The Turnbull government and its new industrial relations minister Michaelia Cash need look no further than Western Australia to examine what happens when workers lose penalty rates. The Turnbull government believes the abolition of penalty rates will create more jobs. The prime minister believes we live in a seven-day economy, that Sunday is the same as Wednesday.



Western Australian workers have heard all this before, when in 1993, the Court Liberal government introduced the Workplace Agreements Act under the mantra of “jobs and choices.”

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This act enabled employers to undercut award wages, including rates of pay, overtime, penalty rates and working hours. These individual agreements only had to meet 10 conditions and could be just one page long.

New employees had no choice but to sign if they wanted a job as the act covered all Western Australian workplaces.

The independent umpire was cut out of the act as the minister determined minimum rates of pay. Rates of pay and conditions of employment in many sectors spiralled downwards, the only winners were the profit takers.

Workers and the community were told “flexibility” was essential if we were to be competitive and create more jobs. This flexibility was all about wages and conditions.

The key reforms being argued by the Turnbull government, including the abolition of penalty rates, failed under the Court Liberal government.

The Productivity Commission is recommending a two-tiered system of penalty rates. There are those, according to the Productivity Commission, who deserve penalty rates and those who don’t. Somehow if an emergency service worker misses out on family time on the weekend, that should be compensated, but that same consideration does not extend to retail, hospitality, aged care workers or the cleaning or security industry to name just a few.

Around 4.5 million Australian workers rely on penalty rates. Emergency service workers, hospital and health workers, doctors and nurses, the manufacturing sector, police and many other workers.

It is no coincidence that the government, the business lobby and employer associations are creating a conversation about abolishing penalty rates paid to workers in particular industries, namely hospitality and retail.

I argue it’s for two reasons; first, there is still a gender divide across the Australian labour market and a gender pay gap of 26.1% in Western Australia against the national average of 17.1%. Women in Western Australia and across the country are going backwards in terms of pay and women are clustered in the sectors where the government wants to slash penalty rates.

Second, many believe hospitality and retail jobs are the jobs you do on your way to securing a better job. Yet many employers want mature workers over a weekend because they value customer service and/or product knowledge. There are many workers across hospitality and retail who have made these jobs their careers and many are women.

The government appears to think these female workers are an easy target. And since they have little bargaining power and low rates of unionisation across many of these small workplaces, maybe they are.

Make no mistake: if the government is successful in lowering penalty rates in hospitality and retail, it will flow onto all sectors of the labour market and penalty rates will be lost or lowered forever.

These same sectors were the areas where individual agreements in Western Australia flourished: low paid, insecure work with employees who have little or no bargaining power. These workers were targeted and were more vulnerable to the new agreements which cut their wages and conditions, including penalty rates.

A paper by Janis Bailey and Bob Horstmann examined industrial reforms in Western Australia from 1993 onwards. The paper, titled Life is Full of Choices, reported that more than 50% of agreements in these sectors reduced or eliminated significant conditions such as penalty rates, overtime and leave loading. And as second generation agreements came in, there was a fivefold increase in agreements which offered below award rates of pay.

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So what happened to Western Australian unemployment under the Court Liberal government’s individual agreements regime from 1993 to 2002? Nothing, absolutely nothing. No marked increase in new jobs. Western Australian labour market trends were the same as other states and territories; states and territories which did not experiment with their labour laws, did not turn labour law over to the vagaries of the market.

So despite the rhetoric and wild claims of Turnbull that reducing or abolishing penalty rates creates more employment, it’s simply not true. The test was Western Australia, which is incidentally the home state of the new industrial relations minister.

Just as harsh industrial relations laws ended the governments of Court and Howard and saw a prime minister lose his seat, Australians will not stand for a prime minister and his government who tinker with penalty rates.