Thus the Commonwealth Court of Conciliation and Arbitration was created to
settle disputes between employees, unions, and employers. When it ruled to
settle a dispute, the decision was known as an‘award’.But,critically,awards
contain a whole set of employment conditions, including minimum rates of pay.
Minimum wage rates are usually traced to the now famous (or infamous?)
Harvester Case of 1907. The case was symptomatic of the insular nature of the
Australian economy at the time, where a key objective of government policy
was protection. Firms were seen to have to be protected from competition
from imports through the tariff and workers to be protected from competition
from cheap imported (mostly Asian) labour through the White Australia
Policy. The Harvester Case related to agricultural machinery manufacturer,
the Sunshine Harvester Company. Agriculture was a major industry in Aus-
tralia at the time, and with growth of the industry came increased demand for
agricultural machinery and large profits for manufacturers of farm machinery.
As part of Labor government policy for workers to share in the benefits of tariff
protection, the Excise Tariff Act 1906 imposed a tax on employers who did not
pay a wage that was‘fair and reasonable’, which Section 40 of the Act ordained
would be determined by the Court of Conciliation and Arbitration.
Under the presiding judge, Mr Justice Higgins, the Court was charged with
establishing this minimum wage. The hearing took place in Melbourne
between October 1907 and November 1907. Higgins heard evidence from
employees of Sunshine Harvester, and received estimates of the total weekly
outlays of nine households of unskilled working men, ranging from £1 18s to
£3 13s and 7d. On 8 November 1907 Higgins judged that the Sunshine
Harvester Company was obliged to pay its employees a wage that met‘the
normal needs of an average employee, regarded as a human being in a civilised
community’, regardless of profitability or‘capacity to pay’. He deemed this
wage to amount to 7s per day (or £2 2s per week); precisely the minimum daily
wage that unions had incessantly sought for unskilled workers since the
mid-1890s (Macarthy 1970, p. 6). Higgins’wage decision became the basis of
the universal practice of state and Commonwealth Courts of Arbitration
declaring a‘basic wage’and, with the passage of decades, a whole set of
other conditions of work as part of any‘award’.
While (most) economists argue that prices (in this case wages) are better
determined by supply and demand, the principle of Court-determined wages
and conditions specifically denied this proposition. In defining a‘fair and
reasonable wage’, Higgins ruled:
The provision for‘fair and reasonable’remuneration is obviously designed for the
benefit of the employees in the industry; and it must be meant to secure to them
something which they cannot get by the ordinary system of individual bargaining
with employers...Australia’s Industrial Relations Singularity