Submission by Master Grocers Australia to the Department of Economic Development, Jobs, Transport and Resources, in respect of the Regulatory Impact Statement on proposed new public holidays in Victoria © Master Grocers Australia 2015 Page 1 of 6 Submission by Master Grocers Australia on proposed new public holidays in Victoria We refer to the recent release of the Regulatory Impact Statement (RIS) on the proposed introduction of two new public holidays in Victoria. Master Grocers Australia (MGA) thanks the Victorian Government for the opportunity to provide feedback on behalf of the members of MGA, in respect of the impact that the proposal to introduce two new public holidays in Victoria will have on their businesses. About MGA Independent Supermarkets and liquor stores play a major role in the retail industry and make a substantial contribution to the communities in which they trade. In Australia there are 2400 independently owned FoodWorks, Foodland, Friendly Grocers, IGA & SPAR branded supermarkets employing over 115,000 full time, part time and casual staff, representing $13.8 billion in retail sales. In Victoria there are 515 independent supermarkets trading under such brand names as IGA, Friendly Grocers and FoodWorks, employing 23,500 staff (FT. PT & Casual) with sales in excess of $3.5b per annum. There are approximately 3.75 million weekly customer transactions. There are 1,005 independent packaged liquor outlets, employing 2,800 staff with sales of $900m per annum. There are approximately 700,000 customer transactions per week. These businesses are small to medium in size and many of them are family operated. The majority pay their employees under the General Retail Industry Award and the remainder operate under enterprise agreements. Irrespective of the industrial instrument they use for payment of employees these instruments have penalty rates that apply in respect of trading on public holidays. Except for a very small number of employers the applicable rate on a public holiday is 150%. Reasons for the proposed introduction of additional public holidays MGA understands that the Victorian Government made a commitment to the Victorian people prior to the last Victorian election that, if elected, the new Labor Government would introduce two new public holidays, one being Easter Sunday and the other, AFL Grand Final Eve. In itself the proposal appears attractive to anyone who works, but it is doubtful that it was ever thought of as good policy by employers. The promise was obviously made without the benefit of a cost analysis and despite the fact that there was still no cost analysis in April 2015, the Easter Sunday public holiday was implemented. The question now is, whether the State of Victoria can feasibly withstand the introduction of not just one additional public holiday on Easter Sunday, but a second additional public holiday on Grand Final Eve. © Master Grocers Australia 2015 Page 2 of 6 The Victorian Government has, since making the election promise to increase the number of public holidays prior to the election in 2014, provided the Regulatory Impact Statement undertaken by Price Waterhouse Cooper.1(the RIS) The RIS provides an opportunity to assess the impact on businesses and the community. The RIS focuses on the possibility of increased tourism and a general enhancement of sporting events in Victoria in respect of the proposed AFL Grand final public holiday and also on the financial cost to the State, and businesses generally, of implementing this holiday. There is also the consideration given to the financial cost and the community benefits of granting an additional public holiday at Easter. The RIS suggested options The RIS considers three options but, firstly refers to the current arrangements in Victoria over the Easter period and the day of AFL Grand Final, which is referred to as the “status quo”. It is intended that each of the options for change be compared with the current arrangements and measured against “the status quo” Obviously, if the status quo remains it would mean that Easter Sunday would remain just as any other Sunday with staff being paid the Sunday penalty rates. The Friday before the AFL Grand Final would also remain the same as it is currently. Options provided in the RIS as opposed to the “status quo”are proposed as follows: Option1: Easter Sunday becomes a new public holiday and the Friday before the AFL Grand Final also becomes a public holiday as promised by the Victorian Government prior to the 2014 election. Option 2: Easter Sunday is introduced as a public holiday and delayed implementation of the Friday before the AFL Grand Final Option 3: Transfer of the public holiday status from the Easter Saturday to Easter Sunday, in addition to the implementation of the Friday before the AFL Grand Final. (Option 3 creates only one additional public holiday in Victoria taking the total of public holidays in this State to 12.) How would the status quo or the 3 options affect independent retailers? (a) Easter Sunday and the current arrangements for the day before the AFL Grand Final The RIS states that making Easter Sunday a public holiday is significant to the community due to its religious significance. It is also suggested that the apart from any religious significance it would provide an opportunity to families to be together at this important time of the year. These arguments in favour of an additional public holiday for Easter Sunday may be sound in some respects because no one underestimates the value of celebrating religious events, or the value of family life. However, there is also the issue that a large proportion of the community does not celebrate Easter as a religious time or that family commitments would necessarily be altered if the current arrangements are changed. Families do spend time together at weekends but that applies on any Sunday throughout the year. 1 Regulatory Impact Statement on proposed new public holidays in Victoria as advisor to the Victorian Department of Economic Development Jobs, Transport and Resources. (July 2015) © Master Grocers Australia 2015 Page 3 of 6 In fact the real issue is that many people will continue to work in restaurants and shops on Easter Sunday and receive the current penalty rates if the situation remains unaltered, but the Government is ignoring the financial burden that will be placed on businesses if another public holiday is added at Easter. If Easter Sunday becomes a public holiday and the shops remain open the only difference that will occur is that the employer will pay higher penalty rates. If the Government rationalises that the number of public holidays should not be increased at Easter time due to the cost burden then there is likely to be a more supportive approach from industry. It would be in the best interests of all parties if the Easter Saturday public holiday was transferred to the following day, Easter Sunday resulting in a more beneficial solution for all parties. At least in this scenario the employer would not be burdened by 2 public holidays in succession or an extra day. If the Government decides to add another public holiday to the Easter weekend many retail businesses will suffer massive losses and there will be a further downturn in the economy. (b) Option 1 If Easter Sunday is added to the number of public holidays it would mean that retailers would be required to pay penalty rates on Easter Saturday and Easter Sunday. In addition the payment of public holiday rates would be required on the AFL Grand final Eve. Two additional public holidays would be a prohibitive cost, placing a massive financial burden on small business. Payment of public holiday rates on Easter Sunday will result in immense increase in the cost to each independent supermarket and liquor outlet in Victoria. The current rate for an adult employee under the General Retail Industry Award on a public holiday is $47.47 per hour and for a casual adult employee the rate is $52.21 per hour. Penalty rates for either a full time or casual employee on Sunday is $37.97. The increased cost for a full time employee under the proposed changes means an increase of $9.50 per hour for a full time employee or an additional $12.76 per hour for a casual employee. It means that the cost of doing business for an independent retailer will be seriously challenged if the Sunday is added as an additional public holiday and threaten the ability of the employer to operate a sustainable business. A public holiday on the AFL Grand Final Eve is without precedent. Traditionally, Christmas day, Boxing Day, New Year’s Day, the Easter period, Queen’s Birthday, Melbourne Cup (Melbourne only), Australia day, Anzac Day and Show Day are public holidays in Victoria that reflect historical, special or religious reasons. The inclusion of a public holiday for a football match appears inconsistent with reasons for other public holidays in the Victorian calendar. There is no apparent model, nationally or internationally, that has a public holiday for a football match. There is no doubt that the event is a significant one, but whether it is worth the economic impost that would inevitably be inflicted on businesses is dubious. (c) Option 2. There is no certainty about when a “delayed” implementation of the proposed Grand Final Eve public holiday might be and in any event a delay does imply that this is what Victorian businesses might expect to have happen in 2016. The increased cost might not impact businesses immediately but they are likely to occur in the not too distant future. Once again MGA supports the change of the Saturday Easter public holiday to Easter Sunday but requests that if the Victorian Government decides to delay the implementation of the AFL Grand Final public holiday so that greater consideration of its financial impact be considered throughout the year.