Sunday penalty rates are a good reform starting point

OCTOBER 01, 2015
THE AUSTRALIAN
A pleasing aspect of the change of leadership in the federal government has been the way Malcolm Turnbull and his team have been willing to discuss economic reform.
Growth, innovation and productivity have been the focus as the new Prime Minister and his refreshed ministry have tried to discuss the direction of reform, if not the policy detail. Encouragingly, even industrial relations has not been exempt from the discussion so far. Frustratingly, under Tony Abbott and Joe Hockey, we often heard proposals ruled out before they were properly ventilated. Mr Turnbull says he wants to change this paradigm. “You get into this crazy situation where politicians are backed up by journalists or their opponents to say, ‘Rule this in, rule that out, rule this in, rule that out,’ or they’re asked to say, ‘Will you guarantee that this policy will work?’ ” he lamented. “And the truth of the matter is that when you’re considering reform, you’ve got to be prepared to consider all of the advice that you receive.”
This won’t be easy, but in its first fortnight the Turnbull government has shown a willingness to discuss at least one aspect of workplace reform. A draft Productivity Commission report two months ago suggested what amounts to a relatively minor change to some penalty rates. “Penalty rates have a legitimate role in compensating employees for working long hours or at unsociable times,” said the commission. “They should be maintained. However, Sunday penalty rates for cafes, hospitality, entertainment, restaurants and retailing should be aligned with Saturday rates.” The report bowed to changing norms about the services expected on weekends as well as evolving attitudes to church, sport and entertainment on Sundays. Given the way our society has developed, it is hard to explain or justify additional penalty loading for Sundays over Saturdays in many industries. The commission found reducing Sunday labour costs could trigger increased investment and employment. While current employees might see their Sunday pay rates fall, the greater good would be served by creating additional jobs paid at a uniform weekend penalty rate. This is hardly a draconian retreat or radical change. It is an incremental reform aimed at modernising our workplace norms in step with our changing society and seven-day economy.
Yet the response from the Labor Party and union movement has been depressingly familiar. Where often the rhetoric from Bill Shorten and others is all about the future and modernising our economy, at the first hint of an effort like this to increase flexibility and reduce costs and complexity they respond with intransigence and the sort of protest campaign used against Work Choices. Employment spokesman Brendan O’Connor has claimed the government wants to “attack workers’ rights by slashing Sunday penalty rates” and argues Mr Turnbull will go much further: “Malcolm Turnbull, friend of big business, former merchant banker, has sort of unilaterally indicated he wants to see the removal of penalty rates.” Oh dear, the ALP has regressed immediately to the class warfare rhetoric used so often by Wayne Swan but seemingly decades out of date.
In this environment, Employment Minister Michaelia Cash will have difficulties delivering even the most modest reform but she must persist. Ms Cash has welcomed debate on penalty rates and should lead it rather than defer to the Productivity and Fair Work commissions. The public standing of the union movement has seldom been weaker; unions account for less than one worker in five and reputations have been dented in corruption trials and the royal commission. Yet at the same time unions have an iron grip on the ALP, having exerted their authority to install Julia Gillard and then Mr Shorten. Together with measures to enforce trade union transparency and accountability, Mr Turnbull should take a reasonable package of workplace reform to the next election to help redress the re-regulation of the labour market that occurred after the Work Choices election of 2007.