Cutting penalty rates would exacerbate inequality and disadvantage, the Australian Council of Trade Unions has warned, as a cabinet minister reopened the controversial debate by urging a rethink on the existing penalty system.



The energy and resources minister, Josh Frydenberg, told Channel 10’s The Bolt Report on Sunday that the government was re-examining industrial issues, including penalty rates.

When pressed by host Andrew Bolt on whether the government should cut Sunday rates, Frydenberg answered: “It’s an area to look at”.

The energy minister’s comments come just days after the new prime minister, Malcolm Turnbull, indicated that cuts to Sunday rates may be on the cards.

“All of these matters are under consideration but it is very important that we proceed in an orderly way,” he told Sky News last week.

Frydenberg said that cutting rates could mean more jobs and a stronger economy, but the ACTU refutes that.

In its submission in response to a draft report by the productivity commission on workplace relations, the union questioned whether cutting rates would actually lead to more jobs.

Instead, it argued that the lowest paid workers are the ones most likely to feel the pinch of the removal of penalty rates and loading.

“The productivity commission makes clear that it understands that its preferred losers are the workers who are already at the sharp end of Australia’s inequality problem, and it even accepts that the penalty rate cuts it advocates for are not expected to improve business profitability,” the ACTU submission said.

Inequality is the “elephant in the room”, the unions warn.

“Australia’s workplace relations system is a crucial plank in the bulwark against growing inequality but it needs strengthening, not weakening,” the submission said. “We are concerned that many of the recommendations in the productivity commission’s draft report will compound people’s existing disadvantage and contribute to a more unequal society overall.”

Cutting Sunday rates for workers in the entertainment, hospitality and retail sectors, while retaining them for other industries like health care and emergency services, was one of the 46 recommendations unveiled in the productivity commission’s draft report into workplace relations last month.

The trade unions drew parallels between the proposed changes and the unpopular Howard-era WorkChoices policy, which former prime minister Tony Abbott famously described as “dead, buried and cremated”.

Malcolm Turnbull last week signalled a change in tone from his predecessor on industrial relations, promising a more flexible and productive workforce without having to “wage war with unions”.

The Senate has twice voted down legislation that would impose tougher oversight on union officials. The registered organisations bill is now a potential double dissolution trigger for the government.

The productivity commission’s final report on workplace relations is due to be handed down in November.