|Court||Commonwealth Court of Conciliation and Arbitration|
|Full case name||Ex Parte H.V. McKay|
|Decided||8 November 1907|
|Citation(s)||(1907) 2 CAR 1|
|Appealed to||High Court of Australia|
|Subsequent action(s)||R v Barger|
|Decision by||H.B. Higgins|
Ex parte H.V. McKay (1907) 2 CAR 1, well known as the Harvester case, is a landmark Australian labour law decision on a fair living wage for workers. The case had national ramifications and was of international significance.
Higgins J in the Commonwealth Court of Conciliation and Arbitration held that an employer was required by law to pay a decent, fair wage to his workers. Higgins J had been appointed President of the newly created Commonwealth Court of Conciliation and Arbitration in 1907 and had been a Justice of the High Court of Australia since 1906.
Hugh Victor McKay, one of Australia's largest employers, owned the Sunshine Harvester Works where agricultural machinery was built. Under the Excise Tariff Act 1906, the Federal Australian government had required the payment of an excise tax from all employers who did not pay a wage that was "fair and reasonable", as defined by the government, or the Court of Conciliation and Arbitration. McKay was charged for the tax, given the payments he paid his workers.
The hearing took place in Melbourne on several days between 7 October 1907 to 8 November 1907. Higgins heard evidence from employees of McKay's factory and also their wives. Higgins gave his judgment on 8 November 1907.
Court of Conciliation and Arbitration
Higgins J held that McKay was obliged to pay his employees a wages that met "the normal needs of an average employee, regarded as a human being in a civilised community", regardless of his capacity to pay. This gave rise to the legal requirement for a basic wage. In defining a 'fair and reasonable wage', Higgins J (without explicit acknowledgement) employed Pope Leo XIII's Rerum Novarum of 1891, an open letter to all the bishops that addressed the condition of the working classes. Higgins ruled that remuneration "must be enough to support the wage earner in reasonable and frugal comfort." A 'fair and reasonable' minimum wage for unskilled workers of 7/- (7 shillings), which is around 70 cents, or 42/- per week. Later surveys showed that this minimum was adequate to provide subsistence.
Higgins J's judgment read as follows.
|“||One finds that the Legislation has not indicated what is meant by 'fair and reasonable,' what is the model or criterion by which fairness and reasonableness are to be determined. It is to be regretted that the Legislature has not given a definition of the words. It is the function of the Legislature, not of the Judiciary, to deal with social and economic problems; it is for the Judiciary to apply, and, when necessary, interpret the enactments of the Legislature. But here this whole controversial problem, with its grave social and economic bearings, has been committed to a judge, who is not, at least directly, responsible, and who ought not to be responsible to public opinion. even if the delegation of duties should be successful in this case, it by no means follows that it will be so hereafter. I do not protest against the difficulty of the problem, but against the confusion of functions and against the failure to define, the shunting of legislative responsibility. It would be almost as reasonable to tell a Court to do what is 'right' with regard to real estate, and yet lay down no laws or principles for its guidance. In the course of the long discussion of this case, I have been convinced that the President of this Court is put in a false position. The strength of the Judiciary in the public confidence is largely owing to the fact that the judge has not to devise great principles of action as between great classes, or to lay down what is fair and reasonable between contending interests in the community; but has to carry out mandates of the Legislature evolved out of the conflict of public opinion after debate in Parliament. I venture to think that it will not be found wise to bring the judicial department within the range of political fire....
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....
The standard of 'fair and reasonable' must therefore be something else, and I cannot think of any other standard appropriate than the normal needs of an average employee, regarded as a human being in a civilised community. If, instead of individual bargaining, one can conceive of a collective agreement - an agreement between all the employers in a given trade on the one side, and all the employees on the other - it seems to me that the framers of the agreement would have to take as the first and dominant factor the cost of living as a civilised being. If A lets B have the use of his horses on the terms that he gives them fair and reasonable treatment, I have no doubt that it is B's duty to give them proper food and water, and such shelter and rest as they need; and, as wages are the means of obtaining commodities, surely the State in stipulating for fair and reasonable remuneration for the employees means that the wages shall be sufficient to provide these things, and clothing and a condition of frugal comfort estimated by current human standards.
Higgins J also said the following.
|“||I regard the applicant's undertaking as a marvel of enterprise, energy and pluck… he 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.||”|
The High Court found Higgins's decision constitutionally invalid because the legislation was essentially concerned with the regulation of employment conditions, a power not held by the Commonwealth Parliament and not capable of being supported by the excise power. The High Court further found a tax based on compliance with certain labour conditions which could differ from State to State was a discrimination within the meaning of section 51(ii) and a preference within the meaning of section 99.
The judgment dominated Australian economic life for the next 60 to 80 years. Higgins J's 1907 Harvester decision was regarded as a benchmark in Australian labour law. Despite the High Court's reversal in R v Barger, Higgins regarded the minimum wage as sacrosanct and applied the Harvester reasoning to subsequent judgments in career as president of the Conciliation and Arbitration Court.
- Ford, Olwen (2001). Harvester Town: The making of Sunshine 1890-1925. Sunshine & District Historical Society Incorporated. ISBN 0-9595989-4-4.
- Kevin Blackburn, The living wage in Australia: a secularization of Catholic ethics on wages, 1891–1907, Journal of Religious History 20 (1996), 93-113.
- Pat Thane (1982). Foundations of the Welfare State. Longman. p. 383. ISBN 0-58229515-7.
- R v Barger  HCA 43; (1908) 6 CLR 41 (1908) 6 CLR 41
- Dr Andrew Frazer (28 May 2002). "The Federal Conciliation and Arbitration Power: from Cradle to the Grave?". Law Internet Resources. Parliament of Australia, Parliamentary Library. Retrieved 2009-08-28.
- Bernard Pulle (7 March 2000). "Dairy Industry Adjustment Bill 2000-Constitutional Issues (Current Issues Brief 14 1999-2000)". Law Internet Resources. Parliament of Australia, Parliamentary Library. Retrieved 2009-08-28.
- Gerard Henderson (18 December 2007). "Failed policy strong on sentiment". Sydney Morning Herald. Retrieved 2009-08-28.
- "The Harvester Judgement". Federation Story: A Fair Go Economy. Australian Broadcasting Corporation. 2001. Retrieved 2006-01-03.
- "Fact and myth: Reflections on why Higgins made the Harvester decision," by W.M. Robbins, I. Harriss and R. Macklin, Charles Sturt University