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Senate Inquiry Calls For Penalty Rates To Be Restored To Workers

'Penalty rates are not a luxury'.

A Senate committee investigating penalty rates in Australia has called for the recent controversial Fair Work Commission decision to be overturned and for weekend and holiday rates to be restored to affected industries.

The committee heard expert testimony that there was "mixed" evidence on whether cutting penalty rates for workers in the retail, hospitality and fast food industries would boost employment, that any actual effect was "likely to be so small as to be negligible", and that penalty rates were unlikely to be the sole factor in stopping businesses opening on the weekend.

The Federal Senate's Education and Employment References Committee began an inquiry into the issue of penalty rates back in June, looking at five matters including employees at large businesses being paid below award rates, amendments to the Fair Work Act, and the February decision by the FWC that penalty rates be cut for workers in the retail, hospitality and fast food industries.

On behalf of the six-member committee, consisting of three from Labor, one from the Greens and two from the Coalition, chairman and ALP senator Gavin Marshall recommended that:

the government legislate to overturn the Fair Work Commission's decision to reduce Sunday penalty rates.

Labor and the Greens have been pushing the government to introduce new laws to supercede the decision of the independent FWC, calls which the Coalition has thus far resisted.

The chair's report stated "penalty rates are not a luxury", outlining that many Australians rely on extra pay for working weekends, unsociable hours or holidays simply to make ends meet.

"It can be a necessary financial calculation, because many employees working in the retail and hospitality industries for instance are low paid, often earning just enough to make ends meet. As a cohort, they are highly vulnerable to financial stress and may be reliant on penalty rates to cover basic living expenses," Marshall wrote.

"This inquiry is therefore set in the context where the basic entitlements of typically low paid and vulnerable workers are under significant threat. Penalty rates are not an optional extra for such workers; they make the difference to individuals' and families' ability to house and feed themselves to a basic standard considered acceptable in our society."

Marshall cited evidence presented to the committee by economist Professor John Quiggin, who said employment would likely not be significantly boosted by the cut to penalty rates. The government and business groups had pushed for, and supported, the cuts to penalty rates using the argument that employers would now have more money to employ more workers, but Quiggin said that trend would be "so small as to be negligible".

Unsurprisingly, in a dissenting report, the two Coalition members said they "reject the assertions and recommendation in the Chair's report".

"It simply defies credibility, how unions and the ALP can wage a political campaign decrying modifications to penalty rates for small businesses who rely on the awards system, yet wholeheartedly support cuts to penalty rates in enterprise agreements, negotiated between unions and big businesses," wrote senator Linda Reynolds in her dissenting report.

"On the subject of penalty rates, the credibility of unions and the ALP is laid bare. Coalition Senators reject the Chair's report and the recommendation proposed."

The Productivity Commission had recommended the changes to align Saturday and Sunday rates in 2015, while Prime Minister Malcolm Turnbull has argued "history" was the only reason the weekend rates differed. The PM and business groups claim lowering penalty rates would help ease unemployment, saying Sunday rates discourage businesses from opening on the weekends and from employing more staff. Unions had fiercely opposed the changes, however, saying many families depend on the extra income from penalty rates to pay bills.

On Wednesday, Gerard Dwyer, national secretary of the SDA shop workers union, welcomed the committee's recommendations.

"The Turnbull Government supports pay cuts that retail and fast food workers don't deserve and can't afford. We are pleased this Senate Inquiry has found that those penalty rates must be restored to workers," he said in a statement.

"Importantly, the Report found that workers of all ages rely on penalty rates to make ends meet, and slashing take home pay will not boost employment or improve economic growth as claimed by the Government. In fact, reducing incomes will do the opposite."

Elsewhere in the Liberals' dissenting report was criticism for big business inking deals with unions to pay workers below award rates, the subject of a long investigation by Fairfax Media which uncovered employees of the likes of Woolworths, Hungry Jack's and KFC being underpaid more than $300 million a year.

Following the report's release, Greens industrial relations spokesman Adam Bandt said his party would push for a Royal Commission into wage theft and below-award payment nationwide.

"It's becoming apparent that failings in our industrial laws have allowed some of Australia's biggest companies to pay workers at below award rates," he said.

"We fear we've only seen the tip of the iceberg and we now need a full inquiry to determine just how much workers are losing. Instead of witch hunts into unions, we need a Royal Commission specifically looking into underpayment and wage theft across the country to protect workers and get to the bottom of the problem."

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