Will cuts to Sunday penalty rates become a textbook example of unintended consequences?

ABC News, 23 February 2017:

Let's start by calling a spade a spade. Sunday penalty rates have been cut by the Fair Work Commission. Not "equalised" or "brought in line" with Saturday rates. Cut.

Business, big and small, has been seeking this cut for years, saying Sunday penalties are a legacy of a bygone era where families went to church — one that's costing them a tidy sum.

They also argue it's a legacy that's been costing jobs, with many employers choosing not to open on Sundays, or to maintain just a skeleton staff (although ask yourself, just how many retailers, restaurants, cafes and bars are actually shut on Sunday?).

But the cuts to Sunday penalty rates could become a textbook example of unintended consequences, where a move supposed to increase employment instead hurts the economy and increases business failures and job losses.

Why? Because the hundreds of thousands of retail and hospitality workers affected by this decision are also customers.

What do you think happens when you cut someone's pay packet by as much as 25 per cent for their Sunday shifts?

(For a typical permanent retail worker on the award who always works Sunday shifts this will cut their annual pay by about $3,500).

They either have to work more, or they have to cut their spending to match their new, lower wage.

Given that unemployment is stubbornly high at 5.7 per cent, and underemployment is near record levels, it seems unlikely they'll actually be able to get more work to make up the lost pay — and, remember, these staff already work Sundays, so it's not like they'll benefit from any increase in jobs on that day.

According to the Australia Bureau of Statistics (ABS) an est. 850,300 people were employed in the accommodation and food industry sector in November 2016 as their main job and another est. 1.25 million people have their main job in the retail sector [ABS 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Nov 2016].

An est. 54.7 percent of female employees in the accommodation/food industry work part-time and an est. 45.3 per cent males do likewise. While in retail an est. 54.6 per cent of females and 45.3 per cent of males work part-time.

In accommodation/food businesses part time employees work for an average of 16.1 hours while in the retail trade part-time employees work for an average of 16.7 hours.

Underemployment appears to be highest in the food and hospitality sector, third highest in the retail sector and females highest in both sectors. [Workplace Gender Equality Agency, Gender composition of the workforce: by industry, April 2016]

Females with only one job were more likely to work on weekends - 73% compared to 68% for males.

These statistics tend to confirm that “hundreds of thousands” of single person and family households will be hit by cuts to Sunday penalty rates as set out in the Fair Work Commission’s 4 yearly review of modern awards – Penalty Rates Decision covering Hospitality, Fast Food, Retail and Pharmacy Awards and, I have no doubt that their loss of income will affect local economies to a significant degree.

The reductions in Sunday penalty rates we have determined are set out below:

Award Sunday Penalty Rate

Hospitality Award full-time and part-time employees: (no change for casuals) 175 per cent -> 150 per cent

Fast Food Award (Level 1 employees only)

Full-time and part-time employees: 150 per cent ->125 per cent

Casual employees: 175 per cent ->150 per cent

Retail Award Full-time and part-time employees: 200 per cent ->150 per cent

Casual employees: 200 per cent ->175 per cent

Pharmacy Award

(7.00 am – 9.00 pm only)

Full-time and part-time employees: 200 per cent ->150 per cent

Casual employees: 200 per cent ->175 per cent

Local and regional economies on the NSW North Coast - where often low levels of employment opportunity combined with the fact that few hospitality/food outlets in tourism-orientated towns and none of the big retail stores currently close on a Sunday anyway - suggest that this wages cut will be nothing more than a straight forward cost saving for local businesses, with no or very little additional full-time, part-time or casual employment eventuating.

That a backlash to the Fair Work Commission decision appears inevitable is indicated by this online poll active on the day the decision was published:

http://www.smh.com.au/business/workplace-relations/penalty-rate-cuts-who-gains-and-who-will-be-hit-the-hardest-20170222-guj8bv.html

Narrabri Shire Council caught red handed

Clarence Valley readers might remember Narrabri Shire Council as one of those NSW local governments pushing to dam and divert the Clarence River and interested in creating a Yamba mega port.

Now they have apparently been caught red handed attempting to stack an online survey in favour of coal seam gas mining in the Pilliga area:

via @PilligaPush

UPDATE

The Northern Daily Leader, 2 March 2017:

Narrabri Shire Council will be forced to hire an independent reviewer, after both its general manager and mayor received code of conduct complaints for the same incident.

The complaints arose following an email sent out to all council staff, asking them to vote in a poll about coal seam gas in Narrabri.

Questions have been raised about who directed the email to be sent to staff, which council has so far ignored.

The Leader understands two councillors made a complaint against general manager Stewart Todd, after seeking advice from the NSW Office of Local Government, who informed them they were obligated to make a complaint if they believed the code of conduct had been breached.

Narrabri Ratepayers Association also made a code of conduct complaint against mayor Catherine Redding.

Normally when a code of conduct complaint is made against the general manager, the mayor would handle the complaint, and vice versa.

However, given both complaints relate to the same issue, the matter will be referred to an external independent conduct reviewer. 

Narrabri Shire Council refused to answer The Leader’s questions because of the confidential nature of the matter.

Office of Local Government documents indicate information that identifies the complainants is not to be disclosed, however, that “does not apply to code of conduct complaints made by councillors about other councillors or the general manager”.

The email in question was sent out to all council staff on February 9, implying employees should stack an online survey which asked “Do you want CSG in Narrabri?”

Company tax rate cuts in Australia and the banks that benefit

There has been some finger pointing in mainstream and social media of late over Labor’s use of $7.4 million as the amount banks would be able to retain under the Turnbull Government’s progressive cuts to the company tax rate included in the 2016-17 Budget.

According to the Australian Tax Office on 3 January 2016:

The government announced a reduction in the small business tax rate from 28.5 per cent to 27.5 per cent for the 2016–17 income year. The turnover threshold to qualify for the lower rate will start at $10 million and progressively rise until the 27.5 per cent rate applies to all corporate tax entities subject to the general company tax rate in the 2023–24 income year.

The corporate tax rate will then be cut to 27 per cent for the 2024–25 income year and by one percentage point in each subsequent year until it reaches 25 per cent for the 2026–27 income year.

Full report: Company tax cuts What the evidence shows

ABC News reported in May 2016 that Treasury Secretary John Fraser told Senate Estimates: The cost of these measures to 2026-27 is $48.2 billion in cash terms.

In the first four years it is estimated that these tax cuts will cost the Treasury bottom line an est. $5.3 billion.

So where did the $7.4 billion for banks come from?

Australia is thought to have four big banks – the National Australia Bank (NAB), Commonwealth Bank (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac (WBA) and it appears that this amount is based on projections done with regards to these banks by think tank, The Australia Institute.

The Australia Institute, media release 2016:

Big 4 banks $7.4 billion budget gift

The Coalition Government’s business tax plan would deliver $7.4B to the big 4 banks.

“Cutting company tax rates delivers a massive windfall to an already highly profitable banking sector,” Executive Director Australia Institute, Ben Oquist said.

“It makes no economic or budget sense to deliver the big 4 banks a multi-billion dollar tax break when Australia already has a revenue problem.

“If your agenda is jobs and growth, targeted industry assistance would deliver a much greater return on investment,” Oquist said.

The value of company tax provisions was derived from 2015 full year annual reports for the big four banks. That figure summed to $11,123 million. That figure was projected forward to 2026-27 to give the no change scenario.

The projection assumed bank profit and hence tax payable would increase in line with nominal GDP. The nominal GDP projections used the figures in the 2016-17 budget papers which give nominal increases of:

2.5 per cent in 2015-16,

4.25 per cent in 2016-17, and

5 per cent in 2017-18 and subsequent years.

Company tax cuts do not affect the big banks until 2024-25 when the current 30 per cent rate will fall to 27 per cent for all companies with further reductions of one per cent per annum until they reach 25 per cent in 2026-27.

The results of this are presented in the following table:

Table 1. Benefit of company tax cuts for big four banks, $million

	2024-25	2025-26	2026-27	Total
Savings on company tax	1,756	2,458	3,227	7,441

KPMG stated in Major Banks: Full Year Results 2015 that the Australian major banks reported another record earnings result in 2015 - a combined cash profit after tax of $30 billion.

By year’s end 2016 the major banks were reporting a combined cash profit after tax of $29.6 billion.

The Federal Government’s underlying cash balance for the 2016-17 financial year to 31 December 2016 was a deficit of $33,025 million and the fiscal balance was a deficit of $31,143 million. While net government debt for 2016-17 stood at an est. $326 billion.

In Major Banks: Full Year Results 2016 KPMG observed:

There is an increasing global perception that banks put shareholders’ and executives’ interests ahead of their customers and the community. This perception is more real for banks than for other corporates as they are seen to rely not only on compliance with strict regulation, but increasingly on the goodwill of the community and government to continue to operate in their current form.

We are seeing heightened scrutiny of Australian banks, including through the recent Standing Committee on Economics (the Committee) inquiry, becoming a regular feature of media and political commentary, notwithstanding eight separate inquiries since 2009. There are many reasons for this increased level of oversight, with terms such as “trust deficit” and “trust gap” often cited as the root cause.

It has been argued that the financial services industry has lost touch with the core proposition customers are seeking by forgetting its real purpose in society and becoming too inwardly focussed. These themes were repeated in testimony to the Committee.

Readers can make their own minds up as to whether banks have lived up to the historic social licence granted them by community (see bank scandals since 2009 and alleged superannuation owing in 2017) and, if they actually need any further tax relief or if that $7.4 billion would be much better in the hands of the Commonwealth Treasury.

TIME Magazine: Trump experiencing headwinds

TIME’s new cover: Inside Donald Trump's White House chaos https://t.co/hctIFEcOSG pic.twitter.com/1hSQNrY6JQ

— TIME (@TIME) February 16, 2017

Adani Mining Pty Ltd: allegations of "black money" and environmental degradation

“The Indian government’s Directorate of Revenue Intelligence (DRI) is currently investigating a number of Adani Group entities, including Adani Enterprises Ltd (AEL), which is the ultimate holding company of Adani Mining Pty Ltd, the proponent of the Carmichael Mine, for illegally overvaluing imports of coal and capital equipment in order to siphon funds offshore, a practice that creates “black money.” A detailed report from a reliable media source also indicates that for more than a decade the DRI has also been investigating Adani Group entities for tax evasion and money laundering whilst trading in diamonds.”  

Major Reports, February 2017:

The Adani Brief

If it proceeds, the Adani Group’s Carmichael Coal Mine and Rail Project in the Galilee Basin in Queensland will be among the largest new coalmines in the world. The associated rail infrastructure and expansion of the coal export terminal at Port of Abbot Point adjacent to Queensland’s Great Barrier Reef World Heritage Area would facilitate the shipping of coal through the Great Barrier Reef’s waters from the Carmichael Mine.

The Adani Brief: What governments and financiers need to know about the Adani Group’s record overseas suggests that governments and private stakeholders should give serious consideration to:

* the Adani Group’s global legal compliance record which demonstrates numerous serious breaches with adverse consequences for the environment and local people; and

* the possibility that if this track record continues in Australia, then supporting the Adani Group’s Carmichael Mine and the Abbot Point Port may expose governments and private  

  stakeholders to reputational and financial risks.

Read The Adani Brief (PDF, 1.53MB)

Read the Overview of The Adani Brief (PDF, 160KB)

View key source documents

Report/submission Type:  

Major Reports

Topics:  

Fossil Fuel Extraction

A university education and a highly paid job the road to home ownership in Australia for the masses?

The Turnbull Government’s tin ear was on full display in The Sydney Morning  Herald on 21 February 2017:

The Coalition MP tasked with tackling Australia's housing affordability problems has said a "highly paid job" is the "first step" to owning a home.

The federal Victorian MP Michael Sukkar, who is the Assistant Minister to the Treasurer and has been charged with finding solutions to the country's housing affordability woes, also pointed to his own experience in purchasing two properties by the age of 35 as an example to struggling homebuyers. 

"We're also enabling young people to get highly paid jobs which is the first step to buying a house, it's not the only answer but it's the first step," Mr Sukkar told Sky News on Monday night.

"I want to see young people like me, leave university, I was a terrible university student but I left university because the economy was so good, I got a great start and I was able to forge a career," he said.

The Liberal MP for Deakin since September 2013 and Assistant Minister to the Treasurer, 35 year-old Michael Sven Sukkar LLB, BComm (Deakin), LLM (Melb), who apparently walked straight into well-paying employment at PricewaterhouseCoopers after leaving university and eleven years later owns his own home in Blackburn and a residence in Canberra after selling a second investment property in Fitzroy.

Conveniently the Australian taxpayer is assisting Mr. Sukkar with the mortgage on the possibly negatively geared Canberra property by supplying him with $273.00 for every night he stays in his own residence while parliament is sitting – an est. $11,466 for the 2017 calendar year alone.

Even at a stretch, married to a professionally qualified wife with a business partnership in a multinational firm, Michael Sukkar’s economic progress though life is hardly typical of a couple seeking to buy their first home.

However, typically of a member of the Liberal Party he assumes almost everyone can be fortunate enough to have small business owners as parents, a good education and a well-paying job before securing a parliamentary seat with an excellent superannuation plan.

According to They Vote For You during his almost three and a half years in the Australian Parliament Michael Sukkar has voted for:

A same-sex marriage plebiscite

An Australian Building and Construction Commission (ABCC)

An emissions reduction fund

Charging postgraduate research students fees

Decreasing ABC and SBS funding

Decreasing availability of welfare payments

Deregulating undergraduate university fees

Increasing funding for road infrastructure

Increasing indexation of HECS-HELP debts

Increasing or removing the Government debt limit

Increasing scrutiny of unions

Increasing the initial tax rate for working holiday makers to 19%

Increasing the price of subsidised medicine

Privatising government assets

Senate electoral reform

Speeding things along in Parliament (procedural)

Stopping people who arrive by boat from ever coming to Australia

Tighter means testing of family payments

Unconventional gas mining

Regional processing of asylum seekers

Temporary protection visas

And voted against:

Implementing refugee and protection conventions

Increasing scrutiny of asylum seeker management

Suspending the rules to allow a vote to happen (procedural)

Increasing Aboriginal land rights

Increasing funding for university education

Increasing investment in renewable energy

Increasing marine conservation

Increasing protection of Australia's fresh water

Increasing restrictions on gambling

Increasing the age pension

Increasing the diversity of media ownership

Increasing trade unions' powers in the workplace

Increasing transparency of big business by making information public

Letting all MPs or Senators speak in Parliament (procedural)

Letting environmental groups challenge the legality of certain government decisions

Protecting citizens' privacy

Restricting foreign ownership

Stopping tax avoidance or aggressive tax minimisation

The Australian Renewable Energy Agency (ARENA)

Credlin admits there was no carbon tax under the Gillard Government

Here is the audio of Peta Credlin admitting the last seven years of Australian politics is based on total crap https://t.co/ydMCWFYe66 pic.twitter.com/p1hHmrK71R

— Mark Di Stefano 🤙🏻 (@MarkDiStef) February 15, 2017