We must protect penalty rates

Published on Mon 20 March 2017 11:07am

The truth is that cutting wages is the last thing we need when we face the related issues of rising inequality, flat productivity, and faltering growth. We do not need to reduce demand in the economy by cutting the spending capacity of those who have least, and who spend what they earn.

Mr Wilson (11:07am) — I am glad to support the private member’s motion brought forward by the member for Herbert, and I thank her for giving us the opportunity to debate the issue of penalty rates. What is at stake here is a longstanding feature of the Australian social compact. People are rightly compensated for working long and unsociable hours; they are rightly compensated because they give up precious time—the time that most Australians devote to spending with family and friends, enjoying the cultural and recreational activities that are concentrated on weekends and holidays. But they are also rightly compensated because working overtime and on weekends or public holidays can sometimes fall to those at the bottom end of the employment hierarchy. Penalty rates compensate people for working in circumstances most would like to avoid. They provide an incentive that makes such work less unattractive to a range of employees, which in turn means those hours are not forced on people just because they are a new employee, or young, or part-time, or otherwise less empowered within a particular workplace.

While I do not live in regional or rural Australia—I lived in the south-west of Western Australia as a kid, and I have family in the Great Southern—I have travelled extensively within my state, and I continue to do so. I was in Nannup on Monday last week—a lovely town and a great example of the way that rural economies have changed and diversified over the last 30 years. It continues to display traditional strengths in farming and plantation timber, but it has also developed a growing profile in the form of tourism and creative industries. The truth is that weekends and holidays are times of strong trade in regional centres, just as they are in places like Fremantle. In many centres that represent a tourism or food and beverage and retail hub, it is not the weekend that is the problem. It is the week—Monday to Friday—that can actually present the biggest challenge. So we have to ask ourselves: what will cutting penalty rates really achieve? There is little evidence cutting penalty rates will deliver significantly different amenity in the form of extended hours of business operation. There is very little evidence it will result in greater employment overall. The only certainty to be found in reducing penalty rates is that you will cut wages. There will be people who straight away lose take-home pay. That will hit individuals and households. It will hit local communities.

Do not forget that in rural and regional Australia the people who work in retail and hospitality centres like Albany, Bunbury, Kalgoorlie, Geraldton, Port Hedland and Broome are often living in smaller towns within a substantial radius—sometimes 100 kilometres or more. What those workers earn is then spent in their local communities. If you cut their income; you cut what goes through the till in local shops and businesses. All the evidence is the vast majority of those who will be affected by a change to penalty rates are on low wages already. In addition to being lower income earners, they are more likely to be young; they are more likely to be part-time employees and students; they are more likely to be single-parents and women. So why on earth would we be looking to make life harder for those people?

The proposed change to penalty rates has been floated by the Productivity Commission—but it is the government that bears ultimate responsibility. The government will choose—by action or omission—whether this change is made. As the Leader of the Opposition has said, if they let these cuts come into being they will own those cuts. In the end, we have to come back to the commonsense question: what exactly is the problem that cutting penalty rates seeks to address? There is no pressing national crisis when it comes to getting something to drink or eat on the weekend, and it is ridiculous to suggest that the first step in creating jobs in Australia should be to cut the wages of those already in work.

The truth is that cutting wages is the last thing we need when we face the related issues of rising inequality, flat productivity, and faltering growth. We do not need to reduce demand in the economy by cutting the spending capacity of those who have least, and who spend what they earn. We do need to address stagnant wage growth, particularly for low- and middle-income earners. We do need to have a frank conversation about rising profits and executive salaries that have grown out of all proportion to average earnings, and which have soared irrespective of poor performance.

This government has a knack for getting tangled up in simple issues. There really is no cause for changing penalty rates. There is no cause for standing in the way of marriage equality. There is no cause for waging a bizarre war on renewable energy. It is derelict to slash funding to community legal centres, and to leave the National Affordable Housing Agreement in such a state of uncertainty. Australia needs a government focused on the big issues and the member for Herbert has got it spot on: this coalition government should swallow its pride and support Labor’s fair work amendment to protect the take-home pay of low-income Australian workers, and it should get serious about tackling the issue of jobs in Australia as a whole.

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