Restaurant and cafe industry overcooking claims about penalty rates

A respected independent expert says the Federal Coalition is overcooking claims that businesses are closing because of Sunday penalty rates.

An economist from the BankWest Curtin Economics Centre analysed claims made last Monday on the ABC’s Q & A program by the Assistant Treasurer Josh Frydenberg that “a lot of cafes, restaurants are closing because of the high prohibitive costs on a Sunday”.

Mr Frydenberg was quoting from a Restaurant and Catering Industry Association study in 2015 of around 1000 restaurant and café operators.

Queensland Council of Unions President John Battams said the independent economic analysis showed that more than 90 per cent of cafes and restaurants surveyed were open on Sunday and/or public holidays.

“Furthermore, the analysis shows the majority of these employers thought Sunday was a profitable trading day,” Mr Battams said.

“The analysis further says that less than a quarter of businesses said penalty rates were reducing profits for restaurant and café operators.

“A closer look at these figures – from the Restaurant and Catering Industry itself – pours cold water on claims about ghost towns of cafes and restaurants because of penalty rates.”

The economist – Alan Duncan (Bankwest Research Chair in Economic Policy at Curtin University) - further concluded in his analysis:

“The evidence that restaurants and cafes are closing on Sundays because of prohibitively high costs is, at best, ambiguous.”

Mr Duncan is Director of the Bankwest Curtin Economics Centre, an independent economic and social research organisation located within Curtin Business School at Curtin University. His analysis has also been reviewed and confirmed by Ann Daly, Professor of Economics at University of Canberra. 

The draft Productivity Commission report released in early August, sought by the Abbott Government, recommends a two-tiered wages system that would cut wages for millions of Australian workers in the retail and hospitality sectors.

Mr Battams says low-paid workers will be worse off by hundreds of dollars a month if the federal government endorses this recommendation.

“This two tiered system will create an underclass of working poor – it will be economic apartheid,” he said.

“As the analysis notes, there is no evidence that cutting penalty rates will increase productivity or employment. However, it will definitely reduce the take-home pay of working families in Queensland who can least afford it.

“Workers who work unsociable hours deserve to be fairly compensated for their work serving us in restaurants, filling our prescriptions, caring for our sick and elderly, and ensuring our public safety,” he said.

“Cutting weekend and penalty rates will strip billions from the state’s economy.”

get updates