Was it a cut with benefits?

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Have penalty rate cuts led to more jobs in small business? It seems no one knows, if recent Senate Estimates questioning is any guide

Kate Carnell, former Pharmacy Guild of Australia ACT branch president, has experienced a gruelling questioning during recent Senate Estimates hearings in her current role as the Australian Small Business and Family Enterprise Ombudsman.

Ms Carnell was called to defend her previous claims that cuts to penalty rates would create jobs in a range of sectors, including community pharmacy.

At last week’s Education and Employment Legislation Committee estimates hearing, Senator Tony Sheldon (ALP, NSW) questioned Ms Carnell over the impact of penalty rates cuts, and whether the claimed benefits had emerged.

“Given that it’s been some years now since penalty rate cuts have come into effect, are you able to explain to the committee how many extra jobs have been created in retail, then in fast food, then in hospitality and then in the pharmacy sector?,” he asked.

In response, Ms Carnell said she had no such evidence, the collection of which fell outside her responsibilities.

“That’s outside our remit,” she said. “Our job is to support small businesses, advocate on their behalf and
handle their complaints when they have them”.

Senator Sheldon pointed out that her “organisation” had supported the cutting of penalty rates.

Ms Carnell responded: “Absolutely, because small business have told us on many occasions that the issues surrounding penalty rates are complex and stand in the way of them opening longer hours, particularly on Sundays and on public holidays, and as our job is to advocate on behalf of small businesses, that’s why we took that position”.

“So you’ve made an assertion [that extra jobs have been created] but haven’t tested it?” the Senator asked in reaction to this, before asking Ms Carnell if she agreed with argument from the Reserve Bank and from economists that wage stagnation was having a detrimental effect on the economy and if she thought this “would have an effect on small business”.

Ms Carnell said minimum wage rises in recent years had meant that many small businesses weren;t likely to “perceive that wages in their businesses have been stagnant as their staff have had wage increases close to double inflation”.

“A number of those workers in those industries I mentioned—retail, fast food, hospitality and pharmacy—have had substantial wage decreases,” Senator Sheldon countered.

“As the Reserve Bank says about stagnation, there is an important nexus between the capacity to spend money and those small businesses. I’ll rely on the Reserve Bank to argue the case, and it says that there is serious concern”.

Ms Carnell said the response was decided upon by the independent arbitrator – the Fair Work Commission – and was not due to lobbying by the “29 industry associations that are part of our policy group”.

For more on the cuts to penalty rates, which took place in late 2017, click here.

For more on the impact of the cuts, go here

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1 Comment

  1. pagophilus

    Just like privatisation was supposed to lower electricity prices.

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