Business groups have lashed the Abbott government for ruling out any change to penalty rates or the minimum wage, accusing it of taking a "head in the sand" approach and squibbing debate on the issue.
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But Labor and the Greens have seized on a report in the Australian Financial Review to argue Employment Minister Eric Abetz should make good on his defence of the current system and pledge in the Parliament that there will be no change to penalty rates or the minimum wage.
The Productivity Commission launched its long-awaited review of Australia's industrial relations system last month, promising to put penalty rates, the minimum wage and the workplace flexibility of 11.5 million Australian workers under the microscope.
Productivity Commission chief Peter Harris promised the review of Australia's workplace laws will "bust myths" in the broadest review of IR laws in a generation.
But Senator Abetz has told the AFR that he was surprised the Productivity Commission decided to look at penalty rates and the minimum wage - arguably the two most contentious political issues in the review - and that "we have a system that has worked relatively well over many years now, and I don't want to put the Parliament in the space of the Fair Work Commission".
And in a statement to Fairfax Media, the minister said: "the government will leave the responsibility of setting modern awards, including penalty rates, and the minimum wage with the Fair Work Commission. That's the way it remains under the Coalition."
Australian Chamber of Commerce and Industry chief executive Kate Carnell said the group, which represents 300,000 businesses, was disappointed as "we hoped the government would do what they said they were going to do".
"Obviously we are disappointed by the minister's comments prior to the Productivity Commission report coming down. It seems to be politically inspired and it seems they don't want to have that debate with the union movement," she said.
"They have said they would have the Productivity Commission report and that ... they would use the outcomes to take a comprehensive policy to the next election. It would seem the policy is becoming less comprehensive.
"We are not arguing for no penalty rates [but] we don't think it is such a huge argument to suggest Sunday penalty rates should be similar to Saturday."
Australian Industry Group chief executive Innes Willox said it was appropriate the Fair Work Commission set the minimum wage and penalty rates, but that "the criteria that applies to the making of such decisions should be scrutinised by the Productivity Commission during its review".
"The fact is that penalty rates in industries like the fast food sector are having a big impact on businesses and on employment for young people," he said.
Labor employment spokesman Brendan O'Connor said Senator Abetz should make a statement on the policy shift to the Parliament. He said it should "make clear the government has no intention to cut the minimum wage that 1.5 million Australians rely upon and no intention to change penalty rates which up to 4.5 million Australians rely upon to make their living".
"The second thing, if it's genuine about this matter it should also withdraw the Fair Work Amendment Bill," he said. "The Fair Work Amendment Bill allows for the trading away of penalty rates for what are called non-monetary benefits. This provision is potentially very dangerous for vulnerable employees."
But Senator Abetz said Mr O'Connor was "engaging in his continued false and conspiracy theorist statements" about the Coalition's industrial relations policies.
Deputy Greens leader Adam Bandt said that if the government was ruling out changes to penalty rates and the minimum wage, the Productivity Commission should "immediately stop a now pointless inquiry into these matters".
He said the Greens would move a motion in the Senate next week that called on Senator Abetz to direct the Productivity Commission to exclude the minimum wage and penalty rates from its inquiry into the workplace relations framework.
