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Wednesday, 11 November 2015
Page: 8297


Senator BULLOCK (Western Australia) (15:26): Back in the 1940s, there was an organiser working for the SDA in Western Australia called Backshall. He organised hairdressers. Backshall went out on his own with his hairdresser members and registered the Hairdressers & Wigmakers Industrial Union of Workers. When Backshall retired, he passed on the union to his son, Ron.

Senator Ian Macdonald: You can't do that, can you?

Senator BULLOCK: Frank Belan did! Over the following decades, the union ran down. Ron found winning wage rises for hairdressers difficult, and by 1990 a four-year-trained tradesperson hairdresser was earning less than a shop assistant. I had a few discussions with Ron, and somehow found myself secretary of the hairdressers' union. I immediately engaged in negotiations with the master ladies' and master gentlemen's hairdressers' associations, and managed to persuade them to increase wages by $150 a week—not bad shooting in 1990. One of the issues which concerned employers was the penalty rates payable for work on the one late night and on Saturday. In the course of negotiations, we valued these penalties at 10 per cent of the total wage costs, and I traded these penalties for a 10 per cent across-the-board wage rise plus a provision in the award—which as far as I know is unique—under which, if there were any future national wage case increases awarded in flat dollar terms rather than a percentage—unusual in those days—the increase awarded to hairdressers would be increased by 10 per cent to preserve the value of the 10 per cent buyout.

It is fair to say that the employer associations were extraordinarily pleased with this outcome. Nevertheless, as soon as the award was varied, employers came out of the woodwork to complain. 'We do not trade on Thursday night; why should we pay?' 'We do not trade on Saturday; why should we pay?' 'We have some employees who only work Monday to Friday; why should we pay them a loaded rate?' These employers were effectively arguing for the penalty rate system—rewarding workers engaged during unsociable hours for the work performed during those hours. Even though the employer associations taking a macro view were satisfied that, across the industry, a 10 per cent across-the-board wage increase was required to ensure cost neutrality, at a micro level there were some employers who were disadvantaged by the buyout as well as some employees, while some employees were being compensated for hours of work which they did not perform. If penalty rates are to be bought out, there is no avoiding these problems.

In the enterprise bargaining era, my union—the SDA—has worked with employers to improve efficiency in the retail industry and to improve wages for members. Implementing simpler pay scales which absorb some penalties into higher base rates has been part of these negotiations. In the 1990s, agreements struck under the no-disadvantage test facilitated these arrangements, as 'no disadvantage' was assessed on an on-balance basis across the affected workforce. Today, the better-off-overall test provides a different challenge because it is, arguably, applied to each individual worker. Take Coles, for example: if a Coles shop assistant was employed under the award, their gross would be $721.50 week. Our agreement pays such a worker $821 a week—an hundred extra dollars a week; locked into the base, flowing into overtime payments, superannuation contributions and leave payments. Such an increase makes a huge difference to a low-paid worker. They are unquestionably better off. Yet it could be possible to find a worker, perhaps a casual who is engaged only to work at what would be penalty times under the award such as on Sundays for example—such an employee could be worse off. All of this demonstrates how hard it is to properly and fairly compensate workers when moving away from penalties. It also highlights how much value there is for a worker in the penalty system for those who regularly work at unsociable hours.

A few years ago I had a chat with the Premier who raised the issue of penalty rates and suggested that he might like to personally be involved in reducing penalty rates. He said that he wanted to be fair and not cut workers' pay but offer some compensating increase in base rates. I explained to him some of the complexities that this involved. After some reflection, he said that perhaps he did not want to be personally involved with it at all. And here is the problem: compensation arrangements are hard to effect; they can be globally cost neutral but are likely to be disadvantageous to some employers and employees, and this is unavoidable. What businesses and most politicians who are advocating reducing penalty rates mean is cost cutting. They are not interested in grappling with the issue of compensation. Yet penalty rates comprise a significant proportion of the take-home pay of those workers who work at unsociable hours, the majority of whom are already low paid. Labor's view is that imposing wage cuts on the low paid workers is simply unthinkable. (Time expired)

Question agreed to.