Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

I rise to indicate that Labor will support the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017, subject to an amendment which protects the penalty rates of 700,000 Australian workers across the nation. This bill will amend the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009. The bill will repeal the requirement for the Fair Work Commission to conduct four-yearly reviews of modern awards from the beginning of 1 January 2018. It will allow the Fair Work Commission to overlook minor procedural or technical errors when approving an enterprise agreement, where those errors were not likely to have disadvantaged employees, including errors related to the notice of employee representational rights requirements. It will ensure that the existing complaint-handling powers of the Minister for Employment and the President of the Fair Work Commission apply to Fair Work Commission members who formerly held office in the Australian Industrial Relations Commission and will apply in a modified form the Judicial Misbehaviour and Incapacity (Parliamentary Commissions) Act 2012 to Fair Work Commission members.

The bill's measures are contained in four schedules. Schedule 1 deals with the repeal of the four-yearly reviews of modern awards by the Fair Work Commission. Schedule 2 deals with the factors considered by the Fair Work Commission when approving an enterprise agreement. Schedule 3 deals with a modified application of the JMI(PC) Act to Fair Work Commission members and application of the Fair Work Act to Fair Work Commission members who formerly held office in the AIRC. Schedule 4 provides for application and transitional provisions in relation to the amendments made by schedules 1 to 3 of the bill. The principles contained in the bill are supported by the opposition, and we are aware of supportive correspondence to the government from the Ai Group, the Australian Chamber of Commerce and Industry and the ACTU.

I want to turn to the burning issue of inequality and its effect on Australian workers and families. Inequality is increasing within Australia. Despite the assertions of Treasurer Morrison that inequality is not increasing, the public, low-income Australians and the working poor understand that Treasurer Morrison is completely out of touch. This is a Treasurer divorced from the social and economic realities facing Australian families as they struggle to make ends meet. It's not only the Treasurer who is out of touch; this divided rabble of a government has no comprehension of or empathy for the growing number of Australians surviving week to week, battling to put food on the table and shoes on their children's feet. I have noted on many occasions in this chamber the failure of the National Party to stand up for their constituents in rural and regional Australia, who would be particularly affected by the attacks on penalty rates. We have former Senator Joyce, now pretending to be the Deputy Prime Minister, even though he's not eligible to be in parliament, saying nothing about the attacks on working families via these cuts to penalty rates in the New England region. Penalty rate cuts have been promoted by coalition politicians and businesses with vested interests.

Our amendments to this bill are in the exact terms of the amendments proposed by the member for Dawson, Mr George Christensen. Labor will do whatever we can to protect penalty rates, because we know how important they are to Australian families. The Senate has already passed my private member's bill to protect penalty rates, but the government has blocked its passage in the House. We know that the member for Dawson, despite all of his big talk about standing up for workers and their take-home pay, failed to vote for Labor's bill to protect penalty rates, on three separate occasions. Mr Christensen introduced a private member's bill in the House but failed to move to bring his private member's bill on for debate. It was only when Labor moved amendments to the bill, when it was before the House, which would have given effect to the provision of Mr Christensen's private member's bill, that he was forced to cross the floor and support Labor. While these amendments have some deficiencies and are clearly inferior to Labor's bill, if this is the only way that we can get this parliament to overturn the decision of the Fair Work Commission to slash penalty rates and prevent it from ever happening again then this is what we will do. If the Senate passes these amendments then the House will be forced to deal with them.

Labor asks the Senate as a matter of urgency to pass these amendments and give the government, Mr Christensen and the crossbench one last chance to stop these penalty rate cuts that will create so much hardship for the most vulnerable workers in the country. This will be both an opportunity and a test for National Party senators and Liberal senators who live in regional Australia to stand up for their communities. It beggars belief that coalition senators have supported a $65 billion handout to business and at the same time have actively defended and supported the worst decision ever in the history of the Fair Work Commission. Trickle-down economics does not work. There are no examples of trickle-down economics delivering on the ideological and theoretical outcomes claimed by neoliberal economists, conservative politicians and rent-seeking businesses. The National Party should stand up and support Labor's amendment that will protect 700,000 Australian workers from cuts to their penalty rates. The National Party should stand up for small business and the farming community, who rely on the bulk of Australians having sufficient disposable income to buy the goods and produce of regional and rural Australia.

Beyond the overall negative economic impacts, there is also evidence that implementation of the commission's decision would be particularly harmful to regional economies. Modelling by the McKell Institute on the impact of penalty rate cuts on regional communities estimated that, for the partial abolition of penalty rates in the retail and hospitality sectors, the size of the cuts in this decision would result in workers losing between $370.7 million and $691.5 million a year. This would lead to a reduction in spending of between $174.6 million and $346.5 million per year across local economies. How could the National Party support this decision and abandon its constituents across the country?

Under the proposed cuts to penalty rates, the most that low-paid and financially vulnerable workers can hope for is to work the same hours for less money or to work more hours for the same money. The opposition agrees with the Fair Work Commission in rejecting the unrealistic suggestion of the Productivity Commission that employees 'can seek other jobs, increase their training and make other labour market adjustments'. Is it any wonder that I have been a long-term critic of the Productivity Commission? In its decision the Fair Work Commission concluded that:

A detailed assessment of the impact of a reduction in Sunday penalty rates—

In the awards—

… on the national economy is not feasible on the basis of the limited material before us.

It is Labor's view that this is a significant flaw in the commission's decision.

If the government possessed evidence of a positive impact to the economy from cuts to penalty rates, it should have made a submission to that effect. The reason the government did not make this submission is that there is no evidence of a positive impact to the economy. On 2 March 2013, the Prime Minister asserted, 'The commission has found that cutting penalty rates would create tens of thousands of jobs.' This assertion is politically motivated, incorrect and one that not even the employers argued in the current four-yearly review. As the commission noted, the hospitality employers and the catering industrial do not advance the bold proposition that cutting penalty rates will increase employment. Labor noted that what the commission actually concluded was that a reduction in penalty rates in the fast-food award may result in a modest increase in employment, 'despite a paucity of direct evidence' from industry participants. There was no suggestion that tens of thousands of jobs will be created in the hospitality, retail and pharmacy industries, with the commission merely concluding that a reduction in penalty rates is likely to lead to some additional employment—it is not a very resounding analysis of the arguments we have heard from the government—because of the common evidence of the employers that 'owner operators would employ people, rather than work themselves', and, 'it would increase the level of services with consequent increases in employment or hours worked'.

The Fair Work Commission has accepted the Productivity Commission's assessment that 'any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects.' The suggestion that a reduction in penalty rates could lead to reduced prices and thereby increased employment is flawed. The evidence base for an increase in employment is not strong and relies on economic simulation models, rather than strong empirical evidence. Such modelling assumes the relationship rather than finds it and, as such, it should be treated with real caution.

A realistic result of the proposed cuts to penalty rates is that, rather than reducing prices or employing more staff, employers may retain any savings in wages as profits. Given that company profits are at a record high at the same time as wage growth is at record lows, this would not be an unrealistic result. In all the circumstances, the commission's conclusion was that while there may be some positive employment effects, and it is difficult to quantify the precise effect, this not sufficient justification for inflicting this pay cut on some of the lowest-paid and most vulnerable workers. In the opposition's submission to the commission, we outlined that the government has downgraded its forecast for employment growth and wages growth, employment growth has halved and remains well below trend, full-time jobs have declined by 23,000, job creation is dominated by part-time work, underemployment remains near record highs at 1.1 million and wages growth has fallen to new record lows at 1.9 per cent.

The risk to economic activity from lower incomes comes at a time when the government and many major economists are warning about the risk to consumption and overall GDP growth, particularly from subdued wage growth. According to the 2016-17 Mid-Year Economic and Fiscal Outlook, factors such as sustained subdued income growth may result in slower growth in consumer spending. The RBA has said:

Domestic wage pressures remained subdued and household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt.

The IMF recently noted that:

… there remain significant risks and uncertainties, notably weaker-than-expected domestic consumption …

And that:

… growth could be slower, as consumption growth could remain lackluster with continued low wage growth …

According to ANZ:

… we see any significant acceleration in consumer spending as challenging given ongoing weakness in wage growth and high household debt.

According to the CBA, the Commonwealth Bank:

Consumer spending growth is constrained by weak wages growth and the predominance of part- over full-time jobs' growth.

This evidence suggests that cutting penalty rates will only increase the risk of slower consumption and economic growth.

In the face of coalition, right-wing media and business pressure for penalty rate cuts, the Fair Work Commission has made a historically bad decision. There was no evidence before the commission that cuts to penalty rates would create more jobs. There were assertions by business lobbyists and advocates that more jobs would be created. There was no specific evidence presented other than assertions based on ideological and theoretical claptrap. The Fair Work Commission itself considered that their decision would create hardship for many Australian workers. It beggars belief that a decision that will cost individual workers between $39 and $127 on an eight-hour Sunday shift could be supported by the coalition. Treasury's Mid-Year Economic and Fiscal Outlook 2016-17 states:

Government receipts, although growing, are expected to be affected by softer domestic prices and wages growth.

… … …

If inflation and wage growth remain low, this would slow nominal GDP growth and in turn have adverse consequences for tax receipts, somewhat offset by a reduction in payments.

Treasurer Morrison stated:

Lower wages growth and profits have an obvious impact on government revenue.

The Governor of the Reserve Bank has called on workers to start demanding large pay rises from their bosses. Philip Lowe said Australia's economy was suffering a crisis in wage growth and workers ought to realise that the relatively low unemployment rate meant they could start asking for a larger share of the nation's economic pie. The governor told a conference at the Australian National University that the labour market was in better shape than some critics are suggesting. He said, 'The crisis really is in wage growth.' He said that despite the relative strength in the labour market too many workers were putting job security ahead of pay rises, partly because they were worried about competition from robots and foreigners.

This is the Governor of the Reserve Bank. What he is saying is that forcing more wage restraint on workers is going to have an effect on the economy. We know that cuts to the take-home pay of retail and hospitality workers, which have already commenced, are just the start. The Fair Work Commission is still hearing applications which would have the result, if successful, of cutting Sunday penalty rates in the clubs award, the hair and beauty award and the restaurant award, and the Sunday shiftwork loading is under review in the retail award. These will have massive effects in regional and rural Australia. These will have significant effects on the buying capacity of ordinary people in regional and rural Australia. These will have an effect on farmers, small business and medium-sized business in rural and regional Australia.

When I moved my bill on penalty rates last time, it was supported by One Nation and by the Xenophon party. If they are going to be consistent they should support these amendments to ensure that the position they adopted on my previous bill is carried through to this bill and that they protect the penalty rates of workers who are doing it tough, workers who are under the pump and do not need further cuts to their buying power.