Mar 18, 2003

Appropriation Bill (no. 3) 2002-2003 Cognate bill: Appropriation Bill (no. 4) 20

APPROPRIATION BILL (NO. 3) 2002-2003 Cognate bill: APPROPRIATION BILL (NO. 4) 2002-2003: Second Reading


18 March 2003


Mr ALBANESE (Grayndler) (7.37 p.m.) —The bills currently before us, Appropriation Bill (No. 3) 2002-2003 and Appropriation Bill (No. 4) 2002-2003, are all about the numbers and sums that together make up the budget of the Commonwealth government. However, today I want to move beyond the numbers and the arguments over surpluses and deficits to consider the human implications of this budget and, in particular, what the budget has meant for the unemployed and for those young Australians seeking to acquire employable skills. Economists sometimes forget that budgets are a means to an end, the purpose of which is to maximise living standards for all Australians. It is my strong belief that a budget must be about more than a dry, annual accountancy document that seeks to make sure the numbers on one side of the ledger are balanced by those on the other. It also must be about more than short-term attempts to bribe the electorate. Budgets are the primary tool by which governments can manage the economy, address social needs and remedy economic failures. They are an investment in the attainment of national priorities.

As such, budgets must be about the pursuit of ideals, of lifting people out of poverty and despair and providing them with the opportunities and security to realise their full potential. This is the great dividing line, the great issue of principle, between Labor and the current Howard government. Labor believes that government has a responsibility to invest in individuals as well as the communities in which they live and work. The coalition believes that individuals prosper only when government leaves them to fend for themselves.

One of the groups most marginalised by this government’s ideology is the unemployed. In seven years, what have the unemployed got from this government? They have a privatised employment service that recycles them through endless programs with little chance of meaningful employment at the end; they have mutual obligation programs that are more about demonising the jobless than providing them with employable skills; and they have a traineeship and apprenticeship system that is being increasingly exploited by employers as a source of cheap labour rather than as an opportunity to skill-up our work force and improve the productivity of the Australian economy.

As the shadow minister for employment services and training, I am disappointed that we as a nation still waste too much of the talent of too many of our people. Unemployment is, without question, still one of the greatest policy challenges we face. Unemployment is a scandal of wasted potential. Unemployment saps the confidence and self-esteem of our fellow Australians. It damages the social fabric and has profound negative consequences for social cohesion. As has been seen in other countries, if it is ignored and neglected, left to a fate to be decided solely by market forces, unemployment creates a permanent underclass.

Today, 609,700 of our fellow citizens are without a job. On top of this official figure, more than 700,000 Australians currently work part time and want more hours. A further 1.16 million, who are counted by the ABS as not in the labour force, would still like to have a job. Altogether, nearly 2½ million Australians are not getting the financial and social stability that comes with having enough work. Unemployment amongst our Indigenous communities is currently running at six times the national average. More than 850,000 children—17 per cent of all dependent children—now live in households where neither parent has a job. It is also becoming increasingly evident that a growing section of our community is becoming entrenched in long-term joblessness. The latest data released by the Department of Family and Community Services shows that 394,499 people have been on unemployment benefits for more than 12 months, which is a higher figure than when this government was first elected, despite a decade of economic growth.

As well as growing welfare dependency, unemployment is becoming increasingly ghettoised—that is, it is concentrated in a small number of regions or neighbourhoods. While nationally unemployment has been ebbing lower, communities in areas such as Wide Bay in Queensland, the Tweed and Illawarra in New South Wales, outer western Melbourne, and many Aboriginal communities in the Northern Territory and Western Australia are enduring an unemployment rate of well over 10 per cent. However, the plight of the unemployed and the continuing rise in long-term joblessness should come as no surprise to any member of this parliament. It is no coincidence that this deteriorating situation coincided with the Howard government’s decision to cut funding to labour market programs by 50 per cent, or $1 billion annually. As part of its ideological crusade, the government scrapped much of the assistance put in place by the previous Labor government’s Working Nation program, irrespective of how effective that assistance was proving to be.

We have a government that, on the one hand, complains about a growing culture of welfare dependency while, on the other hand, it savages the very programs that would assist the unemployed to move off welfare and return to the economic and social life of our community. We have a government that specialises in vilifying the victims of economic change, labelling them as dole bludgers, job snobs and cruisers. As well as slashing funding for labour market programs, the Howard government has privatised the delivery of employment services. The Job Network, established in 1997 without parliamentary debate or community consultation, is now the government’s flagship assistance program for the unemployed. The Job Network replaced programs delivering specific services with a much more open-ended funding regime centred on employment outcomes. Within the Job Network, intensive assistance—soon to be repackaged as `customised assistance’—is the highest level of assistance available and is targeted toward those with the greatest barriers to employment.

Ministers Brough and Abbott regularly boast about how much money the Job Network is saving the government. In response, the following point has to be made: both ministers are correct, but this is a boast that has had a human cost as well as a long-term economic cost. Under the Keating Labor government, funding for employment assistance represented 0.67 per cent of GDP. That figure under the Howard government has declined massively to just 0.39 per cent of GDP. On an international comparison, Australia invests 43 per cent less than the OECD average on help for the unemployed. The budget currently before us continues that legacy. Whilst the flexibility and emphasis on employment outcomes that underpin the Job Network have the potential to deliver better outcomes for the unemployed, fundamental flaws in the funding structure and inadequate levels of government support have greatly undermined the effectiveness of the system.

It is not just the Labor Party voicing these concerns. In September last year, both the Productivity Commission and the Department of Employment and Workplace Relations released detailed evaluations of the Job Network’s performance. Both assessments provided compelling evidence that the current funding model is seriously flawed. The department’s report found that participation in intensive assistance raised the employment prospects of the long-term unemployed by a mere 0.6 per cent. As the report acknowledged, the overwhelming majority of job seekers who obtained jobs after participating in this intensive assistance would have got jobs anyway. On top of this, the Productivity Commission found that many job seekers received little or no assistance while apparently in the intensive assistance phase. This is popularly called `parking’ in the industry. The report also went on to say:

…the Intensive Assistance program is neither intensive nor assistance to some disadvantaged job seekers.

Separate research conducted by David Abello from the UNSW and Helen Macdonald from the Brotherhood of St Laurence that involved interviews and focus groups with providers and job seekers concluded:

The evidence tends to refute the notion that competition improves service quality. Rather it seems to have exerted a downward pressure on service quality and outcomes. Despite having been a much-touted centrepiece of the Job Network’s design, job seeker choice appears to have played little part in driving standards.

Given these findings, it should therefore come as little surprise that the employment outcomes being achieved by intensive assistance compare unfavourably to those that were being achieved under the most effective Working Nation programs such as JobStart.

According to the most recent data produced by the Department of Employment and Workplace Relations, only 17 per cent of those who participated in intensive assistance found full-time employment. In the case of the most disadvantaged job seekers, only one in 10 found full-time work upon completing intensive assistance. As a result of these poor outcomes, job seekers are being increasingly recycled through the Job Network. Information obtained by Labor through the Senate estimates committee process reveals that 49 per cent of people participating in intensive assistance had already been through the program previously, 23 per cent had been through the program at least twice before and five per cent had been through at least four times.

Members should note these figures in particular as I recall Minister Brough telling parliament on 27 February 2001 that the Keating government:

… placed upon the Australian unemployed the greatest fraud of all—recycling the unemployed through unemployment programs, giving them false hope, but never delivering.

Given the data now available on the Job Network, I would suggest that Minister Brough and his government are guilty of the very accusation that they levelled at the previous Labor government. Importantly, in its report the Productivity Commission considered the implications of the changes due to take effect from 1 July this year as part of ESC3. Specifically, the commission concluded:

The proposals for Customised Assistance under the Active Participation Model guarantees a much higher level of interaction with jobseekers … However, there is no guarantee that individual jobseekers will get access to any Job Seeker Account funds or that the 3 day a week requirement need amount to genuinely significant assistance. Accordingly, some jobseekers with large barriers to employment may not get much direct assistance from the Job Network.

The Productivity Commission paints a bleak outlook for the long-term unemployed. At the time that these reports were released, Minister Brough issued a press release stating:

The Job Network is clearly delivering results.

This is nothing short of an extraordinary analysis and highlights just how out of touch with reality this government has become.

The two reports I have mentioned do not suggest that active labour market programs are pointless or a waste of money, but they do indicate that without adequate funding their effectiveness will continue to be greatly reduced. Inadequate funding has meant that those who did gain access to intensive assistance did not get the help that they needed. Only five per cent got any form of work experience and only 14 per cent received vocational training. The deficiency in the Job Network is obvious: not enough is being invested to improve job outcomes for disadvantaged job seekers, particularly those lacking relevant work experience in a mainstream job and/or relevant skills.

I now wish to turn to another program that the government holds up as one of its greatest achievements: Work for the Dole. Since 1996 the government has spent close to half a billion dollars on this program, and it will spend $147 million in this budget. Despite this significant investment of taxpayers’ funds, every evaluation has consistently shown it to be a mediocre scheme at best. The latest data from the Department of Employment and Workplace Relations reveals that 67.1 per cent of participants were still unemployed following completion of the program. According to research produced by ACOSS, amongst others, these results compare unfavourably with the programs it replaced. For example, the previous Labor government’s JobStart program for the long-term unemployed had a success rate of close to 60 per cent, even though it was assisting people who were far more disadvantaged than those currently participating in Work for the Dole.

The reason for the mediocre results is that Work for the Dole offers limited employment experience, much of it in unskilled work, and little formal training. Further research recently undertaken by the UNSW found that participants in the program were stigmatised, making it actually harder for them to secure mainstream employment. The government made much of the `wastefulness’ of the previous Labor government’s labour market programs when it scrapped them in 1996. If it adopted the same hard-nosed approach now, it would immediately scrap Work for the Dole. As every member of this House knows, Work for the Dole was never designed to get people into jobs; it was designed as a political exercise.

This very fact was confirmed when Minister Brough’s spokesman told the Daily Telegraph in December of last year that the program was not about training but about stopping the unemployed watching Oprah. Not only was this a further crude attempt to vilify and stereotype the unemployed, but such comments highlight the simplistic basis upon which the Howard government develops public policy. Labor do not condone those people who fail to take seriously their job finding responsibilities. Indeed, we introduced mutual obligation. Passive welfare can indeed be debilitating. It is about time, however, that the government fulfilled its responsibilities as well. While the current government believes that simply keeping job seekers active will lead to future employment opportunities, Labor recognises that without relevant skills and recent experience in a mainstream workplace job seekers will continue to find it difficult convincing employers to take them on.

Finally, I wish to turn to the government’s New Apprenticeships system. The Minister for Education, Science and Training, Brendan Nelson, regularly boasts in the House that under his government the number of people undertaking apprenticeships and traineeships has doubled. However, this expansion appears to have come at the expense of quality training outcomes, both for the individual as well as for the Australian economy. Job Watch, a community legal centre in Victoria, has provided evidence that employers are increasingly exploiting the New Apprenticeships scheme as a source of cheap labour rather than as an opportunity to skill up the unemployed. A special SBS investigation revealed the case involving fast food retailer Hungry Jacks. When the retailer opened a new outlet in Hornsby, New South Wales, every single one of its 50 new employees were employed as trainees. One wonders who was doing the training. Many of these were high school children simply looking for a little extra pocket money.

Unfortunately, these are not isolated cases. Many employers, in particular those in low-skill industries, appear to be exploiting the scheme as a de facto wage subsidy program. According to the Australian Industry Group’s Heather Ridout, the growth in the New Apprenticeships scheme also disguises `an alarming fall in technical and engineering apprenticeships’. For example, engineering enrolments in New South Wales TAFE colleges alone are down 35 per cent over the past eight years. The Department of Employment and Workplace Relations has identified skills shortages across a range of industries, including child care, secondary school teaching, panel beating, metal fitting and metal fabrication.

These skills shortages highlight a failure of government policy. Under this government, the nation’s training dollar is not being targeted towards addressing acute skills shortages in the economy or providing young Australians with the skills that will improve their long-term career prospects. Australia must raise the skill levels of its work force if it is to address skills bottlenecks and remain fully competitive in the international economy. This can only be achieved if government works cooperatively with industry to provide the vocational education and training experiences that will both equip individuals and reward employers. Instead of appropriately resourcing those collective institutions already in place—the industry training advisory boards—Minister Nelson has actually cut their funding and created his own ambiguous round table of stakeholders.

A further indication of the scheme’s inadequacy is the consistently higher non-completion rate amongst trainees. Thirty-seven per cent of participants in the scheme do not complete their training course. On top of this drop-out figure, between 20 and 30 per cent of those undertaking traineeships are receiving inadequate training. It should therefore come as little surprise to members that skills growth as a contribution to productivity growth has dropped by 75 per cent in the last 10 years, from 28.6 per cent in the late eighties and early nineties to only 2.9 per cent in the late nineties.

The Howard government fends off Labor’s concerns about quality by attacking Labor’s record. But what you will never hear from Minister Nelson is how it was the previous Labor government who, in the 1980s, took on the states and pushed them to put in place new industrial arrangements and legislation that enabled the traineeship system to be established in the first place. You will not hear the Howard government acknowledge that it was the Whitlam Labor government that provided the first Commonwealth financial support for apprenticeships back in 1973, when it established the National Apprenticeship Assistance Scheme. Prior to that time, the Liberals had been in office for 23 years and had done absolutely nothing to put such a scheme in place. It is surprising that the minister for education does not acknowledge Labor’s achievements, given he was an ALP supporter and member back then. Indeed, Minister Nelson was never more correct than when he told the Sydney Morning Herald in 1994:

Labor policies are usually much better for people …

The minister was right then, and his statement rings true today. Unfortunately, he is now a member of the government that is destroying the good policy framework which was inherited in 1996.

NAAS was a landmark for apprenticeships in Australia. It marked the beginning of what was to be continuous Commonwealth funding for apprenticeships and ensured for the first time that apprenticeships became a national priority. Unfortunately, you will never see such visionary public policy from this government. Under this government, the long-term unemployed have been abandoned to the ravages of the marketplace. The government’s current policy framework is failing to tackle entrenched joblessness. As I have previously mentioned, the number of Australians who are relying on long-term benefits and have been unemployed for more than 12 months is today higher than it was when this government first took office back in 1996. It is little wonder, then, that ACOSS has recently labelled the government’s approach to job creation a `policy quagmire’.

A serious effort to tackle unemployment, to skill-up the Australian work force and to move us towards full employment requires substantial investment from government, but when you consider the alternative you realise that the cost of this investment is absolutely worth bearing. It is a price we have to pay to end child poverty, to restore social cohesion and to spread prosperity across all sections of Australian society. Instead of finding new and more draconian ways to breach the unemployed and generally make their lives a misery, the government should be making that positive investment now. Unfortunately, however, for seven years Australia has had a government that simply does not believe in investing in our greatest resource: our population.