One of the more interesting workplace issues to get an airing in the election campaign has been the contest between Labor and the Greens on penalty rates.

Labor and the union movement have been running a visible campaign on protecting penalty rates. It is an issue that polls well and is easy to understand. Business groups have been aggressively arguing for reductions in penalty rates for years. The Coalition has stated it has no intention of changing the process by which penalty rate are set. However, it is fair enough to be suspicious about what they may do if returned to government given their record and MPs who have spoken openly about reducing penalty rates. At one level, at least, the campaign to protect penalty rates has been successful in pushing the Coalition to disavow any changes to how penalty rates are set.

Labor have, however, managed to get themselves in a mess on this issue. The Greens were quick to point out the flaw in the Labor position. Essentially, Labor will protect penalty rates by trusting the Fair Work Commission. The only point of difference between Labor and the Coalition in their stated policies is that Labor would make a submission to the Fair Work Commission if in Government arguing in favour of retaining weekend penalty rates in the hospitality, retail and accommodation sectors.  So not really “protect” them at all but rather continue to advocate for no changes to existing penalty rates.

Labor then went on to say that it had absolute confidence that the Commission would make the right decision and not reduce penalty rates. Bill Shorten is quoted as saying, “The evidence doesn’t support [a reduction in penalty rates], it isn’t going to happen.” Given the Productivity Commission’s recommendation that Sunday rates be reduced to the same level as Saturday rates in certain industries, that is a bold statement to make. To make penalty rates such a big issue without a solution is a political problem for Labor, and one that was entirely foreseeable.

The Greens, in contrast, have said they will legislate to protect penalty rates. Adam Bandt has said weekend penalty rates could be protected in two ways: by altering the principles the Commission had to apply, or by specifying existing rates and conditions to be protected. The Greens’ position raises a number of other questions. Labor was quick to caution against removing the power from the independent umpire to set penalty rates.

It is this issue of the role of the Parliament and the role of the Commission in setting minimum employment standards that is the more interesting issue.  What minimum standards should be set by the Parliament and which by the Commission? What is and should be the relationship between independent bodies like the Fair Work Commission and our democratic institutions? How do the functions and make-up of the Commission affect both its decision and the manner of decision-making?

The Fair Work Commission, like the AIRC before it, is an essential element of Australia’s workplace relations infrastructure with an established function of determining the minimum wage and setting other minimum conditions through awards. Starting with WorkChoices and following through to the Fair Work Act, our current system also provides for legislatively protected minimum workplace conditions for employees such as annual leave, sick leave, parental leave and public holidays. Labor is also proposing to legislate for 5 days of family violence leave, an issue that is  currently before the Commission as part of the award review process. So clearly there is a live debate about what should be legislated and what should be left to the Commission.

Another element to this debate is the make-up of the Commission and how it goes about its decision-making. The Productivity Commission points out that the Commission is “the largest price-setting entity in the Australian economy.” Its report recommends either a separate body to determine the minimum wage and award conditions or expanding the role and functions of the existing Expert Panel. Both of these suggestions include ensuring appointments to the new institution or the Expert Panel come with more “expertise” in economics, social science, commerce or equivalent disciplines. Under these arrangements “matters of national significance would be determined in future more by objective evidence and analysis, and less by precedent, taking into account the national interest, and without giving predominant weight to the interests of the parties participating in the review.”

This recommendation calls for a significant shift in the historical approach of the Commission and the Productivity Commission is not shy is acknowledging this and suggesting the history and culture of the Commission is a barrier to it fulfilling its economic role in respect of awards and the minimum wage. Instead of a contest of differing world views from those most affected, that is workers and employers, the decisions would be arrived at primarily on the basis of economic analysis. A macro view of the world from a very specific viewpoint, one focusing on efficiency and productivity. This is indeed a break with the history of the Commission. One could wonder whether workplace conditions we now take for granted would have been determined under a Commission of the kind proposed by the Productivity Commission.

These matters also raise the question of when do expert independent bodies becomes so technocratic as to break the link with the democratic institutions that give them their power? Is there part of the social contract that will be stretched too far if a particular view of economics and its expertise takes precedence over the lived reality of work? What are the consequences of when evidence of workers and indeed of business owners has less influence than spreadsheets?

These are significant questions that the penalty rates debate open up. Yet, there have not been any responses from the political parties on these recommendations from the Productivity Commission.  If they were to be implemented Labor’s conviction that the Commission will not reduce penalty rates will turn out to be very misguided.