When Penalties Rate A Mention, Labor’s Chances Improve


Despite taking heat from their left, Labor may be happy to see Sunday penalty rates talked about, writes Ben Eltham.

Once again, penalty rates are on the agenda.

Ever since WorkChoices made industrial relations the central issue of the 2007 campaign, penalty rates have popped up as a reliable Labor scare campaign. In 2010, for instance, Tony Abbott was forced to declare industrial relations reform “dead, buried and cremated.”

Of course, once in government, that didn’t stop Abbott’s Coalition from trying to chip away at the Fair Work legislation passed by Labor. It didn’t have a lot of success, however, owing to a hostile Senate.

As a result, Australia’s industrial relations landscape looks roughly similar to the one bequeathed us by the Kevin Rudd and Julia Gillard years. There are a set of legislated minimum standards. There is also an independent judicial body, the Fair Work Commission, which sets things like the minimum wage.

Let’s remember that this industrial relations system has delivered Australia remarkably few strikes in recent years. Nor are businesses in any danger of a wage breakout: real wages are essentially flatlining. Indeed, real wages are so low that the Reserve Bank is worried about them.

So you’d think no-one would be too worried about penalty rates. But you’d be wrong. Small businesses like cafes and restaurants (at least, the ones that don’t already pay cash-in-hand) have always hated penalty rates on weekends, and big business would prefer to pay lower wages if it could. Lobby groups like the AI Group and the Business Council of Australia are pushing hard to lower Sunday penalty rates to the level of Saturday rates. Since these groups represent a natural constituency of the Liberal Party, many in its ranks would like to reduce penalty rates too.

But there is that tricky issue of an election on July 2. Sensibly cautious of making industrial relations an election issue, the Coalition under Malcolm Turnbull has done little so far.


The problem for Turnbull is that the Fair Work Commission is currently deciding on penalty rates. It could hand down a decision to cut them on Sundays in the hospitality industry sometime before the election.

For its part, Labor has generally pledged to keep the current industrial relations system, complete with the Fair Work Commission as independent umpire. This is not very surprising, given Labor put the system in place.

The Greens have lobbed a hand-grenade at this cosy arrangement by promising to legislate to make penalty rates a national employment standard. This would take the issue out of the hands of the Fair Work Commission, and mandate it for all employees across the land. There are plenty in the union movement supporting that policy.

Speaking at a media function in the inner-city Sydney seat of Grayndler, the Greens’ Adam Bandt pledged to legislate to protect penalty rates. “The question is whether Labor has the guts to put that into legislation or whether Labor is going to wash their hands of it,” he declaimed.

As with pretty much everything the Greens do these days, that position has mightily annoyed Labor. The ALP continues to argue that the Fair Work Commission is the appropriate body to decide such matters, and that a future Labor government would merely argue more strongly to the Commission for penalty rates to be retained. Given the stuttering rate of wages growth out there in the economy, it shouldn’t be a hard case to make.

“They’re playing with fire by proposing that a government should be able to legislate on specific penalty rate outcomes,” Bill Shorten responded. “They are loading the gun for a future conservative government to pull the trigger. What the government has the power to put in, a future government has the power to dismantle.”

Shorten is correct here. A future government can indeed dismantle national employment standards, if it has the numbers in Parliament.

But that’s not saying much. Any government can change any law, if it can get both houses of Parliament to agree. Just as a future government could change employment standards, so too could that government do away with the Fair Work Commission altogether.

The Greens are grandstanding on the issue too. Given their minority status they can only ever change a law with the support of a major party. So the penalty rates pledge is simply a stick with which to beat Labor.

But that highlights a problem for Labor during this campaign. The ALP should comfortably own the penalty rates issue. In fact, it should be using penalty rates as a scare tactic against Malcolm Turnbull. Instead, Bill Shorten is being forced to triangulate, wasting precious resources that could be better used campaigning against the Coalition.

This is a tricky issue for progressive voters who want to see the Coalition booted out of office. Outflanked to the left by the Greens on many issues, Labor must run a two-track message, in which swinging voters are persuaded in the outer suburbs, while the party desperately tries to sandbag its inner-city strongholds against a Greens assault.

For Labor, there is no easy answer to this problem. If the party moves left, it can win votes off the Greens on many issues. But that poses problems out in the mortgage belt. Perhaps the best solution might be to simply ignore Greens posturing, and get on with the business of the campaign. Labor has already wasted far too much energy on squabbles with a minor party.

Then again, maybe Labor likes the debate on this topic. After all, every day the media focuses on the pay of workers is another day that we’re not talking about immigration policy, or the economy, or terror.

The fact that Labor is polling so well despite the inner-city Green insurgency must be worrying the Coalition. Recent numbers have confirmed the downwards trend for Malcolm Turnbull’s approval ratings, while Bill Shorten’s are improving. Unlike the Coalition, Labor is running a strong and disciplined campaign.

The Coalition needs a circuit breaker, and fast. It’s not apparent that a lacklustre Turnbull mouthing “jobs and growth” will do the trick. An election held this weekend would probably produce a hung Parliament. A few more weeks of monotone slogans about “jobs and growth”, with little in the way of policies or promises, and the Coalition could be staring at a demoralising defeat.



Ben Eltham is New Matilda's National Affairs Correspondent.