The Abbott government will not interfere with the Fair Work Commission's role in setting minimum wages, but Employment Minister Eric Abetz has refused to call off a review of penalty rates.
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After saying earlier in the week that the government had ruled out changes to penalty rates - even if the Productivity Commission recommends doing so in its November report - Senator Abetz resisted calls by Labor on Thursday to stop the commission's review of overtime rates.
Asked more than 10 times to do so, he told a Senate estimates committee: "I am not going to play this game of ruling in or ruling out matters that the Productivity Commission has now seized itself of, given the terms of reference [of the commission's report due in November]."
"I'm not going to go on public record and tell the Productivity Commission how to interpret the terms of reference," he said.
Senator Abetz described the line of questioning by Labor senator Sue Lines as "tedious" and predicted that shadow employment spokesman Brendan O'Connor would be drafting a press release to continue a "scare campaign" over penalty rates.
Within minutes Mr O'Connor's office released a press release, headed: "Abetz refuses to rule out review of penalty rates".
"The minister used weasel words in an effort to disguise the Abbott government's intention to consider changing conditions of employment for millions of workers," Mr O'Connor said.
"It's clear that the take home pay of millions of Australian workers is under threat by the Abbott government."
Victorian Premier Daniel Andrews also claimed on Thursday that the wages of hundreds of thousands of Victorian workers would be cut should penalty rates be abolished.
On Wednesday, federal Liberal backbencher Alex Hawke insisted the government hadn't "ruled anything out" in terms of penalty rates.
Senator Abetz said the main threat to penalty rates was the Fair Work Commission's four-year review announced under Labor when Opposition Leader Bill Shorten oversaw the Employment portfolio.
On Tuesday, business groups took aim at the government for ruling out any change to penalty rates or the minimum wage, accusing it of taking a "head in the sand" approach and squibbing debate on the issue.
Senator Abetz said the Fair Work Commission would remain as the agency that sets the minimum wage.
Senator Abetz also stepped up his attack on the Community and Public Sector Union, which is currently threatening industrial action. The union is asking for a 12 per cent pay rise over three years, rejecting the government's pay offer that it says would lead to an effective 0.5 per cent pay cut for each of those three years.
Senator Abetz said the current low inflation environment made the union's claim "immoral".
"One wonders what world the CPSU lives in when it makes such outrageous claims," he said.
