Regional and rural Australia needs jobs, not flawed analysis on penalty rates

Source: ACCI Tue 16 May 2017 

Research released today on penalty rates by the McKell Institute, a Labor and union-aligned think tank, is flawed and ignores the plight of more than a quarter of a million Australians living in rural and regional areas who are looking for work, the Australian Chamber of Commerce and Industry said today.

Scott Barklamb, the Australian Chamber's Director of Workplace Relations Policy, said: “Sunday penalty rates were deliberately set high in the past to discourage employers from offering Sunday work. That’s why they were called penalty rates – to penalise employers who opened on the traditional day of church and rest.

"But in today’s Australia, they are making it harder for employers to give young people a go. This has to change, and rural and regional communities need help in kick-starting job creation.

“Research out today by the McKell Institute is part of a broader political campaign to undermine the Fair Work Commission’s decision on penalty rates. The research has fundamental flaws that damage its credibility and relevance.

“The analysis wrongly assumes that no shops, cafes or pubs will open for additional hours following a moderate reduction in Sunday penalty rates. This ignores the Fair Work Commission’s finding that the new rates will deliver more jobs, more hours of work and increased access to services on Sundays.

“The report misunderstands one of the biggest issues facing rural and regional Australia: unemployment. Regional communities desperately need jobs, particularly for young people, yet this report supports perpetuating measures that make it harder for businesses to employ young people.

“Job prospects for young people in rural and regional Australia are particularly alarming. The five highest youth unemployment regions in Australia are Outback Queensland (41.1 per cent), Wide Bay (24.7 per cent), Southern Highlands and Shoalhaven, (24.1 per cent), Townsville (21.7 per cent) and Cairns (21.0 per cent). In total there are 247,800 people in regional areas who are looking for work.

“We need more avenues into employment in regional and rural communities. Changing Sunday penalty rates is one of the important ways to encourage jobs growth.

“We encourage the McKell Institute to focus on policy analysis that helps rural and regional communities to create jobs, rather than helping trade unions perpetuate outdated approaches to weekend work that will deny opportunities for work in regional and rural communities.”


Flaws in the McKell Institute's “Unfair Burden: The Impact of Sunday Penalty Rate Reductions on Regional and Rural Australia”

The report appears to assume that absolutely no shops, cafes, or pubs will open for additional hours following the penalty rate reduction, no new jobs will be created, and no employee will either increase or maintain their disposable income from additional Sunday work. This is directly at odds with the conclusions of the Fair Work Commission (following 39 days of hearings, 143 witnesses, and 5,900 submissions).

The report appears to assume that all employees who work on weekends work on Sundays, ignoring that in many regional towns businesses only open on Saturdays (often only Saturday mornings) and not on Sundays. (p.16)

The report appears to assume that all employees who work Sundays work 52 Sundays per year.

The report appears to assume all employees working on Sundays work eight-hour shifts. This is not a “conservative estimate” (p.15); it seems a significantly exaggerated assumption.

The report appears to ignore the diversity of rural and regional Australia and applies the same assumptions and behaviours in each electorate.

The report appears to assume that any and all benefits from the moderate reduction in rates would be taken out of rural and regional areas where possible, without any reinvestment into additional staffing or additional opening hours.

The report relies on data that is up to six years old. (p.15)