The Harvester Judgment and its Consequences
[First published in The Age, 15 November
Julia Gillard's comments at the centenary celebrations of
the Harvester Judgment of 1907, handed down by the then President
of the Arbitration Commission, Henry Bournes Higgins, and Paul
Keating's spray in The Age (13-11-07) show that it is difficult
for Labor politicians to understand just how much long-term damage
was wrought by H B Higgins, Alfred Deakin, and Billy Hughes,
as they combined wage regulation with tariff protection in the
Arbitration Act of 1904 and the Tariff Act of 1906.
A number of points have to be made about the Harvester judgement.
The first is that it decreed a minimum wage of 42 shillings per
week for unskilled labourers. The second is that it was soon
overturned by the High Court, which found that the Excise Tariff
Act of 1906, which Higgins had presumed gave him the legal authority
to make his award, was constitutionally invalid. The High Court's
intervention was indeed fortunate for the unskilled worker upon
whom Higgins had bestowed a huge mandatory increase. He subsequently
wrote in 1922 in his apologia "A New Province for Law and
"I think I am close to the mark when I say, even for
men in regular work, the average wage was not more than 5s.6d.
per day, 33s. per week. This would mean that the standard was
raised by over 27 per cent in 1907 "
If that increase had remained a legal requirement in 1907,
then a sharp increase in unemployment, particularly amongst the
unskilled, would have followed soon after; just as we saw a sudden
and disastrous increase in unemployment which followed the 1981-82
increases of similar magnitudes in the metal trades awards. But
Higgins' doctrines took hold in the minds of the arbiters of
the State Wages Boards, particularly of NSW and Victoria, in
the years which followed, and slowly these Boards, with unlimited
constitutional power, and constrained only by fear of inter-State
competition, began to regulate using the language and sentiment
expressed in Harvester.
Higgins was vehemently opposed to "the higgling"
of the market place and referred to the "despotism of contract".
Even the most casual reading of his judgments and his apologia
reveals a man who had not the slightest understanding of how
markets work, how economies grow, or how contracts, whether they
be contracts of employment or contracts for services provided,
benefit both of the parties involved, as well as the society
to which they contribute. In his view the contractual relationship
between employer and employee had to be supervised and controlled
by a righteous judge, and in his mind no one could rival Higgins
in righteousness or judicial acumen.
Freedom of contract is the necessary foundation for a prosperous,
growing economy, and Higgins' attempt in Harvester to supplant
with judicial oversight and supervision the rights of people
to enter into employment contracts as they desired, implanted
into our body politic a malignant tumor which still threatens
our future growth, prosperity and ultimately survival as a free
and independent nation.
The election campaign makes it clear that both sides of politics
are still deeply infected with the Higgins malignancy. Paul Keating's
defense of his 1993 legislation shows the same entrenched mind-set.
Both sides make it clear they want to regulate and interfere
in the labour market. Where they differ is in the measures of
regulation and the instruments they wish to employ. The Coalition
wants the Commonwealth government, through the use of ministerial
regulation, to be the primary instrument of interference and
control. Labor wants to bring the trade unions back into the
regulatory apparatus. The trade unions, after all, have been
the life blood of the ALP from its founding, and current Labor
policy will restore legal privileges to trade unions which no
other institutions in Australia possess.
A characteristic example of this privilege is seen in NSW
where awards and agreements for hundreds of thousands of employees
in the energy distribution business stipulate that superannuation
payments must be made to a fund (EISS) administered by companies
owned by Unions NSW. Thus the power to impose superannuation
contributions is used to directly finance unions and, through
them, the ALP.
But whether regulation is to be imposed by Ms Gillard as Minister,
or by trade union officials, is a second order effect. The primary
problem is the innate incapacity of the regulators to stop regulating.
And every time a new regulation is promulgated the capacity of
free individuals to make decisions in their own best interests
is diminished, and the huge social benefits which come from such
unregulated activity are lost.
The collapse of the Soviet Union should have made it clear
to everyone that centralised planning and control does not work.
But this is the essential feature of all of the commonwealth
legisaltion since 1904 which empowers the various industrial
tribunals and labour market regulators. Work Choices and the
No Disadvantage amendments which are now driving the small business
sector into apoplexy are squarely in the Higgins tradition.
By assuming the role which Higgins sought to create for himself
in 1907, and using the corporations power as his authority, John
Howard has assumed an omniscience and omnicompetence which Labor
will inherit and to which no mortal should aspire. It will end