ACTU says the personal income-tax cuts will not be enough to offset the drop in earnings for many workers

Pay rise for politicians as penalty rates trimmed further in hospitality and retail

Australia’s federal politicians, senior public servants, and members of the judiciary will enjoy a 2% pay rise on Sunday, while hospitality and retail workers will see their penalty rates cut for the second year in a row.

Large taxation and wage changes will affect millions of people from 1 July, the start of the new financial year.

The independent Remuneration Tribunal decided last month to award federal politicians a 2% pay increase from 1 July, matching a 2% rise in July last year, and a 2% rise in January 2016.

Malcolm Turnbull will enjoy a weekly pay rise of $203 next week, worth more than $10,500 a year, lifting his annual salary to more than $538,000.

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The Treasurer, Scott Morrison, will see his annual pay increase to more than $388,200, and the pay of the Labor leader, Bill Shorten, will rise to $384,000.

The annual base salary of a federal backbencher will increase from $203,000 to $207,000.

But workers in the hospitality, fast food, pharmacy and retail industries will have their penalty rates cut on Sunday.

It follows a decision by the Fair Work Ombudsman last year to cut rates for public holidays, and steadily reduce penalty rates for the next four years, for award-dependent workers in particular industries.

On Sunday, full-time and part-time workers in the hospitality industry will have their Sunday penalty rates cut by 10%, while causal workers will continue to receive the same rate.

In retail, full-time and part-time workers will see their Sunday penalty rates cut by 15%, while casuals will lose 10%.

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For fast food workers, the penalty rates will drop 10%, and pharmacy workers face a 15% cut.

The cuts in penalty rates coincide with the first stage of the Turnbull government’s $144bn, seven-year personal income tax plan, which rolls out this weekend.

Workers earning up to $125,000 a year will receive a tax rebate between $200 and $530, depending on their income, when they file their 2018-19 tax return next year.

Those earning more than $87,000 will also receive a tax cut, because the top threshold of the 32.5% tax bracket will be increased from $87,000 to $90,000 from 1 July.

The Australian Council of Trade Unions says the personal income tax cuts will not be enough to prevent some workers being worse off.

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Grade 5 cooks earning $54,514 will gain $530 from the tax rebate, but could lose $1,000 from the cut in Sunday penalty rates, and $232 from last year’s cut to public holiday penalty rates, leaving them $702 worse off overall.

Permanent pharmacists will gain $530 from the tax rebate, but could lose $1,693 from the cut in Sunday penalty rates, leaving them worse by $1,163.

The ACTU says polling shows voters in the electorates of Swan and Hasluck in Western Australia, Flynn and Capricornia in Queensland, and Dunkley and Corangamite in Victoria, are concerned about the four-year program of penalty rate cuts.

It asked ReachTel to conduct the polling on 25 June, using an automated telephone-based survey system, under which the numbers and the person within the household were selected at random, and the results weighted by gender and age to reflect the population according to ABS figures.

ReachTel asked voters: “The Labor party has introduced a bill to federal parliament to restore penalty rates that could benefit up to 700,000 workers. Do you approve or disapprove of Labor’s plan to restore penalty rates?”

A majority of voters wanted the penalty rate cuts restored. Of the 1,161 voters surveyed in Capricornia, 48.6% strongly approved and 20.3% somewhat approved, while 31% somewhat or strongly disproved.

The results were similar in other jurisdictions – 65.2% approved out of 1,207 voters in Flynn; 56.3% approved out of 752 voters in Swan, 68.9% out of 910 voters in Hasluck; 70.5% out of 1,195 voters in Dunkley; and 65% approved out of 1,322 voters in Corangamite.

“The Turnbull government is cutting the pay of 700,000 people who rely on penalty rates at the same time as they’re delivering handouts to big business,” ACTU secretary, Sally McManus, said.



“It’s not surprising that the twin policies of taking away from working people and giving public money to big business are so unpopular. These ideas have been proven not to benefit the community. These are bad ideas.”

Last month, the Reserve Bank governor, Philip Lowe, warned a forum for central bankers in Portugal that “the relationship between wages and unemployment looks to have changed” because historically the current level of unemployment should see Australia with wage growth of about 3.7%, but it was stuck about 2.1%.

He also referenced a research paper on productivity, wage growth and unions, of which he said “the evidence is pretty compelling – changes in industrial relations arrangements in Germany have affected wage and employment outcomes and the Australian experience is very similar to the German one. It’s hard to escape the conclusion that changes in industrial relations has changed the inflation process.”

On 1 July, the minimum wage will increase by 3.5% to $18.93 per hour, following a Fair Work Commission ruling last month.

It means the national minimum wage rises to $719.20 per week, an increase of $24.30 on the basis of 38 ordinary working hours a week.