The papal encyclical that helped set Australia’s national wage

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Pope Leo XIII. Photo: CNS
Pope Leo XIII. Photo: CNS

Last Sunday was the 125th anniversary of the encyclical Rerum Novarum issued by Pope Leo XIII on 15 May, 1891. The Rights and Duties of Capital and Labor, as it was otherwise known, was an open letter to all Catholic bishops about the condition of working people around the world.

It came at a time of serious social and political upheaval in the states that would soon unite as the Commonwealth of Australia. Working people were suffering from the very exploitation denounced by Leo XIII in his open letter.

Many of the Catholics who played a significant role in the political and industrial organisations that helped win a better deal for working people over the following years and decades were heavily influenced by Rerum Novarum. Their achievements are still worth celebrating today.

That wages should allow workers to provide for the future and support a family seems an obvious thing to us today. But good health, security and modest comfort were still not guaranteed. Rerum Novarum helped many understand that it was unjust to pressure or trick a worker to accept any less.

The Archbishop of Sydney at the time, Cardinal Patrick Francis Moran, was seen as a great defender of working people. In his pastoral care, Moran helped bring to Australia a powerful and genuine expression of the Rerum Novarum and the view that human society is built upon and around productive human work.

Many ideas that have been cemented in our thinking as a modern society were rendered into place by the Rerum Novarum and the subsequent social and industrial movements: that labour is not just another commodity whose price is simply to be determined by market forces, that a worker therefore is entitled to a fair wage, and that the State has a duty to ensure such outcomes. It taught that to guarantee this, workers have a natural right to enter into association with their peers.

What was to become the bedrock of the Church’s teaching on social justice also had an important but little known impact on the development of the very Commonwealth itself.

Rerum Novarum deeply influenced the work of Henry Bournes Higgins, an advocate for federal conciliation and arbitration powers, who went on to help formulate the concept of the basic wage. His arguments for humanity and compassion were bolstered by the intellectual and institutional weight of the Church’s teaching.

Along with his allies, Higgins narrowly secured the inclusion of the power for the Commonwealth to legislate for “conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limit of any one State” at the 1898 third, and last, Constitutional Convention.

The Bill to create the Commonwealth Court of Conciliation and Arbitration had a turbulent passage through the new Parliament during a period that saw ministers resign and two governments fall.

It was driven through the parliament under four different prime ministers and finally passed in 1904.

It was three years later, in the Harvester Case of 1907, where the nation saw the philosophy of the Rerum Novarum come to fruition in a tangible legal victory for working people.

Higgins, as judge of the Arbitration Court, was called upon to make a declaration as to whether wages paid by a company were ‘fair and reasonable’. Former Prime Minister Bob Hawke, in his 2010 Bishop Manning lecture, noted with some satisfaction that in rereading the judgment he had the immediate feeling that he was looking at a rephrasing and fleshing out of Pope Leo’s Rerum Novarum.

The provision for a fair and reasonable wage was designed for the benefit of employees in the industry, and must be meant therefore “to secure them something which they cannot get by the ordinary system of individual bargaining with employers”.

If Parliament had thought that was “fair and reasonable” there would have been no need for the provision and the course of wages could have been left to the usual unequal contest of the market.

Therefore, he concluded, the standard of fair and reasonable must mean something else and he could think of no standard appropriate other than his now famous dictum “the normal needs of the average employee, regarded as a human being living in a civilised community”.

The State, he said, by such stipulation must surely mean wages sufficient for food, drink, shelter, rent and clothing, and “a condition of frugal comfort estimated by current human standards”.

This judgment formed the principled underpinning of the basic wage, which remained for decades, and of our current law requiring the setting of the National Minimum Wage. It did more than that: it had a profound effect, along with Rerum Novarum, on the development of industrial and social policies based on the respect for the dignity of workers and the need to support them and their families at a decent standard of living. It is a perfect time to celebrate it and the teaching of Pope Leo XIII.