Labor warned gig economy reforms will drive up costs of rideshare and food delivery

Australians will have to pay up to 35 per cent more for rideshare and food delivery services – which would push a humble cheeseburger meal above $22 – under Workplace Minister Tony Burke’s controversial gig economy reforms.

Australians will have to pay up to 35 per cent more for rideshare and food delivery services – which would push a humble cheeseburger meal above $22 – under Labor’s controversial gig economy reforms, new research has found.

Higher prices would reduce demand by as much as 19 per cent, leaving workers using platforms such as DoorDash, Uber Eats or Didi with less hours and slashing up to $376 million in small businesses sales a year, economists behind the report from Pragmatic Policy Group have warned.

The Coalition has criticised Labor’s industrial relations proposal as the “last thing our economy needs” in a cost of living crisis, and is urging crossbench Senators to vote against the bill when parliament resumes from next week.

Under the federal government’s plan, the Fair Work Commission (FWC) could apply conditions such as penalty rates for specific times, minimum pay standards, or protection against ‘unfair deactivation’ for workers in the gig economy.

Labor has claimed its changes improve conditions while maintaining the flexibility and consumer benefits of the sector.

New economic analysis has found rideshare and food delivery workers will have less available hours due to a drop in demand fuelled by higher costs. Picture: Monique Harmer

But the new research, commissioned by DoorDash, has found the cost of services would go up between 12 and 35 per cent, depending on if platforms passed on 25 to 75 per cent of the additional costs of extra conditions “comparable” to existing industry awards expected to be applied by the FWC.

This would increase the cost of a McDonalds cheeseburger medium meal delivered in Sydney’s CBD from $16.87 currently to as much as $22.77.

Takeaway costs would increase by between 12 and 35 per cent under Labor’s changes, according to a new report. Picture: Supplied

Analysis of the current gig economy workforce in food and transport found the total amount of work available for delivery and rideshare drivers and riders would fall by up to 864,000 hours per week as Australian customers spending dropped between $770 million and $1.2 billion annually.

Pragmatic Policy Group lead economist Oliver Browne said Labor’s proposal would overall lead to “higher prices for consumers, lower earnings for workers, a decline in sales for small businesses and a reduction in economic activity across a number of Australian industries”.

“If the government’s gig reform legislation passes the parliament … on-demand platform workers could lose over $400 million per year in income,” he said.

Employment and Workplace Relations Minister Tony Burke has rejected suggestions prices will soar under Labor’s gig economy changes. Picture: John Feder/The Australian.

Employment and Workplace Relations Minister Tony Burke described the report’s figures as “wild” and said it was “no surprise” US researchers would not want Australia to set a precedent with minimum standards.

“We decided a long time ago that Australia shouldn’t be a place where you have to rely on tips to make ends meet,” he said.

A previous Victorian inquiry found underpayment of between $3 and $5 an hour for gig economy workers, which when spread across multiple deliveries would not have a significant impact on consumer cost.

Last year Mr Burke said if there was a “tiny bit extra” added to the cost of a pizza it would be a “small price to pay” if it meant the delivery worker was safer.

Opposition employment and workplace relations spokeswoman Michaelia Cash said the government must “heed the warning” its IR changes will lead to “job losses in the gig economy and higher prices or consumers”.

“This is the last thing our economy needs,” she said.

“I call on Senators to reject these extreme changes when they come before the Senate next week.”

As a vote in the Senate looms, the app DoorDash is launching an advertising campaign on Thursday highlighting experiences of some of the more than 135,000 Australians who earned income on the platform last year.