Australian Workers' Union v Commonwealth Railways Commissioner [1933] HCA 16; (1933) 49 CLR 589 (21 April 1933)

HIGH COURT OF AUSTRALIA

The Australian Workers' Union Applicant; and The Commonwealth Railways Commissioner Respondent.

H C of A

21 April 1933

Rich, Starke, Dixon, Evatt and McTiernan JJ.

H. S. Nicholas, for the applicant.

Sir Edward Mitchell K.C. (with him Russell Martin), for the respondents.

H. S. Nicholas, in reply.

The following written judgments were delivered:—

April 21

Rich, Dixon and McTiernan JJ.

Sec. 18A (4) (i) (b) of the Commonwealth Conciliation and Arbitration Act 1904-1930 enacts that the Commonwealth Court of Conciliation and Arbitration shall not have jurisdiction to make an award altering the basic wage or the principles upon which it is computed unless the question is heard by the Chief Judge and not less than two other Judges and the alteration is approved by a majority of the members of the Court by whom the question is heard. The expression "the basic wage" came into use through the system of industrial arbitration as a description of the primary wage payable to an unskilled worker. Presumably it was so called, because, not only was it the lowest rate for adult workmen, but it was basal in the assessment of the remuneration for skilled labour. It appears that much uncertainty and difference of opinion exist as to the precise sense in which the expression is used in this provision. The statute is dealing with the Court of Conciliation and Arbitration, and it is through the use in that Court of the expression that it has obtained currency. It is, therefore, natural to resort to the awards and reasons given in that Court to ascertain the connotation with which the Legislature should be understood to have used it. An examination of such of this material as we have been referred to has convinced us that in Australia in 1930 the words "basic wage" meant the money rate of wages specified in or ascertainable from a regulation or determination of minimum wages contained in an award or other instrument as the rate prescribed for an unskilled labourer. In this statute the Legislature may further be taken to have referred to a rate of that description prescribed by the Court of Conciliation and Arbitration, which, hitherto, in doing so has proceeded upon the principle that a reasonable living wage must be paid, sufficient to enable a normal man with a wife and three children to be maintained according to a suitable standard. This rate has been habitually fixed by that Court by a calculation from a rate of seven shillings a day in Melbourne in 1907, adjusted to other places and to other periods of time by means of statistical tables, and by exercising a discretion, not only in selecting the statistical table which appears appropriate in respect both of the basis of calculation and of the place as for which the table is constructed, but also sometimes in adding, or perhaps even subtracting, an arbitrary figure considered to be fair because of some local or special condition. The award of his Honor Judge Drake-Brockman, which is impugned as altering the basic wage or the principles upon which it is computed, purports to determine all prior awards governing the wages and conditions of employment upon the Trans-Australian or Central Australian Railway. At the time when his award was made, an award was on foot made by the Deputy President, Sir John Quick, which, in effect, adopted or continued the basic wage fixed by a former award made by the President, Sir Charles Powers. By that award a primary wage was prescribed, arrived at by adopting the index figures for the preceding quarter belonging to Port Augusta in a statistical table showing a relation between the cost of living estimated at seven shillings in Melbourne in 1907 and the cost of living on a corresponding standard in Port Augusta in the quarter preceding the date of the award. To the figures so obtained an addition of three shillings a week was made according to a custom then recently established by the President, and a further addition of one shilling and three pence per day was made on special grounds. This, whether by chance or design, produced an initial figure equivalent to the wage then prevailing in Adelaide. The award contained the usual provisions for an automatic adjustment of this initial figure in accordance with variations in the cost of living shown by future statistical tables. For the purpose of this adjustment statistical tables were selected for the cost of living, not at Port Augusta, but calculated upon a weighted average for four towns in South Australia, not including Adelaide.

In the award of his Honor Judge Drake-Brockman, for ascertaining the basic wage of employees residing west of the 1,021 mile post upon the railway, the index figure belonging to Kalgoorlie was adopted, and for other employees a special index figure belonging to Port Augusta, but calculated upon statistics which excluded rent payable for houses let by the Railways Commissioner and included prices of commodities sold at the Railways Commissioner's store, prices upon which the statistical tables had not theretofore been based. To the figure ascertained by this means, the customary three shillings a week was added. But his Honor declined to make a further addition of one shilling and three pence per day or of any other sum. The wage so fixed was prescribed as the initial figure under the title "basic wage." For the purpose of the adjustment clause the statistical table for the four South Australian towns was not adopted, but the index figure for the specific place or area was taken or intended to be taken. The result of these changes was to reduce the wage which, if the old award had remained in force, would have been payable under its provisions as the primary wage to the unskilled labourer, the wage payable for skilled labour being assessed on the basis of that primary wage. It results from the interpretation which we have given to the expression "basic wage" in sec. 18A (4) (i) (b) that the award in effecting these changes assumed to alter the basic wage. The award was, therefore, made without jurisdiction.

The questions in the summons should be answered:—(1) Yes. (2) Answer unnecessary. (3) No.

Starke J.

Summons under sec. 21AA of the Commonwealth Conciliation and Arbitration Act 1904-1930, referred by my brother Evatt to this Court. The questions for determination are:—1. Whether the award made by Judge Drake-Brockman of the Commonwealth Court of Conciliation and Arbitration on 16th December 1932 in the matter of certain disputes was an award altering the basic wage. 2. Whether the award was an award altering the principles on which the basic wages is computed. 3. If the answer to one or two is in the affirmative, whether there was jurisdiction to make the award.

A preliminary question is whether the disputes were within the jurisdiction of the Commonwealth Court of Conciliation and Arbitration. Under the Commonwealth Conciliation and Arbitration Act 1904-1930, jurisdiction is given to the Commonwealth Court of Conciliation and Arbitration to make awards determining industrial disputes extending beyond the limits of any one State, including any dispute in relation to employment in an industry carried on by or under the control of the Commonwealth or any public authority constituted under the Commonwealth. The disputes in this case were between the Commonwealth Railways Commissioner and his employees, organized in various unions. The operations of the railways extended over more than one State, and the disputes related to wages and conditions of work of the employees carrying on those operations. Prima facie therefore the disputes were within the jurisdiction of the Commonwealth Court of Conciliation and Arbitration. Two Acts, however, require consideration, the Arbitration (Public Service) Act of 1911, and the Arbitration (Public Service) Act of 1920. Under these Acts, the Public Service of the Commonwealth includes the service of any public institution or authority of the Commonwealth, and includes all persons employed in any such service in any capacity, whether permanently or temporarily, or whether under the Commonwealth Public Service Acts or not. The employees of the Commonwealth Railways Commissioner fall within this definition (see Commonwealth Railways Act 1917-1925). Under the Arbitration (Public Service) Act of 1911, an organization of employees in the Public Service was empowered to submit to the Commonwealth Court of Conciliation and Arbitration any claim relating to salaries and wages or terms and conditions of employment, and jurisdiction was given to the Court to hear and determine the claim. Under the Arbitration (Public Service) Act of 1920, however, a Public Service Arbitrator was constituted, and jurisdiction was given him to determine all matters submitted to him relating to salaries, wages, rates of pay or terms and conditions of service or employment of officers and employees of the Public Service. And sec. 11 of the Act provides: "(1) Notwithstanding anything contained in the Arbitration (Public Service) Act 1911, an organization of employees in the Public Service shall not be entitled to submit to the Court" (that is, the Commonwealth Court of Conciliation and Arbitration) "under that Act any claim relating to the salaries, wages, rates of pay, or terms or conditions of service or employment of members of the organization." But this prohibition is directed to claims submitted under the 1911 Act, which do not require and may not involve any of the elements of an industrial dispute extending beyond the limits of a State necessary to found jurisdiction under the Commonwealth Conciliation and Arbitration Act 1904-1930. Consequently, in my opinion, the jurisdiction of the Commonwealth Court of Conciliation and Arbitration under the last-mentioned Act is not ousted by reason of the provisions of sec. 11 of the Arbitration (Public Service) Act of 1920, and so attaches to the present disputes.

I now turn to the consideration of the questions raised by the summons under sec. 21AA. They depend upon the construction of sec. 18A (4) of the Commonwealth Conciliation and Arbitration Act 1904-1930. It provides: "Notwithstanding anything contained in this Act, the Court" (that is, the Commonwealth Court of Conciliation and Arbitration) "shall not have jurisdiction—(i) ... to make an award ... (b) altering the basic wage or the principles on which it is computed ... unless the question is heard by the Chief Judge and not less than two other Judges, and the alteration ... is approved by a majority of the members of the Court by whom the question is heard." The "basic wage" is an expression commonly used in Australia. Its principal exponent was Mr. Justice Higgins, who, in an article contributed by him to the Harvard Law Review in January 1919 entitled A New Province for Law and Order, described it as the lowest wage which can be paid to an unskilled labourer on the basis of the normal needs of an average employee regarded as a human being living in a civilized community (Official Year Book of the Commonwealth of Australia (1932), No. 25, p. 787; Harvard Law Review, vol. 32, pp. 191, 192). But this wage is fixed by various industrial tribunals in Australia operating under Federal and State Arbitration Acts, and is varied from time to time according to changes in the cost of living, constitution of the family unit, &c. (Year Book of the Commonwealth (1932), No. 25, p. 787). "The basic wage rates fixed by State arbitration tribunals differ from those obtaining in the Federal sphere not only as regards amount, but also in respect of constitution of family unit whose need it purports to supply" (Year Book of the Commonwealth (1932), No. 25, p. 788). So I take it that the basic wage referred to in the Federal Arbitration Act is the basic wage fixed by the tribunal operating under that Act. A general basic rate of wage is not declared by any Federal tribunal, as is the case in some of the States. But it is possible that the Legislature may have in contemplation some formula by which the basic wage can be ascertained. According to Mr. Justice Higgins' formula, it was to be fixed on family lines, on the assumption that the male adult worker has to support himself, a wife and three dependent children (see A New Province for Law and Order, Harvard Law Review (1920), vol. 34, p. 105). It is quite immaterial for present purposes whether the assumption is accurate or inaccurate, though it has often been attacked (see table in Federated Public Service Assistants' Association v. Commonwealth of Australia[1]; E. Rathbone, The Disinherited Family). Further, Mr. Justice Higgins said in the same article (Harvard Law Review, vol. 34, at pp. 116, 117):—"In finding the basic wage the Court uses a rough estimate which it made in an inquiry in 1907 as to fair and reasonable remuneration, and the Court varies the 7s. per day, 42s. per week, as then estimated, in the ratio that the cost of living has increased since 1907. For instance, if it now takes 30s. to purchase as much as could be purchased in 1907 for 17s. 6d., the basic wage is found by this formula: 17s. 6d: 30s.:: 7s.: 12s." The above rate of 7s. has been varied from time to time in accordance with the retail price index numbers—food, groceries, rent (all houses)—prepared by the Commonwealth Bureau of Census and Statistics for the city or town in which the persons affected are employed, and the rate so obtained has been taken by the Commonwealth Court of Conciliation and Arbitration as the minimum rate of wage for an unskilled male worker. But it is clear that this formula has not been rigidly maintained by the Commonwealth Court of Conciliation and Arbitration. Thus, in 1921, the sum of 3s. was added for the purpose of securing to the worker during a period of rising prices the full equivalent of the Harvester standard, that is 7s. per diem (Year Book of the Commonwealth, (1932), No. 25, p. 787; Statement of Full Court[2]). Further, effect is given as far as possible to the difference in the cost of living in different localities. The Court has used its discretion in the application, for the purpose of fixing wages, of the index numbers supplied by the Commonwealth Bureau of Census and Statistics. It has selected index numbers for the purposes of its awards, and in some instances has even "loaded" those numbers. (See the examination of wages and prices issued in December 1931 by the Commonwealth Bureau of Census and Statistics). The result is that the expression "basic wage" in sec. 18A (4) of the Commonwealth Conciliation and Arbitration Act 1904-1930 cannot be referred to a wage ascertained by reference to any precise or definite formula, but must mean the minimum rate prescribed for unskilled labourers in an award or order of the Court. It is this rate that must not be altered unless the question is heard by the Chief Judge and not less than two other Judges.

The award of Judge Drake-Brockman in the present disputes, made in proceedings which lasted no less than thirty-four days, contravenes this provision. Under an award made by Deputy President Quick in Australian Workers' Union v. Commonwealth Railways Commissioner[3], the basic wage was fixed at 14s. per day, which included the 3s. loading already mentioned, and also a special loading of 1s. 3d. This rate was subject to adjustment in accordance with variations shown in the cost of living by certain selected index numbers issued by the Commonwealth Bureau of Statistics. The award of Judge Drake-Brockman purports to determine this award, and prescribes as follows:—

The minimum rate of wages (subject to a reduction of ten per cent until otherwise ordered by the Court) shall be the rate ascertained in the following manner:—

Where the employee is stationed in the locality mentioned in the first column of Table "A" hereunder written the employee shall be paid at the rate mentioned in the second column of the said Table "A."

Table A. First Column Second Column. Third Column. Locality where stationed. Basic wage. Index number on which quarterly adjustment of wages shall be made. Number. For. West of 1,021 miles Trans-Australian Railway £3 12s. 6d. per week 1450 Kalgoorlie. 12s. 1d. per day Elsewhere £3 6s. per week 1310 Port Augusta together with railway stores prices for bread, groceries and dairy produce. 11s. per day

The basic wage thus prescribed is less than that prescribed under the Quick award, after making adjustments in accordance with variations shown in the cost of living as prescribed by the award. The difference is due to the rejection of the special loading of 1s. 3d. and to the use, except as to residents in the vicinity of Kalgoorlie, of what Judge Drake-Brockman describes as "a composite index figure arrived at by taking in railway stores prices for bread groceries and dairy produce together with all other factors usually included in the Port Augusta index figure." By taking in the railway stores prices, the learned Judge adopted a new method of computing the basic wage. And I suppose this may also be called an alteration of the principle on which the basic wage was computed under the Quick award, for it departs from the method there adopted for ascertaining that wage.

A suggestion was made that the Kalgoorlie basic wage rate was severable and could be supported. But the Kalgoorlie rate is altered by the new award, and in any case the award is so bound together that the wages provisions cannot be severed.

The questions raised by the summons should be decided as follows:—1. Yes. 2. Yes. 3. No.

Evatt J.

By an amendment of the Commonwealth Conciliation and Arbitration Act, inserted during the year 1930, a single Judge of the Court is deprived of jurisdiction "to make an award ... altering the basic wage or the principles on which it is computed" (Sec. 18A (4): Act No. 43 of 1930, sec. 7).

The question arising in this summons is whether Judge Drake-Brockman's award dated December 16th, 1932, made in settlement of disputes between the Commonwealth Railways Commissioner and certain unions was in excess of jurisdiction by reason of the 1930 amendment. That question necessarily turns upon the meaning of the phrase "basic wage." It is nowhere defined in the statute, so we are remitted to other sources.

Many years ago, Mr. Justice Higgins in an elaborate account of the Federal arbitration system thus stated certain aspects of the "basic wage":—

(1)

The basic or living wage is computed and awarded on the principle that a normal man has a family and must earn sufficient to support it. Nor is the basic wage confined to the money necessary for the main requisites of life—food, shelter, clothing; it allows something "to come and go on." The wage is based on civilised conditions—"the normal needs of the average employee regarded as a human being living in a civilised community." That wage, as originally granted in 1907, lifted the standard of living for the poor; and, in the recent troublous years, it has followed closely the increase in the cost of living (A New Province for Law and Order (1922), p. 90).

(2)

The "basic" or living wage, the minimum wage for the unskilled worker, is the primary factor in the fixing of all wages by award; and the fixing of the proper basic wage is necessarily of an importance that can hardly be exaggerated. It must vary with the cost of living in the various districts; for instance, the basic wage for the seaports would not be a proper basic wage for inland mining districts such as Broken Hill. But sometimes by general consent a uniform basic wage is desirable, as in the case of the waterside workers or seamen; and the Court then takes as its guide the mean cost of living for the several ports (ibid., p. 52).

(3)

The Court has repeatedly invited full inquiry on scientific lines as to the cost of living, but neither the Government nor the parties have yet responded. Preferably the inquiry should be made by expert statisticians and on the basis of distinct regimens, but the responsibility of fixing the basic wage should be left with the Court. In the meantime the Court has been obliged to work out the problem on the best materials that it can get. At present the Court takes as prima facie evidence the findings as to the cost of living on then existing habits in Melbourne in 1907, and then it takes the statistician's figures as to the depreciation in the value of money as against commodities as prima facie evidence of the increase in the cost of living (ibid., p. 53).

(4)

Referring to the part played by the Commonwealth Statistician in the matter, his Honor said:—

He does not, as some people fancy, pretend to show the cost of living in a wage-earner's family; but he shows the depreciation in the value of money as regards the selected commodities, and, as he says, "in normal circumstances properly computed index numbers of food and groceries and house rent combined form one of the best possible measures of those variations in the purchasing power of money which affect the cost of living." Then the Court comes in, and, until the contrary be shown, infers that the depreciation in the value of money which is found in relation to the selected commodities is to be found also in relation to the other commodities. This method is in accordance with the views and intentions of the Statistician; for he says "once a standard of living or living wage has been fixed, the tables published ... can be legitimately used as showing the variations in the cost of living." No party is bound by these tables as by a matter of absolute irrefutable law, but they are on the right method, and the Court makes use of them until it can find better evidence (ibid., p. 54).

(5)

His Honor also said:—

It is the practice of the Court to let no considerations of competition with foreign countries reduce what is found to be the proper basic wage; and this practice, it must be admitted to the credit of the employers, has never been disputed so far as I know. The proper sustenance of the persons employed (on the basis of family life) is treated in effect as a first charge on the product (ibid., pp. 54, 55).

(6)

Referring to the appointment of the Federal Basic Wage Royal Commission of 1920, his Honor said:—

the basic wage is to be fixed on family lines, on the assumption that the male adult worker has to support himself, a wife, and three dependent children. This is in accordance with the assumption of the Court in 1907; and it is also in accordance with the United States Bureau of Labour and Statistics, December 1919 (ibid., p. 95).

Of course the views of Higgins J. on such a question as the present are of the highest authority. They have frequently been adopted and expounded by other industrial tribunals in this country, although the terms "living wage," "minimum wage" and "basic wage" are often used interchangeably.

Thus in 1914 Mr. Justice Heydon of the Court of Industrial Arbitration of New South Wales stated that the worker's living wage was to be founded "on his requirements as a man in a civilized community which has resolved that, so far as laws can do it, competition shall no longer be allowed to crush him into sweated conditions" (Inquiry re Cost of Living[4]). Piddington J. in 1926 regarded the living wage as "the irreducible minimum which can be embodied in an award under the Act or in an industrial agreement made under the Act" (In re Standard of Living Inquiry[5]), and Cantor and Street JJ. defined the living wage as

the lowest wage which the conscience of the community will permit to be paid to an employee, and ... to be paid to him not as a return for services rendered, or in proportion to the value of his services, but in order to meet the cost of maintenance of himself and his family, according to the domestic unit prescribed. It is to be the irreducible minimum below which no person, whose conditions of work are covered by an award or industrial agreement, is to be permitted to offer his services or to be employed by an employer (In re Standard of Living and Living Wages for Adult Male Employees[6]).

The New South Wales system of industrial arbitration differs in important respects from that of the Commonwealth where the jurisdiction of the Court is conditioned by the actual or probable existence of a certain type of dispute, and where, as a consequence, no general rule even as to the amount of the basic wage can be promulgated in advance of an award settling or preventing a dispute.

In answering the crucial question of this case, the meaning to be attributed to the phrase "basic wage or the principles on which it it is computed," some guidance is, I think, to be found in pronouncements made during 1929 and 1930 by Judges of the Federal Court. In one case, Chief Judge Dethridge declined to include in his award settling a dispute any provision for what is known as the "Powers 3s." Powers J. had in 1921, when President of the Federal Court, thought it just to include the sum of three shillings per week in the basic wage for reasons with which we need not now concern ourselves. In 1930 also, Chief Judge Dethridge, in Graziers' Association of New South Wales v. Australian Workers' Union (Pastoralists' Case)[7], indicated, not obscurely, the possibility or probability of using an index number which would considerably reduce the basic wage.

This actual and threatened change from what was regarded as established practice, was soon followed by the amendment in question. Its main object is clear, to protect the existing "basic wage," as embodied in an award, against any alteration on the part of a single Judge. To my mind the terms of the sub-section are too clear to admit of the meaning of "basic wage" suggested by Sir Edward Mitchell for the Commonwealth Railways Commissioner, namely, an amount of money sufficient to purchase, at the relevant time, and in the relevant place, commodities corresponding with the Higgins Harvester standard of 1907. The sub-section regards the "basic wage" as something contained in and foundational to a particular award, not awards of the Court in general.

It was also sought by the amendment to safeguard against alterations by a single Judge the "principles" of computation of the "basic wage." What these "principles" cover, in any given case, may have to be discovered by an ascertainment, so far as it is possible, of the principles by which the existing basic wage has been, and is being, computed. The leading principle is, or will upon examination turn out to be, that of ascertaining what is sufficient to provide a man, his wife and three children with a reasonable standard of living in the appropriate district.

The award in force at the date of the Drake-Brockman award was No. 94 of 1926, made by Sir John Quick on December 22nd, 1926. The basic wage was thereby made alterable from time to time under an adjustment table bringing in the index number for the four towns of South Australia. As adjusted upon this footing at the date when Judge Drake-Brockman made his award, the basic wage in force (by virtue of the continuance in force of the Quick award) was 12s. 4d. per day.

But Judge Drake-Brockman's basic wage was 12s. 1d. per day for an area west of the 1,021 mile post on the Trans-Australian Railway, and 11s. per day elsewhere. Each of these sums of money was lower than the existing basic wage. There was an alteration of the basic wage which went beyond his Honor's jurisdiction. As upon the foundation of such base rates the Drake-Brockman award of marginal rates was also fixed, the award in that respect also was beyond jurisdiction. It is unnecessary to determine whether there was involved, also, any alteration of the principles upon which the Quick basic wage was computed.

The result is that the Quick award as to wages continued, and still continues in force, notwithstanding the Drake-Brockman award. The questions in the summons should be answered:—1. Yes. 2. Unnecessary to answer. 3. No.

Questions answered:—1. Yes. 2. Answer unnecessary. 3. No.

Solicitor for the applicant, A. C. Roberts.

Solicitor for the respondent, W. H. Sharwood, Crown Solicitor for the Commonwealth.

[1] (1920) 14 C.A.R. 639, at p. 685.

[2] (1923) 17 C.A.R. 376.

[3] (1927) 24 C.A.R. 678.

[4] (1914) A.R. (N.S.W.) 22, at p. 26.

[5] (1926) A.R. (N.S.W.) 301, at p. 303.

[6] (1929) A.R. (N.S.W.) 375, at p. 421.

[7] (1930) 29 C.A.R. 261.