In 1906 the Protectionist Party and the Australian Labour Party were united in an effort to introduce measures that would guarantee workers the right to fare and reasonable wages and working conditions. It was called 'New Protection'. The Constitution did not give the Commonwealth direct power to legislate on these matters. So, in order to sidestep, the Excise Tariff (Agricultural Machinery) Act was established. It created an excise on locally made machinery that would be waived if workers were paid 'fair and reasonable' wages.
In 1907 Melbourne based manufacturer and owner of the Harvester Company, Hugh Victor McKay applied to the Federal Conciliation and Arbitration Court for a remission of the excise duty established under the Excise Tariff (Agricultural Machinery) Act. He claimed that his workers already received 'fair and reasonable' wages. The Agricultural Implement Makers Society, the union that covered McKay's workers, opposed the application.
Reasonable And Frugal Comfort
The Harvester hearing took place in Melbourne from October 7 until the November 8, 1907. The Arbitration Court's newly appointed president, Henry Bournes Higgins, heard the case.
"... (Higgins had) courtly manners and a scholarly mind with ultra radicalism, almost priggish lofty principles and quixotic independence- he had a deep compassion for the under privileged."
P.G. McCarthy, 'Justice Higgins and the Harvester Judgement' in Jill Roe (ed) 'Social Policy in Australia 1901 - 1975', Cassell, 1976
A definition of a 'fair and reasonable wage' had to be established. Higgins employed Pope Leo XIII's encyclical Rerum Novarum, establishing that remuneration "must be enough to support the wage earner in reasonable and frugal comfort". He heard evidence from workers and their wives. Following, he accounted for light, clothes, boots, furniture, life insurance, union pay, sickness, books, newspapers, alcohol, tobacco, transport fares and so on.
Higgins settled on a figure of 2 pounds and 2 shillings per week or 7 shillings a day as a minimum wage. This was higher than what McKay's employees were receiving. McKay was ordered to pay 20,000 pounds in duty.