Bendigo will be on the frontline of a national debate on wages and working conditions as the first of eight cities around the country to host a public forum into the Productivity Commission's draft report on workplace relations.

The report recommends changing weekend penalty rates for retail and hospitality workers to make Sunday wages equivalent to those on Saturday, among other proposals.

Local business groups say it would boost tourism and tackle youth unemployment – the latter a notion the federal member for Bendigo slammed as ‘a furphy’.

Bendigo Business Council CEO Leah Sertori said her members “strongly supported” reducing Sunday wages to those paid on Saturday.

“The reason we support this is to encourage longer trading hours, which in Bendigo is especially important when we’re trying to attract visitors to our beautiful city,” she said.

“They want shops, restaurants and cafes open on Sundays.”

Ms Sertori said the move would not only boost the local economy and benefit local shop owners – but also help young people find jobs.

“The Bendigo youth unemployment rate is 19.2 per cent,” she said.

“Looking at the social impact of that unemployment rate on our local economy... it’s already having a significant cost in terms of welfare and a significant cost on the talented, motivated young people who can't find work.”

But Member for Bendigo Lisa Chesters said retail and hospitality workers were already among some of our lowest paid workers – and not all were young people.

“People who work in cafes aren't just uni students, a lot of mums and dads pick up extra work on the weekend to help make ends meet ,” the Labor MP said.

“These changes would make it very hard for them to pay for things like kids sport and school expenses… in many cases, penalty rates are how they survive.”

And Ms Chesters response to claims reducing Sunday penalty would create more jobs was blunt.

“It won’t,” she said.

“It’s a furphy to claim it will… it will create extra shifts on a Sunday and I support the position that people who give up their time on a Sunday to work should be compensated.

“I don’t think it’s at all fair to ask workers to take a pay cut so a few cafes have the option to stay open on a Sunday.”

An online poll run by the Bendigo Advertiser since last Wednesday has readers strongly in support of Ms Chesters’ position. As of 11am Thursday, the poll had received 362 responses with 47 per cent in favour of keeping Sunday penalty unchanged to 26 per cent in favour of reducing them to Saturday rates.

A further 10 per cent was in favour of increasing Saturday rates to match Sunday, while 15 per cent thought weekend penalty rates should be abolished altogether. The poll is still live.

However, both Ms Sertori and Ms Chesters welcomed Bendigo’s opportunity to engage the issue.

“We need to sit down and have a discussion in a fair and transparent way instead of the conversation which is happening in the bubble of Canberra,” Ms Chesters said.

Ms Sertori said the Bendigo Business Council was willing to engage employees in a broad discussion on industrial relations.

She said tackling a trend toward a casualised workforce in a number of industries was one way to improve working conditions.

“We do need to talk about is how can we get more people into work and how we can get more people into work better conditions, with more job security and all the things that go with that like paid leave, sick leave and all the issue that come with casualised labour.”

Conversely, she said the business council would advocate relaxing of restrictions on unfair dismissals.

“The conversation needs to be two ways and needs to be mutually respectful and people need to accept the challenges that small businesses face,” she said.

The Productivity Commission’s public forum in Bendigo will be held September 4.

It will be followed by forums in Hobart, Melbourne, Canberra, Perth, Adelaide, Sydney and Ipswich before a final report is prepared and forwarded to the Australian Government by the end of November.

Individual submissions are accepted until September 18.