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Published online by Cambridge University Press: 24 January 2025
If it is in any sense true that the establishment of the federal arbitration system created “a new province for law and order” as Higgins asserted, then it is certainly true that the concept of the basic wage as a foundational element in all awards of that system made in settlement of interstate industrial disputes became the single most important factor in the development of that law and of that order. From the Harvester judgment of 1907 emerged the structure of:
(i) a basic wage common to all workers irrespective of the work upon which, or the industry in which, they were employed and
(ii) a secondary wage or margin for the skill, responsibility, or particular circumstances of the work, or industry, in question
which was the distinguishing feature of wage determination in Australia for the next sixty years. All federal and State industrial tribunals operated with in this structural framework, either by legislative direction, or as a result of their own deliberate decisions based upon a common acceptance of this structure by the parties coming before these tribunals.
Two general comments seem appropriate in regard to this article. First, the use of terms e.g. “judgments” for reasons for decisions given by the Commonwealth Conciliation and Arbitration Commission is based upon an assumption that readers will know, and assume that the writer knows the implications of the Boilermakers' decision (The Queen v. Kirby; Ex parte Boilermakers' Society of Australia (1955-1956) 94 C.L.R. 254).
Second, an attempt has been made as far as possible to refrain from a partisan analysis that would reflect the fact of personal commitment in the cases under consideration. This has been possible, at least to my satisfaction, in the first two sections. Assessment of the implications of the total wage decision for the future operation of the federal arbitration system must inevitably reflect the writer's own involvements. This no doubt explains my emphasis in the third section—which makes such an assessment—upon possible trade union reactions. That analysis is not meant to suggest that the attitude of the trade union movement is the sole consideration in determining the implications for the federal arbitration system of any particular course of action adopted by that system.
1 The phrase provided the title for the book, published in 1922, by the creator of the basic wage system, H. B. Higgins, the second President of the then Commonwealth Court of Conciliation and Arbitration.
2 For a detailed analysis up to 1953 of this development with particular reference to the basic wage concept, see Hawke, , “ The Commonwealth Arbitration Court-Legal Tribunal or Economic Legislature ?” (1956) 3Google Scholar Annual Law Review: University of Western Australia 422; reprinted in Isaac, and Ford, (ed.), Australian Labour Economics: Readings (1967) 33Google Scholar.
3 Ex parte H. V. McKay (1906) 2 C.A.R. 1.
4 Employers' Total Wage Case 1964 (1964) 106 C.A.R. 683.
5 Ibid. 689.
6 Briefly this theory can be expressed by the proposition that wage increases should not exceed the estimated increase in national productivity for the ensuing year, such estimate to be based on a consideration of current economic factors assessed in the light of past productivity movements.
7 (1964) 106 C.A.R. 683, 690.
8 Loc. cit. (Both quotations).
9 Loc. cit.
10 Ibid. 694.
11 Ibid. 694-695.
12 Ibid. 695.
13 (1961) 97 C.A.R. 376.
14 (1959) 92 C.A.R. 793.
14 Ibid. 801.
16 (1961) 97 C.A.R. 376, 380.
17 Ibid. 381.
18 Kirby C.J., Gallagher, Moore and Nimmo JJ. constituted a bench hearing the unions' applications for an increase in the basic wage lodged with the Commission in early 1964; by the provisions of section 33 of the Conciliation and Arbitration Act 1904-1966 (Cth) such applications can only be heard by the “Commission in Presidential Session”. The composition of the bench consisting of these same presidential members together with Commissioner Winter to deal with the employers' total wage application followed a finding by the President, Sir Richard Kirby, that the matter was of sufficient importance in the public interest to be dealt with by a reference bench of this type according to the provisions of section 34 of the Act Much of the evidence and argument of the parties was common to the basic wage and total wage applications, but the Commission held, rightly, in the preliminary proceedings that it was precluded, under section 44 of the Act, from hearing the matters together. The section detailed the circumstances where there could be joint sessions of the Commission if differently composed benches were dealing with matters in which a question common to both was considered to be involved. As it then stood, the section did not include specific reference to section 33 matters. In the event the Basic Wage Case was heard first with Commissioner Winter physically present on the bench, but taking no part in the proceedings. The Commission, constituted as the reference bench,then proceeded almost immediately to hear the total wage case. The clumsiness of these procedures was obviated by amending legislation in 1965 which enables the President to provide for joint sessions without inhibition as to the type of proceedings in which the common question arises.
19 (1964) 106 C.A.R. 629.
20 Ibid. 641.
20 Ibid. 642. Following the abolition in 1953 of automatic quarterly adjustments to the basic wage for changes in the cost-of-living, the tribunal in annual hearings from 1956 had conducted general economic reviews using for this purpose a number of “indicators”. No particular significance was attached to movements in prices. The essential significance of the 1961 decision was the indication by the Commission that in future annual hearings a prima facie assumption would operate in favour of translating into basic wage rates, price movements shown by the consumer price index since the last hearing; movements in productivity would be considered at longer intervals. Infra, 105-112.
22 The employers' productivity theory of wages (supra n. 6) was advanced in these proceedings, as it has been consistently in all national wage cases, as part of the submission that while, formally, the Commission';s function is the prevention andsettlement of industrial disputes, the Commission “should act as if its primary function were to attempt to create or sustain a favourable economic climate”—the words used by Moore, J. in National Wage Cases of 1965 (1965) 110Google Scholar C.A.R. 189, 267, when discussing the opposing propositions under the heading “Rôle of Commission”.
23 Employers' Total Wage Case 1964 (1964) 106 C.A.R. 683, 695.
24 Loc. cit.
25 Ibid. 695-696. This passage of the judgment seems to reflect, with approval, a section from an article tendered in the proceedings by the unions, Dunphy, and Wright, “The Jubilee of Industrial Arbitration in the Federal Sphere” (1951) 25Google Scholar Australian Law Journal 360, 366: “Subsequent statutory references to the basic wage can only be interpreted as approving the 1928 amendment which provided “that this section shall not affect the practice of the Court in fixing the basic wage”, the 1930 amendment, which gave exclusive jurisdiction overthe basic wage to the Full Arbitration Court as distinct from a single Judge, the 1947 amendment, which perpetuated this exclusive control as against Conciliation Commissioners, and the 1949 amendment, which introduced for the first time a definition of the term basic wage, all amount to unequivocal Parliamentary sanction”.
26 Ibid. 696. (Both quotations).
27 Ibid. 698. (Both quotations).
28 Ibid. 701-702. (Quotations are taken from these pages).
29 National Wage Cases of 1965 (1965) 110 C.A.R. 189.
30 Ibid. 193.
31 Ibid. 206.
32 Ibid. 211.
33 Loc. cit.
34 Ibid. 232.
35 Ibid. 267.
36 Ibid. 241.
37 Ibid. 242.
38 Ibid. 268.
39 Ibid. 269.
40 Ibid. 214.
41 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365.
42 Ibid. 7. Supra n. 18.
43 The Queen v. Commonwealth Conciliation and Arbitration Commission; Ex parte Metal Trades Employers' Association and Others (1966) 114 C.L.R. 648, 654.
44 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 9.
45 Ibid. 10.
46 Loc. cit.
47 Ibid. 12. (Both quotations).
48 Ibid. 15. (Both quotations).
49 Loc. cit.
50 Ibid. 16.
51 Supra n. 2.
52 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 37.
53 Ibid. 96. The 1965 majority decision rejected the 1961 approach of making a prima facie assumption in favour of adjusting the award wage for preceding price‘changes, supra n. 21. An assessment by the three judges that the economic capacity of the country in the ensuing twelve months would allow an increase of one and a half’per cent in the level of award wages was applied by them to the marginal element alone, i.e. each margin was increased by an amount equal to one and a half per cent of the sum of six capital cities basic wage and that margin.
54 Loc. cit. (All quotations).
55 Ibid. 137-138. (Both quotations).
56 National Wage Cases 1967, Serial No. B2200.
57 Ibid. 2.
58 Ibid. 4-5.
59 Ibid. 6.
60 (1953) 77 C.A.R. 477.
61 Serial No. B2200, 2.
62 Gallagher J. in 1966 described the introduction of the minimum wage as “a ground of paramount importance ” for the change from his 1964 and 1965 opposition to the total wage. Supra n. 52.
63 (1961) 97 C.A.R. 376, 415.
64 Supra n. 53.
65 Supra n. 15.
66 Fear of inflation, in particular, predominated in the majority judgment: “We have decided to grant wage increases which we consider will not be incompatible with price stability because, in our view, any wage increase granted at the present time without regard to this question would not confera real or lasting benefit upon wage and salary earners. The Commission cannot, of course, guarantee price stability, but it should in present economic circumstances take care not to make decisions which it recognizes as a threat to it.” (1965) 110 C.A.R. 189, 257.
67 Section 4 (1.) of the Conciliation and Arbitration Act 1904-1966 (Cth) provides: “The Commission in Presidential Session”, in relation to a matter, means the Commission constituted by such presidential members of the Commission to the number of at least three as are nominated by the President for the purposes of that matter.
68 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 6. Supra n. 42 for further details as to the constitution of the two benches.
69 The Prime Minister announced on 13 February 1963 the appointment and terms of reference of a Committee of Economic Enquiry consisting of Sir James Vernon, chairman, Sir John Crawford, Professor P. H. Karmel, Mr D. G. Molesworth and Mr K. B. Myer. The Committee's basic report was submitted to the Prime Minister on 6 May 1965 and tabled by him in the Commonwealth Parliament on 21 September 1965. The remarkable similarities between the majority judgment delivered on 29 June 1965 and chapter 7 of the Report (“Costs, Prices and Wages”) led counsel for the employers in the 1966 proceedings to submit “that the principal issues of substance involved in the 1965 judgment are endorsed issue by issue in the Committee's report” (Transcript of Proceedings, 1187).
In these circumstances the unions sought to have members of the Committee available for questioning before the Commission. The Commission itself declined to call members, but by a majority (the question was decided by the presidential members, Moore J. dissenting) allowed the unions to issue subpoenas compelling attendance, a right which was exercised in respect of Sir James Vernon, Professor Karmel and Mr Myer.
70 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 15. Supra n. 49.
71 Ibid. 18. Wright J. advocated price reviews at these intervals on the assumption “that in future the Commission will possibly declare new wage rates, after triennial or quadrennial investigations…”. The judge contemplated hearings at which a prima facie assumption would be made in favour of reflecting price movements in the award wage but at which it would be open to argue that exceptional circumstances rendered this course undesirable.
72 Ibid. 26.
73 Ibid. 29-30. In the same section Wright J. endorsed what was written by Moore J. on the subject of the Vernon Report, except his attitude towards the summoning of members of the Committee. In his judgment Moore J. said: “In the present proceedings the Report should not be given the pre-eminence which the employers sought to give it. The Report contains helpful discussions of the Commission's work and problems but though the Committee included two distinguished economists it was not in my view as qualified as this Commission either to understand fully the problems of award wage fixation or to attempt to find solutions to them. The conclusions reached by the Vernon Committee closely resemble submissions made by the employers to the Commission since 1964 and I prefer to consider these submissions on their merits without the intermediation of the Report.” (Ibid. 97).
74 Ibid. 22-23.
75 Ibid. 23.
76 Loc. cit.
77 Loc. cit. (The judge's emphasis).
78 Ibid. 26. The judge went on to express the belief “that any fair-minded person should concede that overaward payments should bear objective reconsideration in the light of the new level of minimum wages created by the present decisions”. (Ibid. 27).
79 Ibid. 90-95. In this section of his judgment dealing with principles of wage fixation, Moore J. under the heading “Conclusions on Wage Fixation” said: “The Commission should not attempt at this time to implement through its awards the economic theorem that if increases in incomes are kept within increases in productivity prices will not rise. Action by the Commission alone could not achieve the desired result, and in fact the result has not been achieved anywhere in conditions of full employment.
Assuming that wages actually paid may have reflected increases inprices and productivity, the Commission is not relieved ofits duty in the field of industrial relations to fix proper rates for its awards. It should take into account both price movements and productivity, but should not allow itself to be over-concerned with the elusive concept of price stability.
If it fixes proper rates the wages drift may diminish, in which event not only would all-round wage justice be ensured but also, for those who wish it, the possibility of an effective wages policy would become greater.” (Ibid. 95). The term “wages drift” refers to the movement of actualpaid rates above award rates.
80 As to the former the Commissioner said: “So that, as I see it, the paramount and indeed the only real function and duty of the Commission is to prevent and settle industrial disputes”. (Ibid. 117). As to the latter: “I firmly entertain the conviction that all parts of a wage should be susceptible to adjustment for productivity and price movements with certain qualifications that go to questions of economic unsteadiness”. (Ibid. 132).
81 Two dollars was awarded by the tribunal in 1950 and again in 1964.
82 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 16.
83 Employers' Total Wage Case 1964, (1964) 106 C.A.R. 683, 695-696.
84 Commissioner Winter was joined by Gallagher and Moore JJ. in the latter stages of the enquiry in 1967 and judgment was not brought down until 11 December 1967.
85 Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1748. Increases were granted on the majority judgment of Moore J. and Commissioner Winter with Gallagher J. holding that no increase should then be granted.
86 This section is written without taking into account the possibility that the Commission could move to restore the basic wage-margins award structure.This is a matter entirely within the discretion ofthe Commission, the High Court on 13 December 1967 having unanimously (Barwick C.J., McTiernan, Kitto, Taylor, Menzies and Windeyer JJ.) rejected the unions' applications for prerogative writs directed to the Commission to prohibit it from proceeding further in total wage orders on the ground that the Conciliation and Arbitration Act 1904-1966 (Cth) imposed a duty on the Commission in presidential session to fix a basic wage. See R. v. Commonwealth Conciliation and Arbitration Commission and Metal Trades Employers' Association [1968] Argus L.R. 215.
87 As at June 1967 when total wage was implemented the basic wage (six capital cities) was 75.2% of the weighted average minimum weekly rate for adult males under Commonwealth awards.
88 National Wage Cases 1967, Serial No. B2200, 5.
89 The words used by Commissioner Winter when referring to the minimum wage, Basic Wage, Margins and Total Wage Cases of 1966, Serial No. B1365, 134.