Master Grocers Australia - the Department of Economic

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Submission by Master Grocers Australia
to the Department of Economic Development, Jobs, Transport and Resources,
in respect of the Regulatory Impact Statement on proposed new public holidays in
Victoria
© Master Grocers Australia 2015
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Submission by Master Grocers Australia on proposed new public holidays in Victoria
We refer to the recent release of the Regulatory Impact Statement (RIS) on the proposed introduction of
two new public holidays in Victoria.
Master Grocers Australia (MGA) thanks the Victorian Government for the opportunity to provide
feedback on behalf of the members of MGA, in respect of the impact that the proposal to introduce two
new public holidays in Victoria will have on their businesses.
About MGA
Independent Supermarkets and liquor stores play a major role in the retail industry and make a substantial
contribution to the communities in which they trade. In Australia there are 2400 independently owned
FoodWorks, Foodland, Friendly Grocers, IGA & SPAR branded supermarkets employing over 115,000
full time, part time and casual staff, representing $13.8 billion in retail sales.
In Victoria there are 515 independent supermarkets trading under such brand names as IGA, Friendly
Grocers and FoodWorks, employing 23,500 staff (FT. PT & Casual) with sales in excess of $3.5b per
annum. There are approximately 3.75 million weekly customer transactions.
There are 1,005 independent packaged liquor outlets, employing 2,800 staff with sales of $900m per
annum. There are approximately 700,000 customer transactions per week.
These businesses are small to medium in size and many of them are family operated. The majority pay
their employees under the General Retail Industry Award and the remainder operate under enterprise
agreements. Irrespective of the industrial instrument they use for payment of employees these instruments
have penalty rates that apply in respect of trading on public holidays. Except for a very small number of
employers the applicable rate on a public holiday is 150%.
Reasons for the proposed introduction of additional public holidays
MGA understands that the Victorian Government made a commitment to the Victorian people prior to the
last Victorian election that, if elected, the new Labor Government would introduce two new public
holidays, one being Easter Sunday and the other, AFL Grand Final Eve.
In itself the proposal appears attractive to anyone who works, but it is doubtful that it was ever thought of
as good policy by employers. The promise was obviously made without the benefit of a cost analysis and
despite the fact that there was still no cost analysis in April 2015, the Easter Sunday public holiday was
implemented. The question now is, whether the State of Victoria can feasibly withstand the introduction
of not just one additional public holiday on Easter Sunday, but a second additional public holiday on
Grand Final Eve.
The Victorian Government has, since making the election promise to increase the number of public
holidays prior to the election in 2014, provided the Regulatory Impact Statement undertaken by Price
Waterhouse Cooper.1(the RIS)
1
Regulatory Impact Statement on proposed new public holidays in Victoria as advisor to the Victorian Department of Economic
Development Jobs, Transport and Resources. (July 2015)
© Master Grocers Australia 2015
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The RIS provides an opportunity to assess the impact on businesses and the community. The RIS focuses
on the possibility of increased tourism and a general enhancement of sporting events in Victoria in respect
of the proposed AFL Grand final public holiday and also on the financial cost to the State, and businesses
generally, of implementing this holiday. There is also the consideration given to the financial cost and the
community benefits of granting an additional public holiday at Easter.
The RIS suggested options
The RIS considers three options but, firstly refers to the current arrangements in Victoria over the Easter
period and the day of AFL Grand Final, which is referred to as the “status quo”. It is intended that each of
the options for change be compared with the current arrangements and measured against “the status quo”
Obviously, if the status quo remains it would mean that Easter Sunday would remain just as any other
Sunday with staff being paid the Sunday penalty rates. The Friday before the AFL Grand Final would
also remain the same as it is currently.
Options provided in the RIS as opposed to the “status quo”are proposed as follows:
Option1: Easter Sunday becomes a new public holiday and the Friday before the AFL Grand Final also
becomes a public holiday as promised by the Victorian Government prior to the 2014 election.
Option 2: Easter Sunday is introduced as a public holiday and delayed implementation of the Friday
before the AFL Grand Final
Option 3: Transfer of the public holiday status from the Easter Saturday to Easter Sunday, in addition to
the implementation of the Friday before the AFL Grand Final.
(Option 3 creates only one additional public holiday in Victoria taking the total of public holidays in this
State to 12.)
How would the status quo or the 3 options affect independent retailers?
(a) Easter Sunday and the current arrangements for the day before the AFL Grand Final
The RIS states that making Easter Sunday a public holiday is significant to the community due to its
religious significance. It is also suggested that the apart from any religious significance it would provide
an opportunity to families to be together at this important time of the year.
These arguments in favour of an additional public holiday for Easter Sunday may be sound in some
respects because no one underestimates the value of celebrating religious events, or the value of family
life. However, there is also the issue that a large proportion of the community does not celebrate Easter as
a religious time or that family commitments would necessarily be altered if the current arrangements are
changed. . Families do spend time together at weekends but that applies on any Sunday throughout the
year. In fact the real issue is that many people will continue to work in restaurants and shops on Easter
Sunday and receive the current penalty rates if the situation remains unaltered, but the Government is
ignoring the financial burden that will be placed on businesses if another public holiday is added at
Easter. If Easter Sunday becomes a public holiday and the shops remain open the only difference that will
occur is that the employer will pay higher penalty rates.
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If the Government rationalises that the number of public holidays should not be increased at Easter time
due to the cost burden then there is likely to be a more supportive approach from industry. It would be in
the best interests of all parties if the Easter Saturday public holiday was transferred to the following day,
Easter Sunday resulting in a more beneficial solution for all parties. At least in this scenario the employer
would not be burdened by 2 public holidays in succession or an extra day.
If the Government decides to add another public holiday to the Easter weekend many retail businesses
will suffer massive losses and there will be a further downturn in the economy.
(b) Option 1
If Easter Sunday is added to the number of public holidays it would mean that retailers would be required
to pay penalty rates on Easter Saturday and Easter Sunday. In addition the payment of public holiday
rates would be required on the AFL Grand final Eve. Two additional public holidays would be a
prohibitive cost, placing a massive financial burden on small business.
Payment of public holiday rates on Easter Sunday will result in immense increase in the cost to each
independent supermarket and liquor outlet in Victoria. The current rate for an adult employee under the
General Retail Industry Award on a public holiday is $47.47 per hour and for a casual adult employee the
rate is $52.21 per hour. Penalty rates for either a full time or casual employee on Sunday is $37.97. The
increased cost for a full time employee under the proposed changes means an increase of $9.50 per hour
for a full time employee or an additional $12.76 per hour for a casual employee. It means that the cost of
doing business for an independent retailer will be seriously challenged if the Sunday is added as an
additional public holiday and threaten the ability of the employer to operate a sustainable business.
A public holiday on the AFL Grand Final Eve is without precedent. Traditionally, Christmas day, Boxing
Day, New Year’s Day, the Easter period, Queen’s Birthday, Melbourne Cup (Melbourne only), Australia
day, Anzac Day and Show Day are public holidays in Victoria that reflect historical, special or religious
reasons. The inclusion of a public holiday for a football match appears inconsistent with reasons for other
public holidays in the Victorian calendar. There is no apparent model, nationally or internationally, that
has a public holiday for a football match. There is no doubt that the event is a significant one, but whether
it is worth the economic impost that would inevitably be inflicted on businesses is dubious.
(c) Option 2.
There is no certainty about when a “delayed” implementation of the proposed Grand Final Eve public
holiday might be and in any event a delay does imply that this is what Victorian businesses might expect
to have happen in 2016. The increased cost might not impact businesses immediately but they are likely
to occur in the not too distant future. Once again MGA supports the change of the Saturday Easter public
holiday to Easter Sunday but requests that if the Victorian Government decides to delay the
implementation of the AFL Grand Final public holiday so that greater consideration of its financial
impact be considered throughout the year.
(d) Option 3
It is noted previously that the transfer of the public holiday from Easter Saturday to Easter Sunday will
still be a cost to a supermarket independent retailer. The only benefit being however, that at least the
employer would not be required to pay penalty rates on both Easter Saturday and Easter Sunday.
However, it is also noted that the additional factor in this option is that there will still be a public holiday
© Master Grocers Australia 2015
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on the AFL Grand Final Eve and this is where there will be a significant increased cost to the supermarket
independent retailer. MGA does not support the implementation of this additional public holiday even
when coupled with the alternative Easter public holiday.
Despite the call to scrap the inclusion of a public holiday for the AFL Grand Final eve, it appears there is
a strong belief that it will be implemented. It is predicted that the cost to businesses in Victoria would be
at least $800 million in wages, lost productivity and penalties. MGA strongly opposes this proposed
additional cost burden to members.
The effects on the independent supermarkets industry.
The RIS refers to how employers are expected to operate the business for a public holiday. It states that a
small business will manage their costs by substituting paid staff with owner input, alternatively fewer
staff will be employed to undertake core activities only. This is a very broad assumption and it may well
happen in some places, but it is not appropriate to use it as a valid option for employers who work long
hours for often little return. In this suggestion there is a total disregard for the strain placed on any owner
being expected to operate the business him or herself. Furthermore, employing less staff does not take
into account that the same number of people who shop regularly on a Friday, the day following “pay day”
for most people, will still need to purchase their groceries on that day, regardless of the public holiday on
the AFL Grand Final. The loss of sales to a supermarket retailer would be massive and it is grossly unfair
and unreasonable to imagine that, either working themselves or cutting down on employee numbers, is
going to be a solution. At a time when unemployment rates, particularly for young workers, are at a high
level it is not appropriate to suggest that hours of work should be reduced.
Another proposal is that small businesses will not open their doors on a public holiday. Does this mean
that the business that relies on its takings on a Friday should just close because the Government has
chosen to provide an additional day’s holiday?
The end result is that there could be massive expenditure in terms of payment of higher rates for the
current staff or there will be massive losses if stores are closed or even if fewer people are engaged. It is
estimated that if the AFL Grand Final public holiday is implemented it will cost the independent
supermarket industry in Victoria $3 million and, if the Easter Sunday public holiday is added, it will cost
the industry an additional $800,000. In either situation there will not be any additional productivity gains.
Overall cost to the State.
The Government believes that there will be massive increases in tourism from the introduction of the
AFL Grand Final public holiday. Also that there will be advantages for families and the community from
the introduction of the Sunday public holiday It is difficult to see how the benefits of introducing two
additional public holidays can compensate for the disadvantages that will result from the introduction of
these two new days. Even the RIS states that the “estimated costs outweigh the quantified benefits.”
The RIS continues that there does not appear to be any overall benefit to the State, as “the lost production
resulting from the two additional public holidays will be between $717 million and $898 million on an
annualized basis”2
Conclusion
2
Ibid RIS page vii
© Master Grocers Australia 2015
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MGA is appreciative of the fact that the Victorian Government made an election promise in respect of
introducing two additional public holidays. However, the cost to business, in particular independent
supermarkets, should be very carefully considered prior to any implementation.
MGA supports the move of the public holiday on Easter Saturday to Easter Sunday, but is strongly
opposed to the introduction of an additional public holiday for the AFL Grand Final Eve for the reasons
referred to above.
We thank the Victorian government for this opportunity to comment on the RIS in respect of the proposal
to introduce two new public holidays.
Jos de Bruin
CEO
Master Grocers Australia
August 2015
© Master Grocers Australia 2015
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