Notwithstanding the limited jurisdictional scope of the court, the Harvester decision and subsequent decisions of the court on the basic wage had a much wider impact. This happened through a range of mechanisms including state industrial tribunals directly referencing Harvester as a standard, either for its intrinsic value, or to limit the risk of having significant discrepancies in wages across sectors or between states, and its use by unions in cases as the minimum standard they sought. Although it is difficult to map the pattern of flow-on, Piddington (1921b, 4) cites the Queensland Arbitration Court, earlier in that year, as having reported that the Harvester wage “has remained the basis not just of Federal Awards, but in a large measure, of State awards”. Analysis of historical wage rates by Macarthy (1972) leads him to a similar conclusion: “most impressively, the wage data point to the gradual strengthening of institutional forces in the wage determining process: the gradual implementation of the ‘Living Wage’ concept that every adult male wage earner … should by right receive the labourer’s wage … by 1920-1 it was complete” (158). In contrast data in the Report of the Victorian Parliamentary Select Committee on Child Endowment suggest that the convergence occurred more slowly and even by 1939 was not complete.258,259
3.2.2
A
DJUSTING FORP
RICEC
HANGE–T
HED
EVELOPMENT OFI
NDEXATIONAfter simply awarding the amount of 7s. a day in a series of decisions, by 1911 there was recognition of a need to take account of changes in prices, with Higgins noting: “There seems to be no doubt that the cost of living is increasing; but the evidence does not justify me in saying how much, or in altering the amount of what I may now call the basic wage by any definitive sum” (5 CAR 9, 14).
It was not until 1913, in the Gas Employees’ Case (7 CAR 58), that the amount of the Harvester award of 7s. a day was increased. This was done with reference to the then relatively new Commonwealth Bureau of Census and Statistics (later the Australian Bureau of Statistics (ABS)) cost of living index (see below), with the wage being increased to 8s. 6d – a 21.4 per cent increase. This commenced a process of ad hoc adjustments of the basic wage, based on the “Harvester standard” in individual awards, to take account of changes in prices as measured by the Australian Bureau of Statistics.260
258 The report contains a table showing decisions of the State Wages Boards as follows:
Minimum Wage fixed – 1930 1936 1939
Above Commonwealth Arbitration Court basic wage 88 132 139
Below Commonwealth Arbitration Court basic wage 82 23 24
Equal to Commonwealth Arbitration Court basic wage 8 25 50 Child Endowment Committee (1940, 6).
259 Seltzer and Borland (2016) report an identifiable and immediate flow-on effect in
their analysis of decisions by Victorian wages boards and conclude “while the Harvester Judgment did not apply directly to workers in our sample, it had spillover effects to wage setting by the Victorian Special Boards, especially for the lowest-wage workers” (5).
260 Over the following period there were some differences in the approach adopted by
In the 1920s this process become more formalised with awards such as the 1921 Clothing Trades Case (15 CAR 435) providing for six monthly adjustments on the basis of the “index number of the Commonwealth Statistician for food, groceries, and house rent” (460). In 1922 quarterly indexation became entrenched in awards.
Justice Powers, in the same year, in the light of considerable fluctuation in prices, added an amount of 3s. per week to his decisions in order to “preserve to the workers the Harvester standard of living in the event of any increases in the cost of living in any quarter” (16 CAR 172, 177). Whether this decision was a deliberate attempt to increase the real value of the minimum wage or was, as posited by Powers, just a means of ensuring that the standard was not breached by rising prices, and if so, whether the 3s. was the appropriate amount to achieve this, was contentious, and remains unclear.261,262 The Full
Court however endorsed the approach and explained its rationale in detail in the 1922 judgement “The Fairest Method of Securing the ‘Harvester Judgement Standard’ to the Workers” (16 CAR 829). This was an extensive decision with each of the judges giving an individual decision and their own reasons. Essentially the line of argument was that the mechanism alleviated the need for the court to be involved in regular applications for increases, limited the need for any retrospective awards along with the requirement for back-pay, and, on balance, the court considered it better to err on the upside of maintaining living standards, rather than risk wages falling below the Harvester standard.
The reality was that Powers’ decision effectively operated as an increase, especially given that, with the rapid take up of quarterly indexation, the previous circumstance of the wage being fixed for the duration of the award,
estimates of the price index should be used, or the average for the year. While Higgins initially stated that the use of these statistics was not strictly determinative, the pattern of decisions however suggests that the practice was relatively mechanical, with some exceptions at times of rapid price fluctuations.
Higgins had sought to differentiate the process into two stages more aligned with a judicial function, rather than the court having a wage-setting function. Reflecting this he saw as the first stage the establishment in the case of increased prices being at issue. A second stage involved taking into account the evidence to determine what the increase would be. (While as indicated in the text below he talks about the Statistician’s data as only being evidence he considered, effectively the process became automatic.)
This process was presented by him as: “the rise in prices … is admitted on all sides; and the only question is the extent of rise. It is at this point that I make use of the statistician’s tables; but I make use of them as primâ facie evidence only (10 CAR 465, 481).
261 Some 6 years later in providing evidence to the Royal Commission on Child
Endowment, R.W. Southern, representing the Broken Hill Propriety Company, was still attacking the decision and produced a detailed table of wage rates paid over the intervening period which he stated showed the decision “was altogether wrong, and that as the result of that system the worker during the period has received £42 18s. in excess of the actual Harvester standard wage under the Federal award” (RCCE 1929, para 12143).
262 Forster (1980) provides an analysis of the development of indexation, including the
different approaches by Powers and Higgins. In this he notes, with respect to the Powers’ 3s., “at the same time, as part of the new method of cost-of-living adjustment, there was built into the basic wage, possibly by accident, a loading of 3s.” (116).
frequently for several years, no longer applied. 263 Further while this could not
have been foreseen at the time the decision was taken, of the 43 indexation decisions taken between May 1923 and February 1934, the period in which the Powers’ 3s. was incorporated into the wage, five involved no change, 25 a reduction in the nominal value of the wage, and just 13 an increase.