collated here shows that the FWO has failed to keep pace with the amount of arrears collected by the NSW inspectorate in the mid-twentieth century, across its federal remit (covering all eight state and territory industrial jurisdictions). Had it done so, we might expect that the amount of arrears recovered would be around 50% higher than recent efforts. Indeed, given the current crisis of underpayment or ‘wage theft’ (SERC 2022), it is surprising that the work of the inspectorate should be so comparatively modest.

The high volume of arrears collected by the NSW Inspectorate, together with a comparatively high volume of breach of award prosecutions, show that by today’s standards, this pioneering regulatory agency was a highly sophisticated enforcement body. The volume of arrears collected by the NSW regulator suggests that arrears recovery sat at the bottom of a sliding scale of increasing punishment (Braithwaite Reference Braithwaite2000, 14). In today’s enforcement parlance, we might say that the Investigation Office administered a complex and ‘really responsive’ regulatory ‘mix’ of punishments and interventions against employers (Baldwin and Black Reference Baldwin and Black2008). Yet the Investigations Office pre-dates regulatory discourse. Its modernist approach appears to have simply applied the enlightenment principle of ‘proportionality’ to the process of enforcement. The demise of the Investigations Office is, of course, owed to targeted policies of neoliberal deregulation that have charged its approach with labels such as, ‘command and control’ – an inflexible, Marxist–Leninist system providing no incentive for regulatees to change or comply (Sunstein Reference Sunstein2002, 8, 19, 133, 139, 167). As explained throughout this paper, however, the NSW inspectorate’s approach varied little from contemporary enforcement practice, aside from enabling it to do more work.

A crucial point raised by the data in Figure 4, as well as across each of the datasets compiled in this article, is the vast amount of direct and active regulatory enforcement undertaken by the State inspectorate throughout the mid- twentieth century. Amounts of arrears recovered and litigation commenced – the volume of work performed by labour inspectorates, such as that regularly reported by the FWO – is only meaningful when compared to a metric, such as the scale of wage theft, or the historical efforts by inspectorates. This study provides the latter. From this perspective, the ‘end of inspection’ in the mid-1990s, has undergone a partial recovery, with the establishment of the FWO in the mid-2000s. As a highly resourced operation, the FWO has done its best work in recovering arrears. However, when compared to the work of a single state inspectorate in the mid-twentieth century, the activities of the current federal inspectorate, now responsible for nationwide labour enforcement, are somewhat underwhelming.

Finally, economic history is a useful tool to contextualise the comparative lack of contemporary enforcement and its social outcomes over time. Figure 5 is the unmistakable ‘U-shaped’ graph of social inequality throughout the twentieth and early 21-st centuries, known as the Gini co-efficient (famously resurrected in the work of Thomas Picketty Reference Picketty2014; Ortiz-Ospina, Reference Ortiz-Ospina2018). To be clear, it shows that rates of social inequality were at their lowest ebb in the mid-twentieth century. As some labour lawyers have recently argued, this data may also be read as mapping the outcomes of economic and labour policy over time (McGaughey Reference McGaughey2016, 8; Schofield-Georgeson Reference Schofield-Georgeson2022a). In this light, the rigorous approach to labour enforcement adopted by strong regulatory institutions like the NSW labour inspectorate during the mid-century, coincided with and buttressed low social inequality throughout this period. State labour enforcement was supported by peak union density, while itself reinforcing labour movement power in the mid-twentieth century (Schofield-Georgeson Reference Schofield-Georgeson2022a). This regulatory symbiosis between the state and trade unions strengthened enforcement because it encouraged unions to participate as ‘equal partners’ in enforcement (Hardy and Howe Reference Hardy and Howe2009), litigating underpayment claims. In the late twentieth and early twenty-first centuries, this approach was targeted by neoliberal policies of deregulation. It has become difficult to replicate following the subsequent decline of the labour movement.

Figure 5.

Share of income going to the top 1% in English-speaking countries since 1900.

As significantly, the foundations of this approach were laid in the early twentieth century by a State Labour Government, reflecting a prevailing consensus regarding the necessity of state intervention in industrial relations (Macintyre Reference Macintyre, Macintyre and Mitchell1989; Quinlan Reference Quinlan, Macintyre and Mitchell1989). Consensus had arrived in the States two decades beforehand, following the industrial unrest of the 1890s, culminating in conciliation and arbitration. It delivered what the data clearly shows was one of the most successful regulatory interventions in the history of protective Australian labour law.