Penalty Rates

The Hon. G.E. GAGO (15:39): The Fair Work Commission's slashing of Sunday and public holiday penalty rates will result in the take-home pay of workers in the retail, hospitality and fast food industries being up to $6,000 less per year. Up to around 700,000 workers are expected to be worse off because of this decision.

The plan to roll back on these rates will have a devastating impact on Australia's lowest paid workers, who receive penalty rates as compensation for the unsocial and irregular hours that the industries require they work. Weekends and public holidays still mean something to Australians, as it gives us time to spend with our friends and families and engage in community activities that often fall on weekends.

Long hours and shiftwork have also been proven to result in adverse health effects to employees, and regulated minimum penalty rates recognise this as recompense. Indeed, a recent poll found that 82 per cent of Australians support compensation for working outside the usual working week for these reasons.

Changes to penalty rates will result in significant changes to the total income of workers in the hospitality and retail sectors, who are already in the bottom 30 per cent of Australian income earners. Disposable income for these people is minimal, as wage growth in the private sector is at an all-time low, while the cost of living is at an all-time high.

A recent report by Australia Institute's Centre for Future Work found that, at the current rates of wage growth, it would take 17 years until base wages were able to offset this cut to penalty rates for these workers. Many of the workers in these industries earn only enough to cover their living expenses. Unexpected expenses, particularly, can cause immense pressure for some of our lowest paid workers. This dramatic cut to penalty rates will certainly add to the financial burden. Of those hit hardest, women and young people will be disproportionately affected by this pay cut.

Despite the already excessive gender pay gap, the cutting of penalty rates will have an unfair impact on low paid women, who represent more than half of the workforce in these sectors. A huge 40 per cent of young people rely on Sunday penalty rates to keep up with their living expenses. The reduction of the take-home pay for these workers will increase these burdens, as employees only have the option to increase their working hours to make up for lost pay.

Despite what some proponents may argue, it has been shown repeatedly that a cut to workers' take-home pay will result in less household consumption and spending, leading to a potential drop in trade for local businesses. There is no evidence that suggests that more businesses would open on weekends, or for longer hours, because employers are spending less on wages.

Federal employment minister, Michaelia Cash, claimed that penalty rates deter weekend work; however, this completely ignores the fact that the hospitality sector has grown faster than the rest of the workforce in the past few years. Minister Cash has also failed to point out that the hospitality sector is the biggest employer of 457 visa holders in recent times. The Turnbull government wants Australians to think that this penalty rate cut is a good thing, that it will create employment and that it is even a 'gift', as one federal MP called it. However, any extra employment is likely to come from existing staff working more hours for the same, or less, pay.

While companies are making record-breaking profits, it boggles the mind how the Prime Minister could allow workers to get a pay cut. It is clear to those who live or have lived on wages that incorporate penalty rates—and I certainly have—that they are necessary to maintain relative living standards.

With current wages stagnating and underemployment at an all-time high, it could not be a worse time to reduce workers' take-home pay. Prime Minister Turnbull needs to act now to reverse this cut. This decision will not necessarily end with just the hospitality and food service industries; nurses, hairdressers, aged-care workers and workers from many sectors rely on these penalty rates to make a living, and they are likely to be next. Penalty rates are not a bonus or a gift. Penalty rates are compensation that many in our society rely on to pay the bills and put food on the table.