Speech on Youth Jobs Path Bill

22 November 2016

DR CHALMERS: (Rankin) (19:00): I rise to speak to the Social Security Legislation Amendment (Youth Jobs Path: Prepare, Trial, Hire) Bill 2016. The responsibilities of this parliament are to deliver economic growth which is inclusive, to create work that is rewarded, and to have a decent social safety net for those left behind. The failure of the current government to deliver on those three fronts is nowhere more acute than when it comes to our labour market in Australia. We do have some very serious challenges when it comes to jobs in this country. We have underemployment, which is people looking for more hours but are unable to find them, at record highs. For those people in the workforce we have wages growth at record lows. We have pockets of high unemployment around the country, including in parts of my own state of Queensland. And, for the purposes of this discussion today, we have an extreme issue, an extreme problem, an extreme challenge, when it comes to youth unemployment, with something like 260,000 young people looking for work and unable to find it.

As confronting as these figures are—record underemployment, record low wages growth and 260,000 young people looking for work—they do not completely and properly paint the picture of the devastation that is rort on a young life if they look for a job and do the right thing and are unable to find work. Colleagues in the parliament, on all sides of the parliament, will know that this time of year is graduation time. I am sure the member at the table opposite me goes to a lot of school graduations—as do I; as does everyone in this place—and talks to these impressive young people graduating from high school, who have already probably dipped their toe into the labour market and are trying to work out where they might fit if they are not going on to further study, or even if they are.

When you talk to these young people, you hear the stories and the real angst they feel about what their future will hold for them—when they finish grade 12 and they get beyond schoolies week and recover from that—in the jobs market, a jobs market which is remarkably tight, remarkably difficult and remarkably uncertain for people like them. As the graduation ceremonies break up—and all the selfies are happening and there is all the happiness of the graduating class—in the high schools in my community, I really do think about the prospects for them. I also talk to the families, largely the mums and dads, about where their kids might end up, and at that level, too, there is an extraordinarily amount of anxiety about whether their young people can find a job in the uncertain economy that they find themselves graduating into.

The jobless figures also do not properly paint the picture of the psychological damage done to people who are looking for work for a long time—the long-term unemployed who are unable to find work in this economy—and they also do not speak to the intergenerational vandalism that is done to communities like mine, in Logan City and the southern suburbs of Brisbane, when you have multiple generations of families who, for a combination of reasons, are unable to find work.

Our task in this parliament, as I said, is to deliver growth which is inclusive, work that is rewarded and a safety net for those left behind. Our responsibility to people in my community and, indeed, right around the country is to do what we can to invest in those three pillars of economic policy in this country. I have seen too much unemployment in my community. I spoke about it in my first speech and I have probably spoken about it in one way or another during most of the parliamentary weeks that we have been here. Ideally, both sides of the parliament should share this most important concern for unemployment—youth unemployment in this case—long-term unemployment, intergenerational unemployment, underemployment and, for those in the labour market, that record low wage growth.

That is why we need to really think about this task in two ways. Firstly, there is growing the economy—not as a slogan; we actually need to grow the economy. In my local community that means getting a proper NBN. It means fixing the M1. It means getting our slice of the action when it comes to renewable energy jobs. It means not cutting apprenticeships, so that we can train the trades men and women of the future. That is one part of it. Secondly, we also need active labour market programs. We need very intelligent, well-targeted, well-considered labour market programs. Notwithstanding all of the things that I am about to say about the bills before us—the legitimate and genuine concerns that I do have—at the very least, we are talking about active labour market programs. That is the second element.

Apart from boosting growth in our local communities and making sure that growth is fairly shared, we also do need programs like the ones that we are talking about today. We have our issues with what we are talking about today, but at least we are having the conversation—and a very welcome conversation, if I may say so—about how we specifically help young people in communities like mine get the jobs that they need to eventually buy a home, provide for a family and save for their retirement. These are all of those sorts of things that we cherish in this country and that we should cherish in this parliament.

But we need to make sure that we do not have just any kind of active labour market program. We need to make sure that we get it right. From my point of view, that means five things. We need to get value for money. We need to make sure that young people are not excluded. We need to make sure that wages for people in the workforce are not undercut by some of the programs we are thinking about now. We need to make sure that young people are gaining real skills. Most importantly, we need to make sure that there are real jobs available for them at the end of it. If I am honest, as much as I welcome the attention paid to this crucial issue, I am not confident that we can tick all five of those boxes when it comes to the legislation that we are discussing today.

To go to the detail of it, the bill seeks to implement parts of the government's Youth Jobs PaTH (Prepare-Trial-Hire) program. We all know that was announced in the 2016-17 budget and is intended to take effect from April next year. It is all about providing jobseekers between the ages of 17 and 24 with some pre-employment training and some voluntary internships for from four to 12 weeks. Jobseekers receive $200 a fortnight on top of their current income support payments. Businesses will be paid $1,000 to take on an intern. The businesses get a wage subsidy of $6½ thousand to $10,000 if they hire jobseekers at the end of those internships. Specifically, the bill addresses small parts of the overall program that cannot be dealt with by the department. There are some provisions inserted into the relevant acts—for example, to allow young people to suspend their payments if they find work and restart them within 26 weeks if they lose their job through no fault of their own.

As I said, I am pleased at least that, as a foundation for this discussion, there is a recognition that we do have a serious problem with employment in this country. It really is a symbol of the sense that people in communities right around the country have that the economy is not necessarily working for them and that there are changes going on in the economy that are leaving people behind. We can debate the political consequences of that, we can debate all kinds of aspects of that, but I think we can all agree that there is an issue where people think that the link between wanting to work hard and the reward for that has been severed in this country, and that is what is driving people to look for political alternatives.

One of the issues with that, if I can respectfully say it, is that being told by the Prime Minister, the Treasurer and others that the economy is going gangbusters at a time when people are finding it tough to find the working hours or the jobs or the wages they need to provide for their families does grate with people. This sense that there has never been a more exciting time to be alive may be true for some, but it is certainly not true for all, and I think that language is unhelpful.

On the surface, if you look at the headline figures of some of the economic indicators, yes, there are some numbers that we would traditionally considered to be pretty good. The headline GDP growth figure of 3.3 per cent and the fact that we have just racked up a quarter-century of continuous economic growth are things to be proud of. When you think about that quarter-century of growth and the fact that we made it through the GFC without the massive skills destruction and capital destruction that so many other countries went through, that is something we should be particularly proud of.

So there are some things in the economy that we should be upbeat about, at least on one level, but below that there are a whole bunch of very troubling indicators and statistics before we get to those stories that I mentioned. Wages growth is the lowest on record, as I said. The statistic that we use as a proxy for living standards in this country, which is real net national disposable income per capita, is still 1.9 per cent below the level it was at the 2013 election. For lay people, that means that our living standards have actually declined over the last three and a bit years since that election. That is a very troubling statistic. If you look at the October jobs figures, which were released quite recently, employment growth slowed to just 0.9 per cent over the year, less than half the two per cent rate the government predicted in its budget. We have lost 89,900 full-time jobs since Christmas. The participation rate has dropped to a decade-long low. Youth unemployment fell again, to 12½ per cent—still more than double the national average, with 260,100 young people unable to find work—but it only fell because the youth participation rate plummeted to the lowest level in the history of the labour force survey. It has never been below 66 per cent before. When we talk about youth participation in our labour market, it is a very worrying statistic. Underemployment was at 8.7 per cent. The Treasury officials at the most recent estimates said that that is the lowest it has ever been and the worst it has ever been since the records began in the year of my birth, 1978.

Mr Zimmerman: Show off!

Dr CHALMERS: The member for North Sydney likes that! That means 1.1 million Australians cannot get the hours that they want. The RBA's statement on monetary policy also talked about their underlying concerns about the labour market. Part-time work accounted for all the increases. Growth in part-time jobs was more likely to be driven by weakness in the labour demand than by changes in employee preferences. That means people are forced into part-time work when they really would prefer not to be in part-time work. The RBA also talk, along the same lines as I have been, about their concern about this serious underemployment challenge we have in the economy.

As I said, we welcome the attention paid to this issue of youth unemployment, but we do have our concerns about the program. We are worried about exploitation and about undercutting of wages. We are worried people could churn through participants, leaving them with little prospect of a job at the end. We are worried about young Australians working for less than the minimum wage. We are worried about replacing existing jobs with these jobs paid at the cheaper rate. We are worried about people in sectors like the hospitality sector being replaced by interns so that companies do not have to pay the penalty rates. There is no firm definition of an intern or what they will be doing—whether they will be working or observing, with all of the health and safety implications of that. There are a whole range of issues that we are genuinely concerned about. We all want to get to a good outcome here, but we are very concerned about what this means for the labour market and particularly for young people's place in it.

There are quite a few deficiencies in the policy, and the most important parallel we can draw is probably to the Work for the Dole program. When the Work for the Dole program is explained to people in the abstract, it seems like a good idea, but, when you delve into the detail of Work for the Dole, you find that 90 per cent of participants do not actually get a job at the end of it—which is the main stated aim, at least, of the program. So we need to be very careful, when it comes to things that sound okay on the surface like 'try before you buy' and these sorts of slogans that people use about young people in the labour market, that we actually understand what they mean and whether they have the capacity to work. If we are really genuine about fixing this problem with youth unemployment as a way of beginning to address some of the broader concerns around unemployment in our community, we need to make sure that what we are talking about will actually work.

That is why we want this bill to receive the proper consideration by Senate colleagues in the committee process. We do want to take the time to get it right. It is a pressing issue—it is an urgent issue, but that does not mean that we should rush in and get it wrong and undercut wages and all of those sorts of things that trouble us greatly. I know they trouble the member for Wakefield, who is in the chamber, greatly and all of us on this side of the parliament. We want to get it right. We want to ensure we do get that value for money. We want to make sure that young people, who are already doing it tough enough in the labour market, are not exploited. We want to make sure that, at the end of it, they have developed real skills that are useful in the workplace. We want to make sure that they have the capacity to get real jobs at the end of it.

There is arguably no more important task in this place than to create the conditions where young people can get ahead and prosper if they work hard and do the right thing. I am pleased to see the attention paid to this issue. I am deeply sceptical and deeply concerned about some of the ways that the government is proposing to go about it, but we will learn more about it in the committee process and we will continue to play a constructive role as we go forward.