Like the Abbott government, the Turnbull government is running a mile from the Productivity Commission’s most controversial recommendation, reducing Sunday penalty rates to Saturday levels for hospitality, retail and entertainment workers. It’s entirely a matter for the Fair Work Commission, the relevant minister, Michaelia Cash, has said — a line unchanged since Tony Abbott and Eric Abetz were prime minister and employment minister respectively.
And it has plenty of reasons to do so.
For a start, voters — and the PC primarily recommends the reduction for its consumer benefits — don’t support it. When the PC put the idea forward in its draft report, 54% of voters opposed it, with 32% backing it. Even 40% of Liberal voters dislike it. But more to the point, voters believe business profits are behind the push to cut penalty rates — 61% of voters think the reduction in Sunday rates will simply enable greater profits for business rather than higher employment (20%). Even 50% of Liberal voters think it’s all about business bottom lines, not employment.
The PC disagrees with that view: it argues “long run profitability is unlikely to be affected by penalty rate levels. Effects on profits are not enduring at the industry level” because they’ll be competed away (by the way the PC also dismisses the frequent business argument that penalty rates make them unviable). But the commission also acknowledges, bluntly, that existing “HERRC”(hospitality, entertainment, retailing, restaurant and cafe) employees will pay the price for the benefits consumers will supposedly gain from ditching Sunday penalty rates. “Lower Sunday penalty rates will reduce the labour income of existing employees in the HERRC industries,” the commission concludes. “Some people will be made much worse off if Sunday penalty rates fall.” However, it believes, there are better ways of addressing this problem than the penalty rate system.
And as Crikey has repeatedly demonstrated, this is not a reform that will be a circuit-breaker for a beleaguered industry. The hospitality sector has been going gangbusters for years now, growing both full-time and part-time employment at a much faster rate than the rest of the economy. In fact, the food and beverage sector is growing so fast it is on course to soon overtake the entire manufacturing sector.
Not much of an economic reform sell, is it — burden low-income earners with the cost of ensuring one of our fastest-growing industries can grow slightly faster so we can all buy a coffee or go shopping on a Sunday. Especially when the government has been lamenting low wages growth, and its consequences for tax revenue, for some time. Indeed, even employers have been complaining about weak wages growth and its consequences for demand … which produces the absurdity of employer groups complaining of high wages and wages not being high enough at the same time.
Then there’s the analogous problem to the multinational corporate tax issue. Big business and their shills are demanding a lower corporate tax rate when many of our biggest companies don’t pay any tax at all; likewise, business are demanding cuts to penalty rates when many don’t pay them (or award rates more generally). One retail sub-sector, pharmacies, had a 25% non-compliance rate for award requirements in 2013 — particularly non-payment of penalty rates. Stories of hospitality sector non-compliance on penalty rates are too numerous to list. With the 7-Eleven scandal revealing the extent to which Australian businesses will go to dud their workers, even rabidly ideological Liberal MPs are going to be reluctant to be too closely associated with a sector that carries the risk of serious reputational damage.
Most of all, there’s the risk of Labor and the unions building a scare campaign on the foundation of penalty rates, with medical and emergency services workers and shiftworkers targeted with the warning that, once HERRC workers are successfully targeted, they’re next.
An economically minor reform, disproportionately targeted at low-income earners, for an industry that’s booming, which voters oppose and believe will only benefit business, and which could give your political opponents an opportunity to run a campaign playing to workers’ fears about. Run, Malcolm, run.
As I’ve said before, the business groups’ arguments for lowering penalty rates are piss-weak. Show me these cafes which are suppposedly closed on Sundays as a result of penalty rates. From what I can see, they’re all open and booming.
It’s all ideological with the LNP’s lunar right. They look back misty eyed at how Thatcher took on the miners and Reagan the air traffic controllers. They want to take on the unions forgetting how their neo liberal claptrap ruined manufacturing, created a rise in unemployment, massive deficits and handed the economy over to the financial industry.
Rupert won’t be happy.
I’m with xoanon. Every cafe in the eastern suburbs is open and doing booming Sunday business. The stuff that comes out in the arguments for reducing penalty rates are pathetic. If any case can be made it would be for restaurants, but what to do about businesses that aren’t viable under the current laws. Should we really just change all our laws because they hinder business?
And what about the surcharges that exist at most of these restaurants and cafes for Sundays and public holidays?
Are the surcharges then going to be made illegal?
And what about government tax receipts?
No idea, just lobbying based on spin.
And penalty rates don’t operate merely as compensation, but as incentive. How many people would be happy to work Sundays as cafe waiters if it didn’t pay as well? Maybe plenty, maybe not enough; then we really could see cafes closed for lack of staff.