Media & Speeches

Politicians Can’t Walk Away From Tough Decisions

This opinion article by Jennifer Westacott was published in The Australian on March 30.

Parliamentarians who are weighing up whether to accept the independent umpire’s decision on penalty rates must ask themselves five critical questions. First, what are we giving up on if we don’t make this commonsense change to penalty rates?

Everyone from small businesses to the Fair Work Commission and the Productivity Commission believes that adjusting Sunday penalty rates can create more jobs, more hours and more opportuni­ties for small business.

So, those who choose to walk away from this decision are effectively giving up on additional jobs and hours. And the people who will miss out are those who are currently locked out of working Sundays but dearly need their first job opportunity or some extra cash to pay the bills.

We cannot afford to do this when more than one in five young people is unemployed across 13 regions of Australia — including NSW’s Shoalhaven and southern highlands, Townsville and outback Queensland, and north and west Adelaide.

Second, is the present penalty rates regime really fair? The simple answer is no. Is it fair that an aged-care worker can be paid $21.64 an hour for a night shift, compared with a casual fast-food worker earning $34 an hour on a Sunday? Our awards system is full of these inconsistencies.

Reducing Sunday penalty rates in four industries recognises that the community’s view has changed. When one in five Australians makes Sunday their main shopping day then surely a Sunday is more sociable than a night shift.

Perhaps this is why parts of Australia haven’t always paid double time on Sundays in the retail sector. Until 2010, under the state awards, time-and-a-half was the norm in NSW and some shops in Queensland. This is exactly what is being proposed now.

Third, is it just business supporting this decision?

No. For starters the Fair Work Commission and the Productivity Commission have both supported reducing Sunday penalty rates.

The decision was handed down by Fair Work president Iain Ross, a former Victorian Supreme Court judge and assistant secretary of the ACTU.

His decision has been accepted by others with a long history representing workers, such as Jennie George and Martin Ferguson, both former presidents of the ACTU.

Fourth, are we being honest about the facts behind this decision? The FWC carefully weighed up what is the right wage premium for working on a Sunday in a modern economy.

The commission decided that on balance Sunday has become much less inconvenient than it used to be given the changing habits of workers and consumers. It decided to reduce the penalty rates accordingly.

Far from being abolished, rates have been adjusted and in all cases, except fast food, Sunday still earns a higher rate than Saturday. In some cases the rate is still 175 per cent.

Some businesses will implement the reduced rates and others won’t. Smaller businesses in regional towns will likely choose to pay their staff at the reduced rates so they can open on a Sunday, while others that have trouble finding staff on a Sunday may leave their rates unchanged. Other staff work by enterprise agreements that pay different rates to the award already.

Fifth, what might a sensible path for reducing penalty rates be?

This is exactly what the FWC is working on before ruling on an appropriate transition.

It is seeking community views before coming up with arrangements that would see the changes phased in across time. They could occur alongside annual wage increases to ease the adjustment for affected workers.

There has also been debate about the need for a broader review into how small businesses in particular are disadvantaged by penalty rates. The Business Council supports such a move.

If parliamentarians choose to walk away from this decision, then they are also walking away from opportunities for young unemployed people in regional towns, and from small businesses that want to grow. We cannot shirk the tough decisions required to give all Australians a fair go and build prosperity for the future.

Jennifer Westacott is chief executive of the Business Council of Australia.