Govt won’t change penalty rates, minimum wage: Abetz

The government says it will not seek to change penalty rates or the minimum wage, even if the Productivity Commission’s inquiry into workplace relations makes such recommendations.

Employment Minister Eric Abetz told The Australian Financial Review that the government intends to retain the current system in which the Fair Work Commission has the power to set awards and the minimum wage.

"We have a system that has worked relatively well over many years now, and I don't want to put the Parliament in the space of the Fair Work Commission," Abetz (pictured) said.

The first stage of the inquiry, a discussion paper looked at awards and penalty rates and asked if they should be simplified, changed, swapped for time-off-in-lieu or scrapped.

In addition, it asked about how effective the minimum wage is, could it be different in different states, and could it be replaced with changes to the tax system.

However, Abetz said he was surprised when the Productivity Commission said it the review would look at the minimum wage and penalty rates.

"Ultimately, we have said that these decisions will be up to the Fair Work Commission to determine as to what a minimum wage ought be, as to what penalty rates ought be, as to what awards [ought to be],” Abetz told the AFR.

"They are all matters for the Fair Work Commission. We were looking more at the architecture of the Fair Work regime, as to whether it was working."

Abetz’s comments are likely to disappoint business groups which have been increasing pressure to change the system.