Federal election 2016: Shorten compromised by unions

Judith Sloan
JUNE 7, 2016
THE AUSTRALIAN
Contributing Economics Editor
Opposition Leader Bill Shorten is playing a dangerous game when it comes to weekend penalty rates. He must confront the reality that many union enterprise agreements contain no weekend penalty rates or some lower than the underlying award. He is also running a risk by publicly undermining the independence of the Fair Work Commission.
If you go to Labor’s website, there is no ambiguity on the party’s position on penalty rates. “Labor believes in weekend penalty rates. This is a core Labor ­belief. That is why Labor will fight to protect your penalty rates and your rights at work.”
Yeah, right. Tell that to the thousands of Coles supermarket workers who have been paid less than the award by dint of a union negotiated enterprise agreement.
The quashing of the Coles ­enterprise agreement by the FWC was really only a matter of time. It was always plain as day that staff who worked mainly at the weekend — think students combining their studies with casual work — were being underpaid relative to the award and that the agreement did not meet the better-off-overall test. Unless Coles can rectify this problem, the agreement will ­expire.
To be sure, full-time permanent workers with weekday shifts were better off because of the ­higher base rates of pay. It is these workers who are most likely to join the union, the Shop, Distributive and Allied Employees Association.
But the reality is that up to 40 per cent of Coles supermarket workers have been dudded — and dudded for a long time. It tells us a lot about the mindset of the members of the FWC who had waved through this agreement and earlier versions. The SDA was a party to the agreement — clearly, nothing to see.
But it was surely more than passing strange that, once the sham deal had been exposed, that the SDA would side with Coles to make the case to the FWC that the agreement should continue. You might think that a trade union would be so embarrassed to be ­exposed in this way that it would ask for the agreement to be scrapped.
But the side-benefits for the SDA — encouragement for Coles workers to become union members, automatic payroll deduction of union dues organised by the company, payment to the union for the provision of training, the exclusive nomination of the union-connected industry super fund (REST) — were clearly so compelling that allowing a whole class of workers to lose hundreds, and sometimes thousands, of dollars in pay each year was regarded as a price worth paying.
Now I’m not sure where this sits with Shorten’s positive policy that “Labor will fight to protect your penalty rates”. It clearly ­depends. If there is an agreement negotiated between the SDA, a union that pours millions of dollars into Labor’s coffers, and a large business that reduces penalty rates, that’s fine. But if it’s a small business covered by the award then Labor will fight tooth and nail to preserve the penalty rates dictated by the FWC.
And let us not think that it stops at Coles. The SDA agreement with Woolworths is very similar to the Coles one and then there is the agreement between the SDA and McDonald’s that slashes penalty rates even more than the Coles and Woolies agreements because of the scope to reference now-­defunct state awards. Other large fast-food outlets are also covered by these “special” SDA deals.
The conflict for Shorten is as follows: he supports the SDA; the SDA supports Labor and makes very substantial financial contributions to the party; the SDA gets effectively to nominate its ­officials to become parliamen­tarians and to influence Labor policy; but without the scope for the SDA and large employers to make special deals, the number of union members will fall substantially and the financial merry-go-round will grind to a halt.
This is not a prospect relished by Shorten, his parliamentary colleagues or union officials. And note that these collusive arrangements between unions and big businesses are not confined to the SDA.
Shorten has also lost the plot in respect of the role that the independent FWC should play in the determination of award stipulated penalty rates. As long as he agrees with its decision, which should leave penalty rates untouched, he will be happy.
But if he disagrees with the ­decision, he will be very cross. But it’s OK because he thinks that the likelihood of the FWC overruling him is akin to the prospect of “alien life making contact with earth” (Shorten’s words). What he is ­really saying is that the FWC is there to do the bidding of Labor; the members appointed to the FWC were carefully selected to achieve this outcome. After all, the vast majority of members have union or Labor connections and Shorten expects them to behave.
He seems to be blissfully ­unaware of the precedent set in 2013 when the FWC reduced the Sunday penalty rates from 175 per cent to 150 per cent for Levels 1 and 2 casual staff covered by the Restaurant Industry Award.
He also seems to be blissfully unaware of the lack of coherence to the present penalty rates set down in different awards, with curious combinations of Saturday and Sunday rates applying in different but similar industries.
If these rates are deemed to be a reward for working unsocial hours, it is hard to understand why the penalties can range from 150 to 250 per cent for work on Sunday. And why is weekend work ­rewarded so generously when overtime rates (after a full day’s work) can be as meagre as 115 per cent? None of this makes any economic sense at all.
The bottom line is this. Penalty rates are an anachronism from ­another time, when the weekend was sacrosanct and married women and young people did not work. That there are special deals between big businesses and trade unions to reduce penalty rates tells us that everything should be up for grabs.
And if we are to have an independent regulator whose job is thoroughly to assess the case for change, Labor’s position on the topic is just one of many others.
Just think about it: lower penalty rates would boost jobs, particularly for young people, encourage businesses to invest and benefit customers. If it’s OK for SDA agreements, it should be OK for everyone else.