Federal Opposition Leader Bill Shorten.
EWIN HANNAN
March 1, 2017
The Australian
@EwinHannan
Bill Shorten stood before Labor MPs yesterday and declared the battle over penalty rates was the “fight Labor was born for”.
If he wins office, Shorten has promised to reverse last week’s Fair Work Commission decision to cut penalty rates in the retail, hospitality, fast food and pharmacy sectors.
Nine months ago the Labor leader was singing a different tune. Not only was he opposed to a Greens proposal to legislate existing penalty rate levels, he lectured the minor party about the dangers of undermining the independence of the commission.
“I do also just caution the Greens, from their sideshow position, that they need to be careful … they’re playing with fire by proposing that a government should be able to legislate on specific penalty rate outcomes,’’ Shorten said in May last year.
“They are loading the gun for future conservative governments to pull the trigger because what the government has the power to put in, a future government has the power to dismantle.
“The independent umpire, the system of conciliation and arbitration, has served this nation well for 120 years.’’
On the same day, opposition workplace relations spokesman Brendan O’Connor said if Labor was “to go down the sort of reckless path of the Greens in an attempt to legislate, you would be providing the mechanism for the Liberals to abolish penalty rates by legislation’’.
If there was any doubt about Labor’s then position, opposition environment spokesman Tony Burke said: “Be in no doubt about it. Once you open the door that you won’t have the umpire make these decisions, and you open the door that these decisions will be made through legislation in the parliament. At that point, you’ve given free range for a conservative government to do the exact opposite.”
Fast forward to this week and the Opposition Leader is doing what he said he wouldn’t, seeking to use federal parliament to kill the commission decision and “protect” penalty rates. O’Connor sought to justify the backflip yesterday. “This is an extraordinary step for us, but it is an extraordinary decision,’’ he said.
Defending Labor’s shift, deputy leader Tanya Plibersek yesterday said “nobody ever considered” that the commission would bring down a decision to cut the take-home pay of some of the nation’s lowest-paid workers.
But the commission decision was not a major shock.
In May 2014, the commission cut Sunday penalty rate payments for introductory level casual restaurant workers.
In September last year, The Australian ran a front-page report saying there was growing support inside the commission for some cuts to Sunday penalty rates in the retail, hospitality and fast food sectors. In political and workplace relations circles, there was a strong expectation there would be movement downwards on penalty rates.
Labor hopes its position will strike a chord with the electorate. Union leaders, while expressing anger at the cuts, are politically energised, saying this gives them a substantive issue to campaign on. But their stand is undermined by agreements reached between major retailers and the Labor Party’s biggest union affiliate, the Shop, Distributive and Allied Employees Association.
The union has done deals which cut the penalty rates of retail workers. While the union says workers engaged Monday to Friday got pay rises, employees working largely on weekends were left worse off, courtesy of their union.
University of Adelaide law professor Andrew Stewart says the SDA agreements left employees who primarily worked on weekends worse off because their weekend penalty rates were slashed. This reality was highlighted last week when a young Coles worker promoted by Shorten as a victim of the commission’s penalty rates ruling was found to be unaffected. While Troy Hunter claimed he would be $109 a week worse off, the union had already negotiated deals with Coles reducing Sunday penalties to the level proposed by the commission.
The SDA deals were seized on by Malcolm Turnbull yesterday to accuse Shorten of hypocrisy. He highlighted how a Target worker employed on an SDA deal would receive less per hour on a Sunday than an award-reliant employee. The Prime Minister pointed to Shorten negotiating penalty rate cuts in enterprise agreements when he was leader of the Australian Workers Union, labelling him the “Olympic champion in reducing penalty rates”.
He says Shorten is taking his directions from the construction union after the CFMEU vowed a “Work Choices-style” campaign against the Prime Minister in the wake of the penalty rate cuts. He says the union wants to ensure Shorten remains committed to abolishing the Australian Building and Construction Commission.
“What he had was a direction from his proprietors, the CFMEU, and the other heavies in the trade union movement,” Turnbull says. “They pulled him back and he’s doing as he’s told. He’s betrayed a lifetime of commitment to the independent umpire.”
But the government’s language since the commission decision shows it is sensitive about being directly associated with reducing the take-home pay of workers.
Until Turnbull told question time yesterday that the government “supports” the decision of the commission, cabinet ministers had been reluctant to explicitly back the cuts, repeatedly saying they “accepted” the ruling.
Turnbull and Employment Minister Michaelia Cash have previously made clear they believed penalty rates had a negative impact on employment.
When she took over the employment portfolio from Eric Abetz in September 2015, Cash said Sunday penalty rates were hurting tourism and forcing businesses not to open, denying jobs to university students and women.
“What I get perturbed by is that there are businesses who cannot open on a Sunday because the wages bill far exceeds what they can take in,” Cash said.
“You need to ensure you are globally competitive, which means that you need to ensure our hospitality and tourism industry are delivering what tourists want. The fact that we have an industry which, in many places, is unable to open on a Sunday, quite frankly, that’s doing a disservice to the Australian people and the Australian economy.”
Based on these comments, Cash could have logically been expected to publicly welcome the reduction in Sunday penalty rates. Instead, she has been more focused on blaming Labor for the decision.
For their part, unions have sought to cast the penalty rate decision in the worst possible light.
On the day of the decision last week, ACTU president Ged Kearney said the “radical” cuts to Sunday and public holiday pay would give “almost one million Australian workers a huge pay cut”. She said some workers would lose up to $6000 a year.
But the ACTU’s own analysis of the reductions says the Sunday penalty rate cuts will affect an estimated 648,000 award-reliant workers in the retail, fast food, hospitality and pharmacy sectors. It’s still a big number, but 35 per cent below the level quoted in Kearney’s press release
The biggest annual pay cuts will occur in pharmacy, the sector with the smallest number of workers affected by the decision.
About 40,000 award-reliant pharmacy employees are directly affected.
The only category of worker to suffer an estimated loss over $6000 is a permanently employed pharmacy manager. If this manager worked an eight-hour shift every Sunday for one entire year, he would potentially lose $6608 annually.
The effective pay cuts, even based on the unions’ worst-case scenario, are less in all other categories.
In the fast-food sector, 150,000 employees could be directly affected. A permanent or casual working an eight-hour Sunday shift would lose $39 per shift. Over the year, the losses could total $2021 but the employee would have to work every Sunday for 12 months.
Up to 275,800 retail workers, the unions say, will be affected. Permanent retail shop assistants and store managers could lose from $77.76 to $95.15 per Sunday shift.
Over the year, their pay would drop by $4043 to $4948. Shift losses for casual employees will be $39 to $47, totalling more than $2000 a year. Again, these workers would have to work every Sunday in a year.
Among 182,200 hospitality workers, permanent food attendants and cooks would have their penalty rates reduced by $36.40 to $45 per Sunday shift. Over the year, the losses potentially range from $1893 to $2338.
Casually employed pharmacy assistants stand to lose $39 a Sunday shift, which equates to $2021 over 12 months. Their managers could be $3304 worse off.
“We all know the burden of this decision will be borne by those who can least afford it,’’ Kearney says.
“The average worker in accommodation and food services earns $524 a week and those in the retail trade earn just $687, compared with a $1163 average for all Australian workers.”
The penalty rates reduction will not be immediate. The commission will hear submissions later this month on phasing in the cuts. The first instalment will occur in July but the commission has indicated it favours at least two instalments and potentially up to four.
In its decision, the full bench backed the Productivity Commission’s assessment that there were “likely to be some positive employment effects” from cutting penalty rates.
It says the evidence “supports the proposition that a lower Sunday penalty rate would increase service levels, with a consequent increase in employment, in terms of hours worked by existing employees or the engagement of new employees”.
“In particular, a reduction in Sunday penalty rates is likely to lead to more stores being open on Sundays, increased Sunday trading hours, a reduction in hours by some owner operators, (and) an increase in overall hours worked in retail stores,’’ it says.
The commission concludes reducing penalty rates “may have a modest positive effect on employment”, but “it was difficult to quantify the precise effect”.
Australian Chamber of Commerce and Industry chief executive James Pearson says employers “will stick up for the independence of the independent workplace relations tribunal, and we will work hard to see last week’s sensible and balanced decision implemented”.
“The Fair Work Commission found that reducing some excessive penalty rates on Sundays and public holidays will help to create jobs, to deliver more work hours for the underemployed and make more services available to the community,’’ Pearson says.
“We cannot afford for these gains to be sacrificed in pursuit of political advantage. We will work with our membership network of more than 300,000 businesses across the country to explain the benefits that will flow to the community from the commission’s decision.”
With unions threatening a Work Choices-style campaign against the government, Coalition ministers are keen for business to campaign in favour of the cuts and actively promote their benefits.
Employers say they have spent millions of dollars on the legal proceedings and have limited resources to run a political campaign.
Kate Carnell, the Small Business Ombudsman and former ACCI chief, says the penalty rates cuts are welcomed by small business, which has been grappling with rising operating costs and tighter margins.
“Honest, hardworking small-business owners now have the freedom to stay open longer on the weekend, to offer their employees more hours and ultimately maintain the goodwill of their customers, who expect them to be open seven days a week,” she says.
But Carnell says small employers also fear reprisal from unions if they speak out in support of the cuts.
“Small-business employers are reluctant to speak out for fear of being victims of what is shaping up to be a typically misleading, highly orchestrated and vitriolic union campaign,’’ she says.
“Let’s face it, the unions have form when it comes to using bullying tactics to intimidate mum-and-dad small business owners.
“You need only go back to 2015 when social media was used by unionists to attack small businesses who dared speak up on the exorbitant costs of staying open over the Easter break.”
Carnell says when she raised her concern about the union tactics directly with Kearney in 2015, the ACTU president was unapologetic, saying “it’s war”.
“Small businesses are just too scared given what’s happened in the past when unions used social media to attack them, to force a boycott of their businesses and to ultimately undermine their livelihood,’’ Carnell says.
“When the gloves come off like this, struggling small businesses just don’t stand a chance against the might and money of the union movement.
“Small businesses simply don’t have the time or the resources to fight back.”
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