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Resurrecting Work Choices


Chef and waitress in restaurant kitchenThe Senate Standing Committee on Education, Employment and Workplace Relations is currently considering a Bill that revisits the ill-fated Work Choices legislation. While Opposition Leader Tony Abbott maintains that Work Choices is 'dead, buried and cremated', Independent Senator Nick Xenophon is advocating a position that adopts a central feature of that legislation.

The Fair Work Amendment (Small Business-Penalty Rates Exemption) Bill 2012, introduced by Xenophon on 16 August 2012, proposes a fundamental change to the national award safety net system. If enacted, it would remove penalty rates from the awards covering small businesses in the restaurant, catering and retail industries and would reduce the rights and incomes of many low paid and vulnerable workers.

The rationale is that these pay cuts would lead to increased employment in the firms covered by the exemption.

This kind of rationale was the basis of Work Choices, which sought to cut the costs of employment by lowering safety nets and exposing workers to more labour market forces. It restricted collective bargaining, excluded workers in small businesses from unfair dismissal rights, removed 'needs' from the minimum wage-setting criteria, and permitted the removal of established rights, such as penalty rates, from the award safety net.

The burden of job creation thus fell on the low paid workers and their families. In effect, these vulnerable workers and families were told that their wages and conditions of employment were the reason why unemployed workers and families were suffering and that they had bear the cost.

The Australian Catholic Bishops issued a Statement in November 2005 expressing concern about aspects of Work Choices, including the prospect that 'many workers, especially the poor and vulnerable, may be placed in a situation where they will be required to bargain away some of their entitlements'. In particular they referred to the risk to penalty rates, and called for the protection of these entitlements.

The current bill's proposed loss of penalty rates would have a major impact on many low paid workers and their families. The National Minimum Wage and other award rates already provide only poverty wages. Workers who rely on penalty rates to help make ends meet would be left without any compensation.

Penalty rates compensate for working in unsocial hours. Work on evenings, nights, weekends and public holidays impacts a wide range of personal and family arrangements. The bill proposes treating the restaurant, catering and retail industries differently from other industries that operate during the same time periods: nurses, public transport workers and police, for example, would be unaffected.

It is immoral to hold back wage increases or drive wages down below a decent level on account of economic circumstances when there are other ways to promote job protection and the creation of employment opportunities, that are consistent with an equitable sharing of the burden of creating and sustaining jobs.

The burden of creating and sustaining jobs, including low paid jobs, should not be imposed on those who are in or near poverty. Yet this is the intent and effect of many proposals for labour market deregulation.

Rather than seeking to impose selective burdens on low paid workers, governments should be considering the ways in which the costs of employment can be reduced, at a cost to the broader community, without reducing fair minimum standards for low paid and vulnerable workers.

The tax system must be reviewed. Payroll tax (which is imposed by the states) is a tax on employment. Income tax on the National Minimum Wage, which is currently 8.2 per cent, has the effect of increasing labour costs and also operates as a tax on employment. Changes in these taxes would promote employment opportunities and spread the costs across the community.

Incentives and rewards for the employment of labour need to be built into the tax system. A review of employer on-costs might also be undertaken with a view to reducing the costs of employment without prejudice to fair safety net wages and conditions of employment. Improved targeting of family payments would reduce the need for wages to provide for workers with family responsibilities.

A century ago Australia had a tariff system that protected Australian industry in return for a wages system that was designed to protect Australian workers and their families, with the costs spread across each segment as consumers of intermediate or final goods. It served Australia well for decades.

But the globalisation of markets in recent decades requires a new system in which society as a whole has a shared responsibility for ensuring decent work and decent wages. The current bill runs counter to that objective.



Brian Lawrence headshotBrian Lawrence is Chairman of the Australian Catholic Council for Employment Relations (ACCER). This article draws on the submission by ACCER to the Senate inquiry into the Bill. A copy of the submission is available on the ACCER website.

Topic tags: Brian Lawrence, Work Choices, Industrial Relations, Tony Abbott, Nick Xenophon



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Existing comments

The Senator needs to lead by example and have his fellow Seantors reduce the wages of all parliamentarians in the nation to that of the minimimum wage, with a bonus payment system built in whereby electors, chosen by a random numbers system, like the Vietnam war ballot system that was so very fair to all those who had no desire to join a silly and dangerous war, would decide whether or not, the MP-Senators of their area would receive a bonus. As we all know, this would spur enormous efficiencies in work and results from these people and the nation would be far better governed as a result. Naturally, there would be no travel expenses granted either, since that is clearly a 'personal gain' cost that benefits the individual, like degrees benefit individuals and not the nation as a whole, and we could then also save monies on the 'red tape' involved in all those parliamentary perks, like super, when they all reduce to the minimum 9% Occ Super everyone else gets.

Andy Fitzharry | 28 September 2012  

The unfair dismissal regime worked against employment in small business because it was clearly rorted by a percentage of unscrupulous people. Speak to almost any small business employer and you will hear the same story. My mum and dad came though the depression years with a very different life outlook. Dad was a labor supporter who worked for the NSW public service. He spoke constantly about his "rights". He died in his 60s, a bitter, angry man. Mum, by contrast, espoused the view that, in order to succeed in your career, you had to make yourself invaluable to your employer. This served her well, she was a highly successful, frequently promoted, well paid employee until she retired in her 70s. Always a bright, optimistic person, she lived until she was 98. What sort of person would you rather be? Work CHOICES are important.

Ian | 28 September 2012  

I would like to take Brian's views on lowering payroll and income tax one step further. The Henry Review recommended an overall increase in land tax and resource tax as a way to stimulate the economy (create jobs) Statistics show that if you lower the workers tax what you do in effect is leave more in their pockets to pay in rents and mortgages. Until we all understand the relationship between land and production it will be very difficult to come up with workable solutions.

Anne Schmid | 28 September 2012  

Meanwhile, upward ever upward higher incomes ever rise, unrestrained by law or conscience, for wealth's the only prize.

Peter Ryan | 28 September 2012  

Thanks Brian for this cogent article explaining why the bill proposed by Senator Nick Xenophon is unfair and will penalise people who are already low paid. In addition, such a bill could be later extended to other categories of workers. These issues are complex and proposals such as Xenophon's can have unexpected consequences. As Brian suggests, there are better and fairer ways to reduce economic burdens on small employers.

Bruce Duncan | 28 September 2012  

I agree with Nick Xenophon's war on poker machines, because, as he says, they siphon money out of the pockets of the working poor. But now Senator Xenophon wants to rob the battlers another way - removing penalty rates, which employees in the hospitality and retail sectors rely on to make a living wage. My view is this: if the only way you can make your shop or restaurant profitable is by paying slave wages, you shouldn't be in business.

Monty | 29 September 2012  

restaurant catering and retail are the targets, the very people who make evenings in the city app Nick is a charismatic with one very important policy about no pokies where I agree with him but here I Diverge from his views.Profits must never ever detract from worker's rights or we will have women and kids down the coal mines again

Alastair | 29 September 2012  

"It is immoral to hold back wage increases or drive wages down below a decent level" &c This statement is a tautology, if the word "decent" has any moral quotient. If it doesn't, what does the word "decent" mean here? I would like to see authoritative church pronouncements on this point that avoid the tautoloty, and their theological notes. Moreover: it is open to Catholics, (especially in our diverse post-Vatican II Church) to embrace all manner of ideas in this sphere, eg a labour regulation framework such as Work Choices, and even one going considerably beyond that towards complete labour market deregulation...the latter being something which I am attracted to, for the sake of the poorer in our society. So, could I have concrete proof that this direction I lean toward is antithetical to Catholic dogma? In the absence of such proof: is this an example of what liberal Catholics label as "creeping infallibility"?

HH | 30 September 2012  

HH is right to say that the statement he refers to is tautological. But getting all technically linguistic in the desire to make a debating point should not distract us from the meaning intended. By "decent" one clearly means a range of things, perhaps "sufficient to be able to provide a secure shelter, nourishing diet, health-care as needed, education for one's own children (prudently and judiciously limited of course!), and such surplus that enables one to buy an occasional luxury as to keep one from feeling chonically depressed and excluded socially". That might do for starters. We could go further, but we can already see our way clear to pressing the case that to threaten these things is immoral and there is no tautology there.

smk | 01 October 2012  

Thanks, SMK. No mere debating points here, though. It sounds so noble to insist on "decent" wages, however we cash that word out. And the image of Scrooge/Monty Burns businessmen at the earliest legal possible moment driving their hapless employees into starvation for the sake of a few dollars is very Hollywood ... Hollywood being of the left, overwhelmingly. The good news is, it's all a convenient myth. Never happened in history in truly free markets. Never will. Clearest example: Hong Kong 1950 - 2000 (and some). Minimum wage/labour regulation. Politically weak unions. But: fastest sustained, genuine rise in living standards of workers, et al, in recorded history. Reason: Wages rise in the free market because of increase worker productivity. That's why they rose in HK as well as in a steady, unprecedented gradient in Britain between 1750 (say) and 1910 (say). To say nothing of the contemporaneous U.S. Nothing to do with whatever government labour regulations obtained at the time. Everything to do with a climate which encouraged entrepreneurship. If we want people to become wealthy, THIS is the dynamic, enabling force, not hoary bureaucrats prescribing from Canberra, all care and no responsibility. The post of Mr Lawrence is a curate's egg. Sure: lower taxes of all stripes that hinder employment. Tick. And other regulations (but why not include "unfair" dismissal - surely one of the most subjective of judgements?) Tick. But...tariffs? As if they don't impact on the poor as much as a lower wage, a government engineered inflation, or taxes? La-la land.

HH | 02 October 2012  

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