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Tuesday, 11 August 2015
Page: 5011

Senator KETTER (Queensland) (19:35): First it was veterans and pensioners, and now it appears that hospitality and retail workers are in the line of sight of this government. Why must this government target the most vulnerable in our society? This question, I think, gives rise to a broader issue which is the theme of my contribution tonight, which is in terms of inequality in our society, particularly income inequality. I believe that either you are on the side of reducing inequality or you are not. Unfortunately, it appears that this government is pursuing policies which advance income inequality.

Income inequality in Australia has been rising. We are now at the bottom half of the OECD's equality ladder. We know that the gender pay gap is widening and, most worryingly, since the mid-2000s, wages have failed to keep pace with productivity improvements. What does this all mean? We talk about inequality in society. We know that there are people around the world who are coming to the understanding that there is a link between rising inequality and slowing economic growth around the world. In fact, I think it is well known that the IMF managing director, Christine Lagarde, recently noted that the world's 85 richest people control more wealth than the world's 3.5 billion poorest people and that this degree of inequality is 'casting a dark shadow over the global economy'. So, in my view, we must pursue policies designed to limit inequality.

But what do we see from this government? This government has launched an inquiry into one of the very institutions which I would argue have been at the forefront of the inhibitors of rising inequality. The Chifley Research Centre report Inclusive prosperity states:

Overall, Australia's strong growth and employment record, matched with policy and institutional settings, has acted to slow the growth of income inequality experienced in countries such as the United States and United Kingdom. These settings include: a strong social safety net, including means-tested welfare, universal healthcare, and universal superannuation scheme; high public investment in education; a solid minimum wage; employment standards; and discrimination protection.

I realise that there are a number of factors there that are working to inhibit the growth of inequality in our country, but I would argue that one of the more significant of those inhibitors is our industrial relations system, which is now the subject of a draft report by the Productivity Commission. That Productivity Commission draft report has made it clear that our current workplace laws are not fundamentally broken. The draft report seems to embrace collective bargaining, the National Employment Standards and the award system, and the Productivity Commission support the role of the Fair Work Commission and the Fair Work Ombudsman in the main. So we would like to know if Mr Abbott and Senator Abetz agree with the commission that the current arrangements are indeed fundamentally correct. The report makes a number of recommendations in relation to, amongst other things, penalty rates, the minimum wage, unfair dismissal, individual arrangements, enterprise bargaining and the Fair Work Commission. Unfortunately, the commission has proposed a two-tier penalty rate system, which Labor will not support and which the Abbott government must immediately rule out.

One of the major unions in this country, the Shop, Distributive and Allied Employees' Association, has undertaken research through the McKell Institute and has found that it is estimated that retail and hospitality workers in rural Australia would lose between $370 million and $1.55 billion each year, depending on the extent of the cut to the penalty rates and the level of local ownership of retail stores. The report goes on to find that it will reduce disposable income for spending in regional areas by between $174.6 million and $748.3 million. The extent of these impacts varies from region to region, with several individual examples provided in that report. I commend the report to senators.

We know that the adoption of this two-tier penalty rate system would create two Australias. Treating retail and hospitality workers as second-class citizens is not something that the Labor Party will ever support—one Australia where some people are fairly remunerated and another Australia where there are working poor who are unable to sustain a modest, decent standard of living. In the hands of the Abbott government, it is also likely to be a two-step approach where one group of workers will have their wages cut—hospitality and retail—before the government moves on to the next—nurses, firefighters and others. So we would say that there should be no mistake here: this is a slippery slope towards a wholesale cut to penalty rates across the board.

With wages growth at its lowest in 20 years, penalty rates are essential, but the Prime Minister is seeking to attack penalty rates through the back door of the Productivity Commission. As articulated in our inaugural submission to the Fair Work Commission, Labor believe in a fair and economically responsible increase in the minimum wage, given inequality in this country is at a 75-year high. A strong minimum wage does not just help our lowest paid; it is the foundation for the determination of award wages, which in turn support middle-class families and stimulate economic growth. Labor has concerns about the commission's recommendation to create an enterprise contract, and this could be enterprise bargaining without the bargaining.

Senator O'Sullivan interjecting

Senator Polley interjecting

The ACTING DEPUTY PRESIDENT ( Senator Whish-Wilson ): Order! Do not have conversations across the chamber, please.

Senator KETTER: Rather than a race to the bottom on wages, Labor believes the government should focus on jobs and economic growth through investing in skills and training, infrastructure, innovation and entrepreneurship, and we would carefully consider the report through that prism.

The draft report resembles something out of Work Choices. Instead of ruling out this fundamentally unfair proposal immediately, Mr Abbott has used the recommendation to hit the airwaves, seeking to influence the Fair Work Commission to cut penalty rates in accordance with the recommendation. In reference to looking at penalty rates, Mr Abbott said, 'I think there is a case for looking at this issue.' The Prime Minister then went on, seeking to unduly pressure the independent umpire, the Fair Work Commission, by saying:

… let's hope the Fair Work Commission is alert to the need to maximise employment and maximise economic activity.

The McKell Institute report found that reducing the take-home pay of low-paid workers and their families is going to have a negative impact on economic activity. People around the world are coming to that conclusion. Working people with less to spend—this makes no sense. It means there is no demand in the economy.

I made the point at the commencement of my contribution that we need to look at our economic policies in light of inequality and where we stand on that particular issue. Australia has avoided the radical unfairness that has come out of the American system, but unfortunately the Abbott Tea Party Liberals are attempting to take us down this American road at precisely the same time as we have American economists and politicians looking at Australia as a road map for achieving more inclusive growth. If Tony Abbott has his way and penalty rates are cut, some workers will be forced to get a second or third job. Changes to penalty rates are not just negative for workers but detrimental to companies that rely on the wages of local employees to survive. It does not make any sense.