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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Hospitality penalty rates killing our weekend cafe society

Wednesday, May 08, 2013

Penalty rate hikes in awards, particularly weekend and public holiday rates, are causing Australia to undergo a backward revolution. It's a step into the past by stealth. Restrictive trading hours are being imposed through the mechanism of business-breaking cost hikes.

The consequence is that business is closing down, literally. Tourists are being told to go away. The weekend cafe latte society, or a lazy Sunday brunch is apparently no-go under the dictates of the so-called Fair Work industrial relations system.

The evidence starts with a deserted, newly renovated restaurant and bar in a prime tourist location at Circular Quay in Sydney. Following a multi-million-dollar upgrade, the restaurant of this international hotel chain was closed most of Easter and is closed most of every Sunday. The reason is weekend penalty rates. This top priced, international hotel can't make money on Sundays. Staffing is too expensive.

Think of the consequences. High paying international visitors land in Australia's prime tourist and business location and can't obtain a meal at their hotel. What an unfunny joke! Consider Australia's international reputation. Our high dollar makes us an expensive location yet we can't provide basic services when people need them. This means fewer travellers and less income for Australia. It means fewer jobs.

The Circular Quay example is just one story repeated across our continent. Tourist and hospitality businesses, from corporate enterprises to local coffee shops, are shutting on Sundays. Little by little, the society that we are is being undone.

Australia is a 24/7 society. Football is no longer exclusively played on Saturdays. Sundays are no longer the family roast. Yet there are people who want to re-create this vision of old.

Remember the days when there were big fights over extending retail shopping hours? In Western Australia the fight continues. The Liberal Barnett government is changing shopping hours. The WA Labor opposition fought to retain restricted hours. Australia's unions, with the keen backing of the Gillard government, are reimposing restricted business hours nationally. Their technique is dishonest.

It's not necessary to pass laws directly banning weekend business activity. Labor instead is using the tactic of making weekend business too expensive to operate.

They are running a sham argument about workers' rights. They lie. The basic right every worker has is a job. Labor's weekend penalty rates take away that right. If a business can't afford to open on a Sunday there is no job. The issue is fundamental to the type of society Australians have and want to have. We have shifted from the nine to five, Monday to Friday humdrum routine of the 1950s. We've become more exciting, entrepreneurial and active any time and any day of the week. We've done this by our choices. Labor doesn't like our choices and is forcing us into something else.

Why not instead conceive of workplace laws that only require penalty rates once you'd worked more than (say) 38 hours in a seven-day week. It makes common sense. The law would then let people do what they already want to do, shop, play, study, travel and work any time, any day. Businesses could afford to provide services when people want them. There would be more jobs.

But through their industrial relations system Labor is imposing a different society. It's another example of a disconnect from ordinary Australians.
Anonymous commented on 08-May-2013 08:40 PM
I am an owner of a cafe/wine bar in Melbourne suburbs and we've been struggling with the horrors of penalty rates since we opened a year ago. What a nightmare.

One thing you didn't mention which affects us competitively is that few businesses are paying the correct penalty rates. My co-owner and I are new to the hospitality game, but cash-based businesses are alive and well in Australia!

Just from talking to our staff (whose first question on joining us was "How much do I get in cash?") we know what is happening at our competitors. Often cash payments help staff who want to avoid Centrelink issues, but they also allow owners to avoid being ordered for failing to comply with industry awards.

In my view, costs and consequently pricing of goods etc would skyrocket if doing the right thing (paying award wages, super etc) was common place - and if our area is anything to go on it is not.

Obviously this sort of thing was going on before Fair Work and the new hospitality award - but it has only got worse forcing people to dodge their obligations - which we won't.

We closed Easter accordingly.
Anonymous commented on 09-May-2013 09:42 AM
One of my business associates runs a small metal recycling yard. Finding the award part time hourly rate for hiring labour to be uneconomic he pays piece rate in cash to two youths for dismantling ewaste ready for recycling.

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