In Canberra, we love our public holidays. We love them so much, that we have more of them than any other part of Australia.
It is Easter this weekend. With Easter comes a lot of holidays — more than any other time of year, besides Christmas.
So what’s the effect of all this holidaying on the ACT economy? Expert views differ widely.
According to the Canberra Business Chamber, the territory’s top business lobby, the effect can be negative as public holidays mean penalty rates, and penalty rates mean unemployment.
“Generally speaking, penalty rates on public holidays make businesses think staying open on a public holiday is just not viable,” says Robyn Hendry, CEO of the Canberra Business Chamber.
“Some businesses – particularly small businesses – look at their cost of operation compared to potential income and think it’s not commercially viable to open.”
These effects hit young employees hardest as they’re most likely to be working as casuals or in unskilled roles. It’s also bad for tourism, Ms Hendry says.
“We have a major tourism industry whose numbers are heading north. If everywhere is shut on public holidays because of these penalty rates, then Canberra becomes less interesting for tourists.”
Other sources take a different view.
“The problem with this entire penalty rates debate is the ‘fallacy of composition’,” says Matt Grudnoff, an economist at The Australia Institute, a left-leaning think tank based in Civic.
“It’s where I, as a business owner, look at myself and say “I’ll employ less people” then assume the same for everyone else.
“Other firms might not think like I do and the firms that stay open will get more business because I’ve closed shop.”
Mr Grudnoff rejects the idea that public holidays cause higher unemployment. He says that workers are also consumers and the fact that they are being paid more means they can spend more, which in turns creates more jobs.
“What you’re effectively doing by having public holidays and penalty rates is workers have more pay and businesses have lower profits. But the effect on employment is negligible.”
According to Professor Phil Lewis, an economist at the University of Canberra, there are both moral and economic considerations to keep in mind.
“If you have a public holiday, employers who pay the award will be obliged to pay $45 an hour for a person on the lowest wage. It doesn’t take much imagination to realise that your business has to make a lot of money to cover that.”
“We had an example of what public holidays do some years ago when the government gave everyone in Canberra a holiday for Melbourne Cup Day. That day, most restaurants closed down.
He says that some businesses will stay open, especially family-owned businesses, as family members won’t demand penalty rates.
“There is also a moral question about whether people should have to be paid these higher rates — especially as it is really inconvenient for people to lose their Easter, which is a day usually spent with loved ones.”