Penalty rate cut will depress Australia and help to destroy the Turnbull government

Scene from protest at Ann Sudanis' office
Contributed by Joe Montero

It is obvious that the move by the Turnbull government to cut penalty rates for many Australians is producing a backlash.

This should not be surprising, given a large proportion of families are directly affected.

Just a few days ago,   residents in Nowra, on New South Wales’ south coast, fronted the office of Gilmore MP Ann Sudmalis, as part of an ongoing local campaign.

This is symbolic, because people are starting to act up around Australia, reflecting the feeling against the ruling against penalty rates,  the government appointed Fair Work Commission made about a month ago.

Ann Sudanis had foolishly made the comment that the ruling was a gift to young people, when they are the main one’s who will walk home with less pay. The hospitality industry is the present target and the main employer of Australia’s youth. Since her unfortunate  comment, she has been confronted by protests at every turn.

Having a paper-thin hold on her seat doesn’t help exactly help her. She stands out as a vulnerability of the Turnbull government, which is understandably nervous about the organising of opposition on the ground, in places like Nowra.

A recent survey of 2500 in the south coast has shown that the majority want penalty rates to stay as they are. Thisa might not be conclusive, but it is an indicator.

Tomorrow (20 June) there will be union organised rallies against the cut, which is to take effect on 1 July. The turnout is likely to be significant.

Penalty rates are being cut by a government that is continuing to peddle the argument that cutting the wages share will grow the economy. It may cut operating expenses for individual businesses, but for the economy, this will only add to downward economic performance.

In fact, the decline of the wages share in recent times has already had a dampening effect and in the face of this, the sensible thing would be to stop doing it. But the government is caught up between the short-sighted demand of its backers and sound economic policy. The irony is that this will rebound on its backers. This is the outcome of a rising irreconcilability between individual ambition and the collective need of business, let alone the rest of society.

This irrationality is behind the cut to penalty rates.

The hospitality industry is important, not just for its size, but because it is more labour intensive than most. Other industries have transferred a proportion of their costs away from labour through automation and the subsequent fewer doing the work that used to be performed by many more.

Hospitality, largely because it is composed of a much higher proportion of smaller businesses and its face to face nature, has had much more difficulty in doing this. It means that the industry has a special problem in terms of rising costs. This does need attention.

But cutting wages is not the way to go, especially when this industry particularly vulnerable to a fall in disposable income. Going out on an evening, that visit to the café or that little luxury item that will be the first to be sacrificed.

It would be much better for there to be government support in other ways, like tax breaks for smaller operators, access to cheaper capital, lifting of the cost of administering GST, to name just a few.

Unfortunately, such an approach does not fall in line with the continued obsession with neoliberalism, the logic of which, is to use the vulnerability of one industry, to eventually envelope all industries.

As this occurs. The economy will continue to degenerate, as living standards continue to fall for most. Opposition will continue to grow. In this respect, the Turnbull government is not only engineering the decline of Australia, but also ensuring its own fall.

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