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Labor pledges to restore penalty rates in Budget response

SDA members protest penalty rate cuts in 2018.
SDA members protest penalty rate cuts in 2018.

Opposition leader Bill Shorten reiterated his promise to restore Sunday and public holiday penalty rates, if a Labor Government is elected, in his Budget reply speech on Thursday evening.

Shorten said the next election would be a referendum on wages, and that Labor has a concrete, practical plan to drive wage growth.

“One, if we win the election we’ll legislate to restore the arbitrary cuts to Sunday and public penalty rates in our first 100 days,” he said.

“Two, we will stop companies using sham contracts and dodgy labour hire arrangements to cut people’s pay.”

According to Shorten, wages have grown at a rate of 5 per cent since the last election, while company profits have increased by nearly 40 per cent.

But executive director of the Australian Retailers’ Association, Russell Zimmerman, said this idea overlooks one key fact: the ruling on penalty rate cuts was made by the Fair Work Commission, an independent body, and any reversal of its decision would set a dangerous precedent.

“My question is, would any government – Labor or Liberal – overturn a decision by the Reserve Bank? The Reserve Bank is an independent body, and Fair Work is an independent body,” Zimmerman pointed out.

“Some decisions they make we like, and some we don’t…I think this [proposal by Labor] opens the gateway for the government to overturn a decision by the Reserve Bank.”

Fair Work in 2017 cut Sunday, public holiday and evening penalty rates for permanent and casual employees on the Retail, Pharmacy, Hospitality and Fast Food awards.

The changes started being phased in last year and will change yearly until July 1, 2019, for those on the Hospitality and Fast Food awards, and until July 1, 2020 for those on the Retail and Pharmacy awards.

Labor and the unions have been vocal about their opposition to the penalty rate cuts since they were implemented, but retail industry bodies have largely supported the decision and highlighted the fact that it was based on thousands of submissions and evidence from 143 witnesses.

Shorten said in his speech that, if elected, Labor would “consult with employers and the independent umpire, and of course we will take into account the capacity of business and the economy to sustain the wages growth, but I don’t want any adult Australian who works full time to be trapped in poverty”.

Tax cuts for lower-income earners

Besides the promise to overturn penalty rates, Shorten laid out a tax plan that he said would do more for low-income earnings than what Scott Morrison’s Budget would do.

He called out the Coalition Government’s plan to get rid of the 37 per cent tax bracket and tax everyone earning between $37,001 and $200,000 at 30 per cent as particularly harmful to lower-income earners.

“In a lot of these cases these are the very same workers in retail, hospital, pharmacy, and fast food, who have already had their penalty rates arbitrarily cut,” he said.

“We won’t back a plan that puts a retail worker on $35,000 less than $5 a week, while an investment banker pockets more than $11,000 a year.”

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