Penalty rates need to change, says Abbott government minister

Nassim Khadem
August 12, 2014
The Age
“We cannot go on in a society where we are charging people on a day which is a normal operating day, double what you would on any other,”: Assistant Infrastructure Minister Jamie Briggs
An Abbott government minister has said business should help the government make the case for lowering penalty rates paid to millions of workers on Sundays and public holidays.
Assistant Infrastructure Minister Jamie Briggs said it was unfair that small businesses had to pay double on Sundays and triple on New Year’s Eve, and it was on the government’s radar.
“We cannot go on in a society where we are charging people on a day which is a normal operating day, double what you would on any other,” Mr Briggs told a small business audience.
In the hospitality industry, you cannot afford to pay more than 35 per cent of turnover in weekly wages, and now we’re finding it’s reached 45 per cent.”: Di Bella Coffee founder Phil Di Bella.
In the hospitality industry, you cannot afford to pay more than 35 per cent of turnover in weekly wages, and now we’re finding it’s reached 45 per cent.”: Di Bella Coffee founder Phil Di Bella. Photo: Glenn Hunt
“We cannot accept that on New Year’s Eve you can’t attend your ­favourite restaurant because it is impossible for that restaurant to pay its staff to open up.”
Penalty rates are set by the Fair Work Commission. The government has asked the Productivity Commission to review workplace laws but promised no major changes until its second term.
Mr Briggs said high labour costs had made businesses “uncompetitive” and hurt youth employment. “This is an area we must reform,” he said.
“But it will only be an area reformed if society is willing to have the debate. And [business] can help lead the debate.”
The Australian Council of Trade Unions estimates that 4.5 million people rely on Sunday and public holiday penalty rates. ACTU boss Ged Kearney said it was ridiculous to argue that venues were not open on New Year’s Eve.
Ms Kearney said dropping penalty rates will not increase jobs or help small business but damage the economy by lowering the amount of money people spend in stores and restaurants.
“You cut $200 a week out of someone’s pay . . . and small business will be the first to suffer,” she said.
Rates ‘unfair’
The founder of Di Bella Coffee and BRW Young Rich lister Phillip Di Bella said he spoke to Tony Abbott about high penalty rates just before the election. “He acknowledges that hospitality hours are not Monday to Friday 7am to 7pm,” Mr Di Bella said.
“If people are happy to pay $5 for a cup of coffee, then we can pay a barista, who gets on average $26 a hour, $52 on Sundays. In the hospitality industry, you cannot afford to pay more than 35 per cent of turnover in weekly wages, and now we’re finding it’s reached 45 per cent.” Mr Di Bella said there should be a staged decrease of double rates on ­Sundays and public holidays to time-and-a-half rates. ”It’s not fair to take that money away from an employee overnight but it’s also not fair to continue to make employers pay these high penalty rates.”
Australian Chamber of Commerce and Industry chief executive Kate ­Carnell said if Sunday rates were brought in line with Saturday rates, more casual jobs would be created, helping the young. “Many small business owners are not opening on weekends and public holidays; they are working themselves because they cannot afford to pay anyone,” she said.“The world has changed. We are open 24/7 and consumers are out there shopping and accessing services on weekends. It makes it incredibly difficult for small to medium businesses.”
‘Regression’ on workplace relations
Mr Briggs said Australia had regressed on workplace relations and the debate had moved away from being about what both parties want to one where employers and their workers were pitted against each other.
Ms Carnell agreed the move to lower penalty rates could be phased in over time. “You don’t want this to unfairly hit any groups in our community but we have a large number of young people who can’t get jobs and that’s not fair and reasonable.”
“We do not think that workplace relations should be seen through the prism of us versus them,” said Mr Briggs. “We should not write workplace relations law based on assumption that every boss does harm to their worker.”
He said he was concerned about repeated stories from small business owners that it was too costly to employ someone so they had to work Sunday shifts themselves to break even. The current system of awards was too complicated and made it harder for business owners to talk to their employees directly about what arrangements suited them.
Employment Minister Eric Abetz is yet to release the final terms of reference for the upcoming Productivity Commission review.
In May, the Fair Work Commission agreed to reduce penalty rates by 25 per cent on Sundays for casual employees, after a long campaign by Restaurant and Catering Australia.
A survey by the association, which represents 35,000 Australian restaurants, cafes and catering businesses, found wages and staff on-costs, including payroll tax and training, account for about 45 per cent of business expenses for members.
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