February 24, 2017

DAVID SPEERS: - penalty rates in Hospitality, Retail, Fast Food and Pharmacy sectors as well. Unions are outraged about it, Labor is vowing to fight it.  With me now is the Shadow Minister for Workplace Relations, Brendan O’Connor. A very good afternoon to you. Now it was Bill Shorten as the Minister back in 2013 who actually required the Fair Work Commission to review these Sunday penalty rates. Was that in hindsight a mistake?
BRENDAN O’CONNOR, SHADOW MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS: The decision by the previous Labor Government to review awards was fine. No one envisaged at the time that there’d be any chance that the Commission would hand down cuts in real wages of workers. So, it’s easy in hindsight to say that we could have taken a different way but, David, we’ve been shocked with the decision today to cut the real income of hundreds of thousands of workers.

SPEERS: Ok and we will come to what you will do from here, but this is an interesting point. Labor, and Bill Shorten specifically wanted the Fair Work Commission to do this sort of review, but you honestly didn’t expect it to possibly change the status quo?
O’CONNOR: Well I don’t think, well people talk about modernising awards, it’s not modern to cut wages for low paid workers. I think that’s a misunderstanding of the intent behind the Act with all due respect.  We are the political party that likes to support the Commission, we believe it’s an important institution, but in this decision –
SPEERS: But why ask them to review it at all? Were you only thinking it might increase –
O’CONNOR: No, because it wasn’t one particular matter, all awards were being considered, it was something that employer bodies and unions representing workers looked to see if we could make sure that awards are sufficiently contemporary, that they  reflect the modern society and modern economy.  But no, it wasn’t our view that penalty rates would be targeted and that there’d be a real cut to income without compensation whatsoever for hundreds and thousands of retail and hospitality workers.

SPEERS: Well, it’s a little confusing, because the Minister, Bill Shorten at the time, was very clear about this in an amendment that he made to the Fair Work Act, ‘the Government has no plans to change the way penalty rates are set’ that’s part, and then it does talk very clearly about the only reason the Commission is now specifically reviewing penalty rates is to review them promptly under the modern awards system. So, if Labor only wanted the Fair Work Commission to increase penalty rates, why didn’t you make that part of the legislation when you were in government?
O’CONNOR:  Well Bill did make an amendment to the Act to expressly say you must have regard to irregular hours. He was pointing the Commission - guiding the Commission to having regard to the irregularity of work or working on public holidays and weekends. This decision in our view is contrary to the intent and that is why we have taken I suppose the exceptional step of opposing this decision, and we call on Malcolm Turnbull to stand up for workers too.

SPEERS: Ok, so what will that mean? How can this be overturned?
O’CONNOR: There are over 450 pages of this decision and it goes to many areas, and we need to look at it very closely. But our political will is to respond so that there is no impact on workers who are relying on the minimum award that are affected by this decision. So, we will be exploring options to prevent anyone losing real income and we ask the Government to consider doing the same. We believe that the Parliament will have the capacity to consider remedying this decision and yes that’s an exceptional act, but the decision itself is exceptional and I think we need to take that step, and we call on the Government to support our position.
SPEERS: Alright, just to be clear -
O'CONNOR: As for other matters -
SPEERS: Sorry -
O'CONNOR: The decision itself, sorry David I just want to finish on this point if I could. The decision itself does invite the parties, including the Commonwealth to comment on the transition of the cuts. I think at some point that is important. I can assure you on the 24th of March Labor will be there restating its position and opposition to penalty rates cuts and explaining why. We'd expect the Commonwealth to outline its position in full. But before that Malcolm Turnbull, can for once in his life, stand up for workers and join Labor and negate the effects of this decision.
SPEERS: Alright, so just to go through those options, the 24th of March date you're talking about there is when the Fair Work Commission will look at how to implement this decision today of the Full Bench. So what you're saying is Labor, and you're calling on the Government as well, let's see whether they do, but Labor, for your part, you will be putting in a submission arguing that this should not go ahead at all?
O'CONNOR: That real income loss should not occur. People should not be having money taken out of their pockets, effectively. We don't think that's at all fair. We're at a 75 year high as far as inequality concerned and we have the lowest wage growth in more than 20 years, David. The idea that you'd attack the lowest paid - I mean this has been a campaign of the Government to date and I think it's not just an opportunity to stand up -
SPEERS: Just sticking with what you'll do, you're submission, when you start [inaudible] that workers won’t be out of pocket, would you be seeking some sort of no net loss provision ie: you could lose the Sunday penalty rates as long as you are compensated in elsewhere, along the lines of union deals that have been struck by Bill Shorten and others over the years.
O'CONNOR: Well I mean enterprise bargaining is another matter. Of course you can change arrangements if people are not worse off through enterprise bargaining. I’ve never argued against that -
SPEERS: So what about some sort of no net loss provision?
O’CONNOR: Well, can I just say, there’s a number of options we’re considering. One is a parliamentary remedy. Remember this, that Malcolm Turnbull was quite happy to intervene to fundamentally alter, in fact to revoke an order of the independent umpire when it came to rates of pay for truckies in this country. So there are parliamentary remedies which may well be available which we are going to explore. And then of course there are ways in which we can submit matters to the Commission. So, I would say there is a combination of options here.  We are going to read the decision in full, but we want the Government, instead of attacking workers to stand up with Labor for the lowest paid workers in our society and many of them happen to be retail and hospitality workers who are struggling to make ends meet.
SPEERS: To be clear, if you don’t achieve success of any of those fronts, come the next election, what will Labor be seeking to do about it?
O’CONNOR: Let’s see how we will go in getting the Government to support Labor’s position. I think they will have to re-think their position on this. This is very, very unfair for low paid workers who are struggling to make ends meet as I said earlier. And secondly, we have an opportunity to make submissions which may change the nature of the decision by the Commission, there is still a process but you can be assured of this, come the next election, a Shorten Labor government if elected will never have rules of the Fair Work Commission that allows for the cutting of wages of low paid workers, that is not something that we every envisaged or would ever support.
SPEERS: What do you say, Brendan O’Connor, to – I think it’s – every employer group who argues this will have a benefit in terms of more jobs. Indeed, the Fair Work Commission itself said that’s the whole idea here. It does see a, while not quantifying it, an employment benefit of reducing Sunday penalty rates.

O’CONNOR: I don’t support that proposition, David and neither does Labor. We’re of the view that if you take money out of the economy, if you cut the income of those families that usually spend all of their income in the economy you’re going to lead to a reduction in the consumption of goods and services, which will lead to a contraction of the economy which would lead to fewer, not more jobs.
Insofar as longer hours it may well be that some workplaces work longer hours because you know what if this decision takes effect a retail worker working on a Sunday for seven and a half hours will have to work ten hours for the same money. So we might see more hours but we’ll see people paid the same for more work and I don’t think that’s fair.

SPEERS: Do you accept though we do have a problem with underemployment rate right now in Australia; it’s pretty hard to deny a lot of hours might want the extra hours, may be willing, may be hungry, for those extra hours.

O’CONNOR: You find me one worker that wants to work an extra two and a half hours on a seven and a half hour shift for the same amount of money and I’ll buy you a beer.

SPEERS: It doesn’t necessarily need to be the same worker – I’m talking about a new employee.

O’CONNOR: Firstly, the Commission itself – neither the Productivity nor the Fair Work Commission – could not in any way explain exactly the nature and scale of any chance of increase aggregate hours in the labour market as a result of cutting people’s wages. They did say there might be some increase but my point is, as John Hart, from the Restaurant and Caterers Association has said most recently – we don’t expect people to lose money we just want them to work more hours for the same amount of money. I think that’s the agenda of many. I think in the end businesses will be worse off. There will be lots of businesses that sell goods and services that will see contraction in consumption as a result of cutting those worker s who actually spend all of their income. You take the money from the labour costs and put it over to the shareholder dividends, not all that money will be spent in the economy. By the way, it will be worse in the regions because that money will be taken out of the local economy so we’ve got problems with the economic arguments by employers.

SPEERS: Well, I guess we’ll see whether that money that the employers are saying goes to share dividends or hiring – let me ask you finally, let’s get to the crux of the whole case here. Why is Sunday different to Saturday? Why do we need to have in your view a higher penalty rate on Sunday as opposed to Sunday?

O’CONNOR: The Commission itself finds there is still a difference that’s pointed out by the way in which families and people gather socially but even if you think there is no difference why not increase the Saturday rate to Sunday? What is the assumption around cutting the Sunday rate down closer to Saturday?

SPEERS: Alright and that’s what you would argue? In fact, will you go the election saying you’ll take the Saturday rate up to Sunday?

O’CONNOR: Look, even the Commission itself, David, said there is still an expectation that Sunday is seen differently in terms of families and so on. But until Parliament sits on Sunday and banks open on Sunday I don’t think you can call Sunday an ordinary day.

SPEERS: Brendan O’Connor, I know you work, along with many of us in the media industry, on a Sunday every now and then as well. Appreciate you joining us this afternoon, thank you very much.

O’CONNOR: Thanks David.