The Harvester Decision

Updated time

Last updated

05 September 2016

A national breakthrough

Hugh Victor McKay, one of Australia's largest employers, owned the Sunshine Harvester Works where agricultural machinery was built. The Excise Tariff Act 1906 required the payment of an excise tax from all employers who did not pay a wage that was ‘fair and reasonable’. McKay was charged for the tax, given the payments he paid his workers.

During the hearing, Judge H.B. Higgins heard evidence from employees of McKay's factory and also their wives. Higgins gave his judgment on 8 November 1907:

“He (the applicant) is allowed - if my view of the Act is correct - to make any profits that he can and they are not subject to investigation. But when he chooses, in the course of his economies, to economise at the expense of human life, when his economy involves the withholding from his employees of reasonable remuneration, or reasonable conditions of human existence, then, as I understand the Act, Parliament insists on the payment of the Excise duty.”

This case became known as the Harvester Decision.

Dinner at Sunshine Harvester Works, circa 1907

The basic wage

The Harvester wage became known as ‘the basic wage’. Justice Higgins decided that 7 shillings a day or 42 shillings a week for an unskilled labourer was ‘fair and reasonable’ wages, having regard to ‘the normal needs of the average employee, regarded as a human being living in a civilised community’. This was calculated based on the evidence of household budgets, and to enable a man, wife, and three children to live in ‘frugal comfort’. 

There is some speculation that the Papal Encyclical ‘Rerum Novarum’ of 1891 had an intellectual influence on Higgins, as the language used is similar. 

Additional amounts known as ‘margins’ were paid to more skilled employees such as tradespersons, known then as tradesmen or journeymen. 

The various State tribunals gradually increased award rates to at least those set in  Harvester (VIC) and by the 1920s over half of Australian workers were protected by the minimum wage system.

Eventually there were 34 separate federal basic wages based on different costs of living estimates: separate basic wages for the six capital cities, for 26 country towns and for two localities. 

1907: Family portrait taken outdoors