Australia

Soft economy fuel for penalty rate push

Labor leader Anthony Albanese says the weak economy should stop further erosion of penalty rates. (AAP)

Preventing cuts to Sunday penalty rates for thousands of workers could help rev up the Australian economy, unions and federal Labor argue.

Weakness in the Australian economy is further proof of the need to stop cuts to penalty rates, according to Labor and unions.

About 700,000 retail, fast food, hospitality and pharmacy workers will have their Sunday penalty rates pared back from Monday, as part of a gradual easing of the loading initiated by the Fair Work Commission.

Labor has long rallied against the cuts, with leader Anthony Albanese arguing it is particularly important while the Reserve Bank has indicated the economy is softening.

"At a time when wages are not keeping up with the cost of living for so many Australian families, this is a blow to them, but it's also a blow to the national economy," he told reporters in Canberra on Monday.

Australian Council of Trade Unions president Michele O'Neil agrees the economy would be best served by keeping Sunday rates weighty.

"What we know, if you look at economic commentators, is that what's needed in the economy is more spending and that wages is the most direct way to deliver that," she told ABC Radio National.

But Finance Minister Mathias Cormann has stressed the Fair Work Commission decided on the changes to penalty rates independently.

He said the wage price index, which tracks wage growth, is picking up and the government is trying to put more cash in people's pockets through its $158 billion worth of tax cuts.

Looking at the state of the economy more broadly, the government also has plans to spend big on infrastructure.

"We are very focused on making sure that we continue to deliver our pro-growth agenda," Senator Cormann told ABC Radio National.

"It is what is reflected in our budget and it is what we will continue to do into the future."

The Reserve Bank is widely expected to deliver the first back-to-back interest rate cut since 2012 when its board meets on Tuesday, in an effort to kick-start economic growth.

That would set a new record low cash rate of 1.0 per cent.

Mr Albanese says the central bank's meeting is likely to influence the debate about the coalition's full tax package, which will play out in parliament this week.

"We'll wait and see what they have to say about the economy," he said.

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