Masterchef star George Calombaris slams penalty rate regime

MasterChef star George Calombaris has launched a spray at the Gillard government’s Fair Work Act, claiming that public holiday and weekend penalty rates have the potential to force his new restaurant venture to the wall.

In an exclusive interview, the straight-talking multi-millionaire told The Power Index that waiters at his new South Yarra pasta den Mama Baba would have to be paid “$40 an hour on Sundays … and it’s not like they’ve had to go to uni for 15 years”.

“The problem is that wages on public holidays and weekends greatly exceed the opportunity for profit…It’s just not a good business practice to be paying penalty rates. It’s really difficult to stay open and we only do it because of tourism but the reality is it’s uneconomical.”

“So our labour laws are something that need to be looked at and we keep talking about it.”

About 350 staff are employed across Calombaris’ seven-venue Press Club Group. Workers in the hospitality sector receive 25% loading on Saturdays and 75% on Sundays. In the 12 months to September, hospitality industry wages increased by 3.1%, well below the average 3.6% wages growth in other industries.

But Calombaris, a self-described “proud Mulgrave boy”, said he had recently stumped up $45,000 for a pasta extruder for Mama Baba and that “variables” were threatening to turn the restaurant’s books a deep shade of red.

“But people underestimate the cost, as soon as those doors open, you’ve got variables, you’ve got labor costs, your beverage costs, your food costs, your fixed costs, they all start adding up.

“People say we’re very expensive in Australia in terms of costs. You know I can eat at [UK three Michelin star restaurant] Fat Duck cheaper than I can at some fine dining restaurants in Australia. But I know why it’s like that…because of our labour laws.”

Workplace Relations minister Bill Shorten, who has appointed an independent panel to review the Fair Work Act, rejected Calombaris’s analysis, pointing out that “waiters like other low-paid employees, couldn’t even afford to eat in high-end restaurants if they weren’t paid penalty rates”.

“I appreciate George’s excellent cooking and his business sense is to be applauded, but I can’t agree that cutting wages of low-paid workers is a boost for the hospitality industry. If George wants to bargain with his workers and improve productivity and be even more competitive, then the tools exist in our present workplace system.”

“Waiters are some of the lowest paid employees in the country. Penalty rates compensate wait staff and others who have to work late nights, public holidays and weekends while everyone else gets to spend this time with family and friends. We saw penalty rates and wages slashed under the Liberals’ extreme Work Choices laws, which was of course roundly rejected by the Australian people. The Gillard Government won’t be adopting the low road of paying already low-paid workers less.”

Since founding high-end restaurant The Press Club in 2006, Calombaris has opened six other Melbourne nosheries and an exclusive diner in the Greek seaside retreat of Mykonos. His empire commands an annual turnover of over $20 million and his personal brand is worth $2 million, according to Ernst & Young.

ACTU Secretary Jeff Lawrence said Australia has the second highest rate of insecure employment in the developed world, and that the hospitality industry was one of the worst offenders.

“Employers such as Mr Calombaris have added to the rich fabric of Australia’s food and wine industry but they do not operate their businesses unless they can make a profit. Without workers such as wait staff and cleaners, Mr Calombaris would have no restaurant to run, so is a bit rich for him to have a go at the very people who facilitate his success.”

Casual work was actually a boon to employers, rather than employees, Lawrence said, who often prefer something more permanent — even if it meant the removal of penalty rates.

“ABS and other data tells us that more than half of all casuals would prefer not to work on a casual basis, even taking into account the effect that a move to permanent work would have on their casual loading. But is suits bosses to employ their workers this way, because of the flexibility it provides the employers. Casual work and the accompanying pay is often variable from week to week, lacks minimum call in times, can lead to increased debts and can be whittled away by work expenses.

“Many insecure workers find it hard to predict their income, to pay bills and make ends meet , let alone plan for the future or save to buy a house.”

But Calombaris said the ongoing global financial crisis would make things tougher for restaurateurs, as well as employees.

“Mark my words there’s going to be a lot of restaurants closing. It makes me really scared. When the boys become men there’s going to be tough times and we’ve got to think clever, we’ve got to think smarter, we’ve got think efficient, we’ve got to be on top of it, I mean all those things count, every little thing.”

In December, the government unveiled an independent panel to conduct a review of the Fair Work Act, headed by former Federal Court judge Michael Moore, RBA board member John Edwards and industrial relations professor Ron McCallum. It is not known whether Calombaris intends to make a personal submission.

This article first appeared on The Power Index.