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Penalty rates on chopping block?

Liberal Wyatt Roy says current work place laws are too inflexible, but Labor's Amanda Rishworth says the government is gearing up to revive Work Choices.

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Prime Minister Tony Abbott is under pressure from his backbench to address ''job-killing'' weekend and holiday penalty rates, with 10 Coalition MPs telling Fairfax Media the controversial issue cannot be ignored.

But the leadership team of the Abbott government, which in private still talks bitterly about the damage caused by the Howard government's WorkChoices policy, is determined to keep its pre-election promise not to touch penalty rates in its first term.

Liberal Senator for Tasmania Eric Abetz.

Liberal Senator for Tasmania Eric Abetz. Photo: Peter Mathew

Hoping to mollify fears that he was planning to change workers' weekend and holiday penalties rates following a report by Fairfax Media on a leaked government document, Mr Abetz said the government would go no further than the modest workplace changes it proposed at the 2013 election.

''I can confirm that in absolutely no iteration of the terms of reference has the issue of penalty rates or union militancy been mentioned,'' Senator Abetz said.

But conceded that the terms of reference for the commission's review of workplace laws were deliberately broad enough to cover ''a full and thorough analysis of all aspects of the Fair Work Act''. And the draft terms of reference explicitly mention ''pay and conditions'' and ''industrial conflict'' - which is widely understood to include penalty rates and union militancy.

But by leaving penalty rates for the independent umpire - who may decide to keep present rates in place - Mr Abetz and Mr Abbott could face a protest from their backbench MPs.

Numerous Liberal MPs, particularly those who represent electorates with large numbers of tourism and hospitality businesses, believe small businesses need to be ''liberated'' from having to pay higher weekend and holiday rates, which can lead to businesses deciding not to open on certain days or to employ fewer staff.

Coalition MPs Warren Entsch, Dan Tehan, Russell Broadbent, Wyatt Roy, Sean Edwards, Craig Laundy, Alex Hawke, George Christensen, Dennis Jensen and Zed Seselja all said on Friday that penalty rates needed to be reviewed. Other senior MPs, speaking on condition of anonymity, said there was broad appetite in the Coalition to address penalty rates.

''It's a bit like a bushfire,'' one Liberal MP said. ''It started small but a lot of members are hearing [complaints about penalty rates] from small businesses in their electorates.''

Mr Laundy, Liberal MP for Reid in western Sydney, who has 23 years of experience in the hospitality industry, said both sides of politics needed to have a mature discussion about workplace flexibility, and that the Coalition should not retreat from a Labor and union ''scare campaign''.

But even the most passionate Coalition MPs acknowledged the government needed to proceed cautiously on industrial relations reform, to avoid a WorkChoices-style situation.

Asked on Friday about these calls from Coalition backbenchers, Senator Abetz said: ''There is no way that those in the ministry can control backbenchers and, indeed, I encourage them to speak out on all sorts of matters.''

Labor and the ACTU leapt on the leaked Coalition document, saying the Abbott government wanted to smuggle through insidious workplace reforms.

Labor's workplace relations spokesman Brendan O'Connor said: ''This is them returning to WorkChoices.''

ACTU president Ged Kearney said the review's terms of reference said the ''business lobby is very clearly getting its way with this government''.