The politics of penalty rates

Prime Minister Malcolm Turnbull during Question Time
Prime Minister Malcolm Turnbull during Question Time Alex Ellinghausen

It is a sign of these unhappy times in politics that the biggest economic fight going on in Australia seems to be over the level of penalty rates paid to approximately 700,000 people who work on Sundays.

Not that anyone who currently earns a big Sunday loading will be happy at having it reduced from, for example, 200 per cent to 175 per cent (retail) or 150 per cent to 125 per cent (fast food).

But there is plenty of hypocrisy to go around on all of this, especially from the union movement. Unions have regularly done deals, especially in major retail stores, that reduce weekend penalty rates in exchange for improvements in general weekly pay and conditions. That's usually been with at least the implicit approval of the Labor party.

Timing still matters.

The fact that wages growth has been so low over the last few years means the impact of any reduction in pay is particularly painful. And that plays directly into the politics of today.

The Fair Work Commission spent two years investigating this issue before President Iain Ross handed down a very complicated and, in many ways, inconsistent decision from the full bench last week.

That's partly because the labyrinthine Australian industrial relations and awards system is still a survivor from another economic and cultural age - no matter how many times the adjective "modern" is deliberately attached.

Thus the commission cut Sunday penalty rates for fast food and retail workers because they were typically students wanting to work a mix of weekends and weekdays.

Yet wages for café and restaurant workers were not cut because the commission didn't think the restaurant and catering industry had "established a merit case sufficient to warrant varying the Sunday penalty rates".

On the other hand, hotel and pub workers, covered by the hospitality award, had their Sunday penalty rates cut from 175 per cent to 150 per cent. But all of this affects only four out of 122 (modern!) awards.

If that sort of detail isn't confusing enough, just try the politics.

Iain Ross, for example, was a former ACTU official who was appointed the President of the Commission by Bill Shorten when he was Industrial Relations Minister. That didn't stop Labor from immediately seeing the political fruit ripe to be picked. Nor did the fact that Shorten had earlier promised to accept the decision of the "independent umpire" deter the Opposition leader.

"Why is it that when profits are surging, companies get more, and when wages are flat, workers get even less under your government," he asked Turnbull in parliament as part of Labor's continuing if confected outrage with the Government on behalf of employees.

By contrast, the Coalition Government is now strongly defending that same "independent umpire" and its ruling despite its mutterings over years about the Commission's pro-union bias.

Instead the commission is now being praised for its "careful consideration" of the issues and its rigorous analysis.

Presumably the Prime Minister and Treasurer have never got around to reading the vitriolic criticism of the commission by vice president, Graeme Watson, in his January resignation letter.

Watson described the commission as "partisan, dysfunctional and divided" and said the workplace relations system was a "danger zone" for business. The response to this spray to the commission from government was deafening silence.

Turnbull clearly had no interest in facing the prospect of another union campaign on workers' rights. But it's increasingly clear he's going to get it anyway, courtesy of the Commission's decision.

The Prime Minister keeps pointing out what should be the obvious benefit of this. Many more small businesses (although not cafes and restaurants) should be able to afford to open on Sundays, creating more jobs - especially for young people.

That's assuming, of course, that such business are not put off by what remain very high Sunday penalty loadings even if some are now to be gradually cut by 10 per cent or 15 per cent. We are hardly talking a rampaging free market in wages.

The creation of new jobs is true, in theory at least. In practice, however, anyone losing cash tends to feel it more keenly than those who may or may not get a job as a result of cuts for those who are already working. It's not as if wages are increasing enough to match rises in the cost of daily living, especially rents and mortgages.

Labor is determined to ensure the Coalition gets the political blame for not de-railing this "unfair" decision from the FWC. Now combine that with those well known defenders of workers' rights, like the Construction, Forestry Mining and Energy Union.

The CFMEU is insisting it will use the decision to campaign against the Government on its cuts for the lowest paid workers, not to mention family benefits and welfare payments, while promoting corporate tax cuts.

The Turnbull government is hardly in the fighting fit mode necessary to counter this sort of combined assault. The Prime Minister is mocking Shorten for his hypocrisy and for being suddenly "re-programmed" by the CFMEU in a "thought cleansing exercise.

"What he had was a direction from his proprietors, the CFMEU, and the other heavies in the trade union movement," he declared in parliament. "They pulled him back and he's doing as he's told. He's betrayed a lifetime of commitment to the independent umpire."

Yet the lingering political impression is closer to what Labor wants to prosecute in the current climate. That is of a government on the side of highly profitable big businesses rather than struggling employees dependent on protecting their modest wages.

Was it only a year ago the Prime Minister was promoting the excitement of an agile, entrepreneurial nation?