By Latika Bourke
Prime Minister Malcolm Turnbull has suggested it is inevitable Sunday penalty rates will be reduced but said there would need to be widespread acceptance from workers that they would not be left worse off.
Mr Turnbull on Tuesday described the Sunday penalty rate, which is double a regular hourly wage compared to the Saturday time-and-a-half rate, as a hallmark of the old economy.
"The only reason they're different, I assume, is history," Mr Turnbull told Melbourne radio 3AW.
"I think over time you will see a move to a more flexible workplace the transition to that …" Mr Turnbull said before host Neil Mitchell interjected: "It's a seven day economy isn't it?" "Of course it is," the Prime Minister agreed.
Malcolm Turnbull says weekend penalty rates are a hallmark of the old economy.Credit: Sahlan Hayes
Mr Turnbull said it was important that he as Prime Minister empathised with unions and their workers whom he said were "naturally reluctant" to give up their benefits.
"If you want to get the support of workers and unions … then you inevitably would have to persuade them that in net terms they'd be better off," he said.
"And any reform has got to be able to demonstrate that people are certainly not going to be worse off and, overall ideally in net terms, better off," he said.
Mr Turnbull did not specify what would constitute a no-worse-off test. Liberals and business have previously argued reducing double-time Sunday rates for the tourism, retail and hospitality sectors would spur jobs growth and help bring down Australia's high youth unemployment rate, which has been stuck above 13 per cent since April 2014. This is the highest youth unemployment has been since 2001.
Malcolm Turnbull Credit: Andrew Meares
The Prime Minister's comments on Sunday penalty rates are his strongest since he signalled the issue would be up for consideration by his government, shortly after he ousted Tony Abbott as leader. Since then, Resources Minister Josh Frydenberg has advocated cutting Sunday penalty rates providing the move boosted the economy. Employment Minister Michaelia Cash has also said high Sunday loadings "deter weekend work" but promised to take any changes to an election. New Treasurer Scott Morrison has been the sole cabinet minister to publicly scotch the idea, citing low wage growth as a barrier.
The productivity commission, which is investigating the industrial relations system, has recommended bringing Sunday loadings into line with Saturday for the retail and hospitality sectors only.
But unions say those on penalty rates are among the lowest paid and any cuts would unfairly hurt those on lower incomes.
Mr Turnbull said one way of compensating lower paid workers could be through the tax system through incentives or credits.
He said "over time" the government wants to reduce the amount of tax it takes as a proportion of gross domestic product but hinted this would only be achieved by growing the economy rather than cutting the tax take, because of the deficit.
Mr Turnbull said everything was on the table when it came to tax reform but said the government did not intend to make changes that would "unsettle the market".
He said the key was making sure the government collected tax more efficiently.
"There are a lot of changes that can be made to the tax system which can improve the efficiency of the system."
Penalty rates were a political no-go zone for the Coalition under the leadership of former Prime Minister Tony Abbott, who was haunted by John Howard's election defeat in 2007, partly due to Workchoices. Unions are threatening to revive their campaign against changes to workplace conditions and say it could be bigger than the one waged nearly a decade ago.
The Labor Party is also challenging the government to go to an election on the issue, believing the community backlash will see the Coalition suffer at the ballot box.
Labor leader Bill Shorten said on Monday penalty rates were the difference for a family being able to afford to send their children to a private or public school.
On Tuesday Mr Shorten said: "Labor believes that people who get penalty rates are not people who are doing the wrong thing."
"Tony Abbott said on 3AW that WorkChoices was 'dead, buried and cremated.' Malcolm Turnbull today has gone on 3AW and given WorkChoices the kiss of life," he said.
ACTU President Ged Kearney rejected the idea that Sunday penalty rates don't belong in the modern economy.
"We're very worried that the Prime Minister thinks penalty rates are a historical anomaly - people depend on them and weekends are a part of people's lives," Ms Kearney told Fairfax Media.
Ms Kearney said the idea of tax credits would see Australia copy the United States and shift the onus of paying wages from employers to consumers and advocated instead boosting the tax-free threshold or raising the minimum wage.
She pointed to awards struck where unions had agreed to trade penalty rates for a higher base salary but said employers would never back increasing the minimum wage.
"Across the board, we know employers would not accept raising the minimum wage - Kate Carnell [from the Australian Chamber of Commerce and Industry] has never coupled her calls for reductions in penalty rates with an increase in the minimum wage."