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Thursday, 17 September 2015
Page: 7091


Senator LEYONHJELM (New South Wales) (10:38): Work is one of the most fundamental of human activities. It is difficult to overemphasise the importance of the dignity of gainful employment, providing independence and security for individuals and families. A lot of the debate around workplace regulation depends on who is seen to be more important: those with a job or those who do not have a job but want one. For myself, I am emphatically in the latter camp. Getting a job should always take priority. There is nothing wrong with seeking to improve the terms and conditions for those with a job, but this should not come at the expense of those who do not have one.

Nobody needs reminding that small business is a major driver of our economy and the largest employer group in this country. It is therefore surprising that we do not do more to enhance this engine room of economic activity. In fact, it seems at times we go out of our way to stifle entrepreneurial enthusiasm with red tape and regulation. Many of these regulations are aimed at assisting those who already have a job. Onerous unfair dismissal laws, rules on how to conduct job interviews, holiday loading that pays more for not being at work and penalty rates are just a few examples. The effect of these regulations is to discourage employment growth. They stop people from getting a job in the first place. Our industrial relations regime inhibits the enthusiasm of business, particularly small business, to employ more people.

The Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Bill 2015 is intended to encourage important and overdue reform in this area. I introduced the bill, and it is co-sponsored by Senator Day. The purpose of the bill is to improve the viability of small businesses operating in the restaurant, retail and tourism industries. It seeks to reduce regulation overseeing the relationship between small businesses in these industries and their employees. In the context of all the barriers facing small business it is a baby step. But it is at least a baby step in the right direction. It does this by removing any requirement that small businesses in these industries pay penalty rates unless the work is on a public holiday, the work is in addition to ten hours of work in a day or the work is on a weekend and in addition to 38 hours of work over a seven-day period.

The bill recognises the changing employment market in the 21st century. We no longer live in the world that existed when penalty rates were first introduced. Pubs used to shut at 6 pm. Dining choices were limited. Shopping ceased at noon on Saturdays. Sporting events were held almost exclusively on Saturdays. Today's world, in many ways, operates 24/7. We now shop all weekend. We dine out from breakfast through to late into the night, and the breadth and depth of dining choices has grown significantly. Tourism services for both domestic and international visitors have also blossomed such that tourism is now the fastest growing sector in the economy. The revolution in retailing, restaurants and tourism has provided numerous job opportunities to hundreds of thousands of Australians.

But now we are stalling because we are locked into old labour market thinking. Businesses and entrepreneurs are pulling back, shrivelling under the dead hand of government regulation. To continue the evolution of these important industries we need to recognise the changed circumstances of the 21st century and recalibrate, adapting to the lifestyle choices of both customers and employees. Indeed, recalibrating now, recognising that change is needed, is preferable to the fate of numerous industries that refused to do so and are no longer in business.

Right now in Australia, many retail, restaurant and tourism businesses are choosing to close their businesses on Sundays and public holidays rather than open to trade at a loss. Employers will not run their businesses as a charity. If the law does not provide a framework where a small business can reasonably operate at a profit, they will choose not to open or choose not to employ. There are two losers from this: those who are willing and able to work in those businesses and their customers. It is ludicrous that businesses are being forced to restrict trading hours, and therefore job opportunities, because regulated pay rates deny profitable trade. Any business, other than a sole trader, that restricts trading hours is closing off a job opportunity for someone.

The accounting firm Deloitte recently reported that 49 per cent of businesses in the fast food sector reduce their hours of operation when penalty rates apply. They also reported that a large number of these businesses have decreased their numbers of employees due to the impact of penalty rates. For restaurants and tourism in particular, weekends and late evenings are when people choose to use their services. These businesses are penalised for operating at a time that best suits their customers. They cannot escape this high cost regime and in most cases cannot charge sufficiently more to offset the imposition of penalty rates. For businesses in this bind, penalty rates threaten the viability of their entire business. This is a problem not just for people employed in retailing, restaurants and tourism but also for people who are not employed but who could be.

People not employed obviously do not receive a penalty payment of any kind. They receive nothing—no wage, no dignity of employment and no opportunity to progress. Penalty rates of up to 275 per cent are certainly appreciated by those who are paid such rates, but they are worthless if you do not have a job or if you are never offered shifts that pay such rates. It is a problem that particularly affects the young and low skilled. The retail, restaurant and tourism industries not only are big employers overall but particularly employ a lot of young and low-skilled workers. Unemployment amongst the young is at alarming levels in some areas.

The changes proposed in my bill will provide employment opportunities for a great number of people. Importantly, they will also improve the viability of businesses in the retail, restaurant and tourism industries, giving security to existing employees. While my bill might reduce the take-home pay of some current employees, there will be others who get more because their hours increase and plenty more who start earning a take-home pay. Given the high job mobility in these sectors, it is unlikely anyone will be worse off for long.

Those who feel disinclined to support these reforms should be aware that many of the people who work in these businesses want to work after traditional work hours or on weekends to accommodate studies or the work patterns of their partners. Far from feeling penalised for working early or late shifts or weekends, it is the first choice for many. Indeed, the transcripts of the 2012 Modern Awards Review conducted by the Fair Work Commission make interesting reading on this. They show that many employers find it easier to find employees for weekend shifts than for Monday to Friday nine to five shifts. They outline instances where employees nominate on their job application forms when they wish to work during the week. In many cases times are chosen to fit in with their studying and to avoid formal class hours. These transcripts confirm that many employees in retail, restaurants and tourism are young, with limited skills, and highly mobile, changing jobs to suit their current needs. Many employees state that if they could not work on weekends they could not work. While receiving penalty rates is welcome, it is not the primary motivator for many of them. Clearly, for many it is not a burden to work on weekends or after traditional business hours but an opportunity.

Finally, my bill is consistent with the objects of the Fair Work Act. These are the promotion of flexible modern work practices and efficient and productive performance of work; the promotion of social inclusion through increased workforce participation; the consideration of the likely impact of modern award arrangements on productivity, employment costs and the regulatory burden; and the consideration of the special circumstances of small- and medium-sized businesses. My bill promotes these objects. The current penalty rates regime does not.

The Fair Work Act does not properly address the special needs of small business. It is time for modest reform to improve the effectiveness and suitability of penalty rates, particularly in the small business context. Adoption of the changes in the bill will benefit our tourism industry, one of our biggest employers and a huge success story. The bill reflects a 21st century mindset that recognises changing lifestyles and the needs of both customers and employees. It is a modest reform and I commend it to the Senate.