Melbourne — Australians do a lot of things differently. They drive on the left. They celebrate Christmas in summer. And they go nuts over a home-grown version of “football,” which is actually a bizarre cross between rugby and ballet.

But one of the strangest things to get used to Down Under is paying a restaurant bill without leaving a tip. Tipping is not customary in Australia. And as someone ingrained in Canada’s 15-per-cent tradition, this causes me immense discomfort every time I settle up.

Once I’ve paid the tab, I quickly skulk from the restaurant — pulling my hat down tightly, feeling quite sure the waiter is cursing my skinflint backside.

I should get over it. Because while smallish tips are appropriate for exceptional service or large groups, tips are not expected in Australia. Is the entire nation collectively trying to stiff its waiters? Far from it. In fact, the Aussies have developed a much fairer system for compensating restaurant workers. And Canada could learn from it.

In Canada, most restaurant workers receive the minimum wage or slightly more. Tips are then essential to supplement these poverty-level wages. The whole system is nominally justified as an “incentive” to improve service, but everyone in the business knows this is hogwash. In reality, the tipping system is a shell game: It transfers some of the costs of running a restaurant from the owner to the customer, but in the process exacerbates the precariousness of restaurant work.

Even the Canada Revenue Agency assumes all waiters get tipped at the “going rate” — in fact, they must pay tax on the imputed income. Last time I checked, the CRA didn’t send inspectors around to separate the “good” waiters (who receive tips) from the lousy ones (who, in theory, shouldn’t).

Imagine if restaurant workers got paid the same way the rest of us do: with a paycheque, instead of holding out their hat. That’s how it works in Australia. The average hourly wage in the restaurant business is $18 per hour (or $16 in Canadian-dollar terms).

On top of that, workers receive a premium (usually 25 per cent) for working evenings and Saturdays, and 50 per cent on Sundays. (A Canadian waiter would likely be fired on the spot just for asking for a weekend premium.) Restaurant employees work an average of 32 hours per week (compared to 25 in Canada), and their hours are more regular.

Australia’s system reflects a deliberate effort by policy-makers over past decades to raise work standards. To start with, the minimum wage is high ($11 per hour in Canadian terms). Then, a traditional wage-setting system established skill-specific minimums that were even higher. The payback, for customers, is that no tip is required: the skilled labour that goes into a restaurant meal is compensated like any other input, rather than treated as some kind of charity. In general, service is as good as or better than Canada — precisely because waiting is a respectable, fairly compensated career.

I can already hear the small business lobbyists revving up the scare campaign, should we ever dare to try this at home: bankrupt restaurants, jobless waiters, and sky-high dining costs. The Australian experience, however, proves the opposite. Australian restaurants generate as many hours of labour demand (relative to population) as Canada’s (although since the average work week is longer this translates into slightly fewer, but better, jobs). And Aussies spend just as much of their income dining out as we do.

And if anything, Australia’s higher standards have encouraged a modest upscale shift in the whole industry: there is less fast food, and more mid-range restaurants. (Australians’ genetic inability to brew a good cup of coffee is another reason Tim Hortons will never take hold down here; their espressos are great, though.)

Sadly, if Australia’s current right-wing government has its way, their restaurants will soon look more like Canada’s. Prime Minister John Howard has frozen the wage award system, and launched an all-out assault on unions. Once restaurant wages start to fall, then tips will again become a matter of necessity, rather than a relatively rare “extra.” Mr. Howard’s labour laws are highly unpopular, however, and may scupper his re-election campaign next year.

Economists are unanimous that service industries, such as restaurants, will account for a growing share of total employment in the decades to come. The Australians have proven that it’s possible to make them good jobs, rather than McJobs.

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York,...