TRANSCRIPT PENALTY RATES AND FAIR PAY SELECT COMMITTEE Inquiry into penalty rates and fair pay Melbourne — 26 April 2017 Members Ms Gabrielle Williams — Chair Mr Sam Hibbins Mr Robert Clark — Deputy Chair Ms Dee Ryall Ms Lizzie Blandthorn Ms Natalie Suleyman Mr Josh Bull Witness Ms Ged Kearney, president, Australian Council of Trade Unions. 26 April 2017 Penalty Rates and Fair Pay Select Committee 1 The CHAIR — I welcome Ged Kearney, president of the ACTU. I will start by making clear that all evidence taken by this committee is protected by parliamentary privilege. Therefore you are protected against any action for what you say here today, but if you go outside and repeat the same things, including on social media, those comments may not be protected by this privilege. All evidence given today is being recorded by Hansard, and you will be provided with a proof version of the transcript for you to check as soon as possible. Verified transcripts, PowerPoint presentations and handouts will be placed on the committee’s website as soon as possible. For those media representatives among us, we welcome you. We remind you of the following guidelines: that cameras must remain focused only on the person speaking; operators must not pan the public gallery, the committee or witnesses; and filming and recording must cease immediately at completion of the hearing. Broadcasting or recording of this hearing by anyone other than accredited media is not permitted. We invite you to give a 5 to 10-minute presentation, after which time members of the committee will ask you questions, usually in the form of a substantive question followed by a supplementary question. Just as a reminder, you may be familiar with the terms of reference of the committee, but in a nutshell it is to examine the social and economic impacts of the Fair Work Commission’s decision to cut penalty rates. I am sure you have read the terms of reference; if not, we can provide those to you. I welcome you and ask you to start your presentation. Ms KEARNEY — Thank you very much. My name is Ged Kearney. I am the president of the Australian Council of Trade Unions, and I thank you very much for inviting me to speak to your inquiry on behalf of our 1.8 million members today. I would like to give a little overview of our view of the penalty rates decision itself. I would like to go to some legal advice about the implications for the wider workforce of that decision, beyond the ones mentioned in the decision itself, and then perhaps talk a little bit about community expectations with regard to penalty rates, if that is okay. In the decision the Fair Work Commission determined that Sunday penalty rates will be in general cut by 25 percentage points in those awards that I am sure you are aware of. The cuts apply, except under hospitality, to both permanent and casual employees. Under the fast-food award the cuts apply to level 1 employees, who are by far the predominant class of employees in that industry. Full-time and part-time employees under the retail award and the pharmacy award will see their Sunday penalty rates cut by 50 percentage points. As well as Sunday penalty rates, the commission has determined to cut public holiday rates in those awards, as well as the clubs awards and restaurant award, by 25 percentage points. These cuts will affect some of the lowest paid workers in the country, and it comes at a time when wage growth is at a record low and inequality in Australia is at a 75-year high. We estimate that there are approximately 700 000 award-covered employees in the retail and hospitality industries, and according to the data referenced in the decision, an average of 52 per cent of workers in the affected industries work weekends — and that data is available. These workers face a direct cut in weekend and public holiday penalty rates if the decision is implemented. A further approximately 700 000 are covered by enterprise agreements, and many of these workers are also likely to see their penalty rates reduced when the enterprise agreements they are covered by are renegotiated. This is not a distant possibility as many EBAs covering some of the largest chains in the affected industries are already past their nominal expiry dates or due to expire and hence are up for renegotiation, including large agreements like Coles, Myer, Woolworths and Officeworks. Some employers are already moving to take advantage of the cuts before the decision is even implemented. The kikki.K enterprise agreement was in the media recently for its inclusion of a mirroring clause that locks in those cuts already, ensuring that the rates will drop automatically when the decision to cut penalty rates takes effect later. The impact of the decision on hospitality and retail workers will be harsh. In the decision the commission acknowledged that the planned reduction in Sunday penalty rates will result in a significant loss of pay to retail and hospitality workers who work on Sundays and that it accepts that these workers are indeed low paid. The commission also found that hospitality, retail and food services have in fact, and I quote, ‘the largest proportion of low-paid workers in Australia’. These workers are more likely to be women, award reliant, part time and employed on a casual basis. Many hospitality employees earn just enough to cover their weekly living expenses. 26 April 2017 Penalty Rates and Fair Pay Select Committee 2 Saving money is difficult. Unexpected expenses such as school trips, illness, or repairs, can produce considerable financial stress. That too is a direct quote from the decision. One witness — for example, Ms Gordon — gave evidence in the proceedings that she earned between $357.90 and $362.50, and the proposed cuts would reduce her income by between $25 and $40 a week, leaving her very ‘little margin for error in her spending’. The commission found that the reduction will have an adverse impact on the earnings of those hospitality industry employees who usually work on a Sunday, and it will have a negative effect on their living standards and on their capacity to meet their everyday needs. Fast-food employees are more likely to reside in a lower income household and are more likely to experience financial difficulties. Again, that was recognised by the commission. Retail employees and their households face greater difficulties in raising emergency funds and their financial resources are limited. And, as a result of the decision, most of the hospitality and retail employees who work on Sundays will receive a wages cut. Some will have to work more hours to make up the lost pay, whilst others will be unable to and others will be offered less hours than they received previously. The ACTU has calculated, for example, that full-time fast-food level 1 workers employed on the award working Sundays would lose $38.88 every Sunday, an effective reduction of around 16.6 per cent in their Sunday hourly rate of pay and equates to around $2022 per year. Full-time pharmacy assistants would lose $77.77 per Sunday, an effective reduction of 25 per cent of their Sunday rate of pay and around $4043 per year. We have had some legal advice because we are concerned that the decision has the potential to undermine penalty rates in other industries as well. We sought advice from Maurice Blackburn as to what extent the decision could open the door to penalty rates being cut in other industries. The advice which we received confirmed that even though the commission indicated that the hospitality and retail industries are distinguishable from other industries and there is not necessarily a case for reduction in other industries, many of the commission’s findings are applicable to those awards. For example, the following findings are fact and law, and Maurice Blackburn said are all applicable to other awards: (a) entry-level jobs for relatively unskilled or young people justifying a reduction in Sunday penalty rates (b) consumer expectations of weekend and public holiday service justifying a reduction in penalty rates. I am listing these as things that can apply to other awards that was the decision for cutting the rates in this instance. The potential increase in employment opportunities justifies a reduction in penalty rates, this utility for employees not preventing the reduction in penalty rates. Even if women were disproportionately affected, the principles of equal or comparable value would not be enlivened, therefore not preventing a reduction in penalty rates, and employees earning just enough to cover weekly living expenses did not prevent a reduction in penalty rates. All these findings are potentially applicable to other awards. The commission also stated that each review application will be assessed on its merits. However, this decision has relied on principles which are likely to be relied on in future decisions, hence it opens the door to reducing penalty rates and loadings in other awards in the future. The advice says that each review application will be assessed on its merits, signifying that they will hear other applications for reductions of penalty rates. It goes on to say that a significant factor in the commission reaching its decision to reduce penalty rates is the apparent rise in consumer expectations for services to be available on weekends and outside of normal hours, and that hence there does not appear to be any impediment to such reasoning being applied to other sectors. We have some lists of other sectors that our advice gave us.