Scott Morrison praises ‘innovative’ idea to trade tax credit for any future penalty rate cuts

Treasurer Scott Morrison laments the “pitched battle” over industrial relations reform that has pitted business against unions is “boring, it’s not helpful”. Photo: Alex EllinghausenLiberal MPs push for penalty rate cutsLower penalty rates inevitable: Malcolm TurnbullBill Shorten links penalty rates with affording private schools

Treasurer Scott Morrison has praised as “innovative” a proposal that could see workers rewarded with tax credits in exchange for a reduction in penalty rates, a day after the Prime Minister signalled changes to weekend rates would take place over time to reflect the seven-day economy.

Momentum is building in the Liberal Party for the adoption of industrial relations reforms, including potentially the reduction in weekend penalty rates, as part of a broader package of measures that is also expected to include tax reforms.

Six Liberal MPs on Tuesday publicly backed the need for changes to weekend penalty rates in sectors such as hospitality, retail and tourism, to drive business growth and stimulate employment, though with compensation for low income earners that, for example, could see general hourly rates of pay raised.

In an interview on ABC’s Radio National on Wednesday, Mr Morrison appeared to put aside his previous concerns about cuts to penalty rates, and lamented the “pitched battle” over industrial relations reform that has pitted business against unions for “far too long” as “boring, it’s not helpful”.

“What we need to have is a mature discussion about these issues where we look at how the system works. What we want is more people, particularly young people, being employed. We need flexibility in the system which means people with disabilities, people who have been long-term unemployed can get a go in the labour market,” he said.

“I don’t see why you wouldn’t want to consider anything that would achieve those sorts of goals.

“If the Opposition Leader Bill Shorten wants to go back to yesterday’s politics, and drag us in to a pro or negative penalty rates debate, I don’t think that helps the economy, I don’t think that helps the debate.”

On Tuesday, Malcolm Turnbull left open the prospect of lower income workers receiving a tax credit as compensation if reductions in weekend penalty rates – as suggested in the Productivity Commission’s draft review of the industrial relations system – took place.

The Prime Minister said there were a “lot of changes that can be made to the tax system which would improve the efficiency of the system” and promised decisions on tax changes before the next budget that would be taken to the next election.

Asked about such a proposal, Mr Morrison said “I think these are all very innovative ideas, in the UK [Secretary of State for Work and Pensions] Iain Duncan Smith has done some excellent work in looking at those sorts of systems”.

“What you want is a tax system and a payment system that locks together and a labour market system that links in with that to ensure you are better off working than being on welfare and that when you are working, you are not going to be taxed out of existence and you are able to get on and make a way for yourself.”

Opposition Leader Bill Shorten brushed aside Mr Morrison’s call for a “mature” debate about workplace reform.

“The Labor Party’s got 110 years of being mature about the wages of workers and trying to improve it. I’ve spent my adult working life improving people’s conditions. The Liberal Party, when they talk about wages, it’s code for cutting penalty rates, cutting conditions, reducing the circumstances of working people when they go to work. The Liberal Party has no plan to lift wages,” he said.

The Treasurer also flagged an announcement later on Wednesday with the Tax Commissioner about the government’s plans to crack down on multi-national tax avoidance, following the introduction of laws in September.

“We already have 30 companies that the Tax Office has been working with and we have people embedded there working through various arrangements they have to ensure that these companies are paying their fair share of tax,” he said.

“We have been able to identify additional companies as a result of the legislation we introduced into Parliament recently.”

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