Fonterra’s Australia boss backs penalty time review for dairy workers

27-Feb-2014 - Last updated on 27-Feb-2014 at 16:03 GMT

The managing director of Fonterra’s Australian operation has warned that Australian food processors and manufacturers cannot be competitive with the rest of the world until it reviews the penalty rates for dairy workers.

Eyeing the system that is currently being used by the dairy industry in New Zealand, whereby work hours are longer during the time of the year when supply is most plentiful, Judith Swales told the Sydney Morning Herald: “Essentially you are not legislating that people have to work 38 hours a week, 48 weeks a year.

“They can work longer hours without penalty [during peak supply periods] but then they get time off either side of the peak.”

Government plans

Swales has been speaking as the government prepares to introduce legislation that will allow employees to bargain away entitlements such as penalty rates on the proviso they are better off overall.

However, unions have rejected Swales’ suggestion and the coalition’s policy, with Australian Council of Trade Unions having recently begun a petition asking Prime Minister Tony Abbot not to “strip away penalty rate protections”.

“When you work unsociable hours and miss out on time with family and friends, you deserve to be compensated—that’s why penalty rates exist,” the group said.

“For many workers feeling the squeeze from the high cost of living, a cut to penalty rates and take home pay would make keeping their heads above water nearly impossible.”

‘Disenfranchised and demotivated’

In the SMH report, Ged Kearney, president of the Australian Council of Trade Unions, said that profits might rise if penalty rates are cut, but at the same time it risks lowering productivity by encouraging “disenfranchised and demotivated” staff.

He added that the New Zealand model would prove to be unworkable because local plants produced more fresh milk and products with a shorter shelf life.

Swales continued: “I think more flexibility, not to disadvantage people but to make us more competitive, is kind of the name of the game.

''If we want to be serious players on a global scale we have to have seriously competitive and efficient manufacturing operations.

Australia’s milk production has dropped by almost one-fifth over the last 10 years, compared to New Zealand, which has nearly doubled its supply to 9bn litres per year.