President Paul Jubb, of the Tasmanian branch of the AHA – the THA – talks about the impact of penalty rates on the State’s hospitality industry.


Paul Jubb_small_LRAt first glance, the idea of having a Tasmanian Parliamentary inquiry into penalty rates, when Awards are very definitely in the Federal jurisdiction, may seem fruitless. After all, it’s unlikely to matter what such an inquiry finds or recommends, given that not only is the Federal Government under no obligation to act on such an exercise, but Fair Work already reviews Awards as legislation requires and runs its own process.

However, there is still much merit in an inquiry that will give the hospitality industry – and other industry groups – the opportunity to spell out the real impacts of penalty rates on businesses in this State. And hopefully provide not just the policy-makers, but more importantly, the public, with the full penalty rate picture.

Already this year, the THA has received complaints from people about the lack of café choices on Sundays and public holidays such as the Australia Day long weekend, as punters wonder why their favourite café or restaurant had the “closed” sign firmly stuck to the door.

Out on the ground, in and around our cities and towns, that’s what the public sees: closed venues. They rightly don’t like it, but they probably haven’t had the opportunity to understand the complete picture. This is beyond the fact that they feel deprived of a positive experience, and the realisation that a town full of closed hospitality businesses is hardly sending a visitor-friendly message to the rest of the world.

By the same token, ask any hospitality business owner or manager how popular a Sunday or public holiday surcharge is with their customers – even though it doesn’t even go halfway to making heavy penalty rate days more affordable.

Who can blame a patron for wondering why the exact same $25 meal they enjoyed anytime between Monday and Friday suddenly costs 15 per cent more on a Sunday? Particularly when they couldn’t reasonably be expected to know how the business’ staff costs are structured, or the fact that the business is likely to make a net loss trading on Sundays or public holidays.

An inquiry into penalty rates, as suggested by Western Tiers MLC Greg Hall, provides the opportunity to give the public factual information about the impact of penalty rates, and the very real challenges they pose for businesses who genuinely desire to open seven days a week.

While this will no doubt give a similar platform for unions to mount their opposing point of view, the important difference is an inquiry will have the ability to ask hard questions and move beyond the usual rhetoric that this is somehow just a campaign to abolish penalty rates.

As the THA has stated many times: employees of a closed business aren’t earning anything – regardless of the penalty rates. So the argument unions are turning to, that a reduction in penalty rates would strip money out of the economy, lacks credibility. Money is already being stripped out of the economy, because businesses can’t afford to open, and aren’t employing people.

Penalty rates are a big deal for a State such as Tasmania, which not only strives to be a tourism hot-spot, but has a very significant hospitality industry; hospitality is the third-largest employment sector in the State, providing jobs to more than 20,000 people. That translates into about $450 million in wages every year.

It is therefore disappointing to see recent publicity suggesting that the secret to successfully opening seven days a week is to only employ your family members, thus avoiding the penalty rate trap. While many business owners already sacrifice their weekends to ease wage pressure, it is hardly a recipe for long-term growth and viability of an industry to rely on cheaply paying family members just to be able to get the doors open.

The vast majority of hospitality businesses, thankfully, have a much stronger commitment to the overall well-being of the sector, and their own employees. Many take pride in the fact that they are employing people, and many are well and truly prepared to pay loyal and efficient staff above the Monday-to-Friday award rate.

There is undoubtedly the opportunity to grow the hospitality sector in Tasmania. A reduction in Sunday and public holiday penalty rates will ultimately see more businesses open, more people employed, and a far more visitor-friendly operating regimen.

While that decision ultimately rests with Fair Work’s review, a Parliamentary inquiry will hopefully shine the light on an admittedly divisive issue, and inform the broader community of the challenges that penalty rates are posing – not just for an individual business, but for the broader wellbeing of the State.

THA President, Paul Jubb

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