At A Minimum, A Longstanding Feature Of Our Way Of Life

Sydney Morning Herald

Thursday December 20, 2007

Gerard Henderson's understanding of the 1907 Harvester judgment delivered by Justice Henry Bournes Higgins, and its historical impact, is flawed ("Failed policy strong on sentiment", December 18). Higgins believed the best way to determine employment conditions was by bargaining between parties of equal strength. His objection to "the higgling of the market" was based on a reading that unskilled workers lacked such strength in dealings with employers. If there was no minimum wage, workers would be forced into poverty and degradation.

Higgins refused to allow wages to fall below this minimum because to do so would encourage "parasitic trades". If the rest of society was "taxed" to provide for the welfare of workers, because of the inadequacy of their wages, their employers would have an unfair advantage over competitors. Taxing society to prop up such employers is the antithesis of the free working of the market. Such a taxing-spending approach by governments has been consistently criticised by neo-liberal commentators.

The wage he set was designed to enable a family of five to enjoy "frugal comfort". He was well aware that young men did not have families of this size. The wage was designed to enable them to save so as to have funds to support such a family. When it came to women, he determined a wage for an individual, hence women were discriminated against.

In 1922, when automatic quarterly cost-of-living adjustments were introduced by Justice Charles Powers, the basic wage took into account regional differences in the cost of living. Incidentally, Powers requested a knighthood on the grounds of resisting the wage demands of unions. Even though the capacity-to-pay principle was introduced in 1931, wages were still linked to cost-of-living adjustments. This practice was not abolished until 1953.

Since then there has always been a process for determining a minimum wage. Such a process occurred under the various Accords of the Hawke-Keating years and the Coalition under John Howard, before and after Work Choices. It is difficult to believe that Henderson can be in ignorance of the two decisions of the Australian Fair Pay Commission. Minimum, or living wage, determination will become a function of Fair Work Australia, as foreshadowed by the new Rudd Government.

The idea of procedures for determining a minimum wage has been a longstanding feature of the Australian way of life. Higgins's legacy is alive and well.

Braham Dabscheck (senior fellow, faculty of law, University of Melbourne), Bronte