Harvester Case

Updated time

Last updated

10 January 2017

Ex parte H.V. McKay

(1907) 2 CAR 1, Higgins J, President, 8 November 1907

Summary

In the Harvester Decision, Justice Higgins of the Arbitration Court decided that 7 shillings a day, or 42 shillings a week, was fair and reasonable wages for an unskilled labourer. This became the basis of the national minimum wage system in Australia. It was a ‘living’ or ‘family’ wage, set at a level which would supposedly allow an unskilled labourer to support a wife and three children, to feed, house, and clothe them. By the 1920s it applied to over half of the Australian workforce. It became known as the ‘basic wage’. Additional amounts were paid to more skilled workers, for example an additional 3 shillings to a fitter or other tradesperson. These additional amounts were known as ‘margins’. In the Harvester Decision, a fair and reasonable wage for more skilled employees was for example 10 shillings a day for ‘journeymen’, or tradesmen.

In Ex parte H.V. McKay (the Harvester Decision), Justice Higgins of the Commonwealth Conciliation and Arbitration Court decided to determine what ‘fair and reasonable’ wages were using the following test:

I cannot think of any other standard appropriate than the normal needs of the average employee, regarded as a human being living in a civilised community. [p.3]

What wage rate would result from this test? Justice Higgins said that this test resulted in a fair and reasonable wage of 7 shillings a day for a labourer:

I come now to consider the remuneration of the employees mentioned in this application. I propose to take unskilled labourers first. The standard wage – the wage paid to most of the labourers by the applicant – is 6s. per day of eight hours, with no extra allowance for overtime; but there is one man receiving only 5s. 6d. There is no constancy of employment, as the employer has to put a considerable number of men off in the intervals between the seasons. The seed-drill and plough season, I am told, is in the earlier part of the year, about April; but the busiest time is the harvester season, about August to November. But even if the employment were constant and uninterrupted, is a wage of 36s. per week fair and reasonable, in view of the cost of living in Victoria? I have tried to ascertain the cost of living – the amount which has to be paid for food, shelter, clothing, for an average labourer with normal wants, and under normal conditions. Some very interesting evidence has been given, by working men’s wives and others; and the evidence has been absolutely undisputed. I allowed Mr. Schutt, the applicant’s counsel, an opportunity to call evidence upon this subject even after his case had been closed; but notwithstanding the fortnight or more allowed him for investigation, he admitted that he could produce no specific evidence in contradiction. He also admitted that the evidence given by a land agent, Mr. Aumont, as to the rents, and by a butcher as to meat, could not be contradicted. There is no doubt that there has been, during the last year or two, a progressive rise in rents, and in the price of meat, and in the price of many of the modest requirements of the worker’s household. The usual rent paid by a labourer, as distinguished from an artisan, appears to be 7s.; and taking the rent at 7s., the necessary average weekly expenditure for a labourer’s home of about five persons would seem to be about £1 12s. 5d. The lists of expenditure submitted to me vary not only in amounts, but in the bases of computation. But I have confined the figures to rent, groceries, bread, meat, milk, fuel, vegetables, and fruit; and the average of the list of nine housekeeping women is £1 12s. 5d. This expenditure does not cover light (some of the lists omitted light), clothes, boots, furniture, utensils (being casual, not weekly expenditure), rates, life insurance, savings, accident or benefit societies, loss of employment, union pay, books and newspapers, tram and train fares, sewing machine, mangle, school requisites, amusements and holidays, intoxicating liquors, tobacco, sickness and death, domestic help, or any expenditure for unusual contingencies, religion, or charity. If the wages are 36s. per week, the amount left to pay for all these things is only 3s. 7d.; and the area is rather large for 3s. 7d. to cover – even in the case of total abstainers and non-smokers – the case of most of the men in question. One witness, the wife of one who was formerly a vatman in candle works, says that in the days when her husband was working at the vat at 36s. per week, she was unable to provide meat for him on about three days in the week. This inability to procure sustaining food – whatever kind may be selected – is certainly not conducive to the maintenance of the worker in industrial efficiency. Then, on looking at the rates ruling elsewhere, I find that the public bodies which do not aim at profit, but which are responsible to electors or others for economy, very generally pay 7s. The Metropolitan Board has 7s. for a minimum; the Melbourne City Council also. Of seventeen municipal councils in Victoria, thirteen pay 7s. as a minimum; and only two pay a man so low as 6s. 6d. The Woodworkers Wages Board, 24th July, 1907, fixed 7s. In the agreement made in Adelaide between employers and employees, in this very industry, the minimum is 7s. 6d. On the other hand, the rate in the Victorian Railway Workshops is 6s. 6d. But the Victorian Railways Commissioners do, I presume, aim at a profit, and as we were told in the evidence, the officials keep their fingers on the pulse of external labour conditions, and endeavour to pay not more than the external trade minimum (p. 388). My hesitation has been chiefly between 7s. and 7s. 6d.; but I put the minimum at 7s. as I do not think that I could refuse to declare an employer’s remuneration to be fair and reasonable, if I find him paying 7s. Under the circumstances, I cannot declare that the applicant’s conditions of remuneration are fair and reasonable as to his labourers.

Other possible tests included that of actual rates paid by reputable employers, and were not adopted. As Justice Higgins explained:

There is an Agricultural Implements Board, but it is under the operation of the “reputable employers” section (s.83). This inquiry was finally opened on the 7th October, after long adjournments, granted by my predecessor with the view of giving the Board ample time for coming to some conclusion with regard to wages. But the Board had failed to come to any conclusion, and the Minister of Labour had suggested that the Board should adjourn till an amending Bill should be passed (see letter of 23rd September, 1907). On the evenings of the 7th and 8th October, however, the Board suddenly came to certain determinations, which have been pressed upon me. But it turns out, from the evidence of the Secretary of the Board, that the chairman, finding himself coerced by the “reputable employers” section, declined to receive any motion for a wage exceeding the average appearing from the returns of wages paid by “reputable employers.” This restriction upon the free action of the Board deprives the Board’s determination of almost all value in the eyes of an outside investigator, and especially in the eyes of one who has my duty to perform. If my view of my duty in ascertaining what are fair and reasonable conditions as to remuneration, as stated above, is right, how can I fulfil that duty by accepting the average rates which employers think fit to give on individual bargaining with men seeking work? I should attach, I think, overwhelming value to conclusions freely formed by experts in the trade, representing the opposing interests; but I decline to accept the mere conclusions of employers, just as I should decline to accept the mere conclusions of employees. Again, a determination of a Wages Board may be reversed or varied by the Court of Industrial Appeals (section 120). The Court consists of a Supreme Court Judge; and he is bound to lower the minimum wage fixed by the Board if he thinks that it may prejudice “the progress, maintenance of, or scope of, employment in the trade or industry.” In other words, he is to put the interests of the business – of the profit maker – above the interests of the human beings employed. I cannot think that this system is consistent with that marked out for me by the Excise Tariff. The scheme of the Excise Tariff seems to be based on making fair and reasonable remuneration a first charge, as it were, on the gross receipts – based on putting such remuneration in the same position as the cost of raw materials. I cannot delegate my functions to the Judge, whoever may be appointed from time to time, of the Court of Industrial Appeals, acting under a very different Act, under conditions which coerce him on every side, and especially when I know that he, though non-expert in the industry, is enabled to reverse what experts in the industry may have concurred in deciding. In addition, I cannot impose the Victorian Act or Victorian conditions on other States, and I shall keep steadily in view the importance to the manufacturers of certainty and (so far as possible) uniformity, throughout Australia. I am forced to make these observations on the Victorian Factories Act, in order to explain why I cannot accept the Wages Board determinations as sufficient for the purpose of my decision under the Excise Tariff 1906. I have no right, and I have no desire, to criticise what any Parliament may do. But when the determinations of Wages Boards are pressed upon me, I have to consider all the circumstances, in order to see whether these determinations are a safe guide for me in the performance of my duty under the Excise Tariff. [pp.8–9]

During proceedings, Justice Higgins asked counsel for H.V. McKay how he could fix wages other than by assessing the costing of living for the unskilled labourer:

Mr Schutt.- It is very hard to say exactly, but I say the basis to fix would be practically to see whether the rate paid to the unskilled labourer is in accord with rates usually paid and accepted.

His Honor.- That would never do. I admit you must be more or less limited. You must have regard to current rates for ratios and the rest, but the whole idea of the Act is interference with what is called free contract between an individual employer and employee. The whole thing is upon that basis. Of course, if the legislature had meant to leave it to the individual employee to make the best bargain he could with the employer, they would not have needed to have this provision about fair and reasonable wages with the excise.

In A New Province for Law and Order Justice Higgins explained the process of fixing a fair and reasonable wage. In relation to the test he used of 'the normal needs of the average employee, regarded as a human being living in a civilised community' he said:

This was to be the primary test in ascertaining the minimum wage that would be treated as ‘fair and reasonable’ in the case of unskilled labourers. At my suggestion, many household budgets were stated in evidence, principally by housekeeping women of the labouring class; and, after selecting such of the budgets as were suitable for working out an average, I found that in Melbourne, the city concerned, the average necessary expenditure in 1907 on rent, food and fuel, in a labourer’s household of about five persons, was £1.12s.5d. (about $7.80 [US], taking a dollar as equivalent to 4s.2d); but that, as these figures did not cover light, clothes, boots, furniture, utensils, rates, life insurance, savings, accident or benefit societies, loss of employment, union pay, books and newspapers, tram or train fares, sewing machine, mangle, school requisites, amusements and holidays, liquors, tobacco sickness or death, religion or charity, I could not certify that any wages less than 42s per week for an unskilled labourer would be fair and reasonable. Then, in finding the wages which should be treated as fair and reasonable in the cases of the skilled employees, I relied mainly on the existing ratios found in the practice of employers. If, for instance, the sheet-iron worker got 8s. per day when the labourer got 6s., the sheet-iron worker should get, at the least, 9s. when the labourer’s minimum was raised to 7s.

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