Jun 19, 2003

Matters of Importance: Employement: Job Network


19 June 2003

Mr ALBANESE (Grayndler) (3.39 p.m.) —I want to begin with a quote from the Prime Minister. When he was opposition leader, just four days before the federal election in 1996 he said:

If I win the election, I won’t be going overseas for quite a while … I think Prime Ministers should go overseas and I have never, I don’t think I’ve ever been guilty of cheap shots in relation to Prime Ministerial travel but my first priority if elected will be to get to work on doing something about youth unemployment.

Even for this Prime Minister, it is a good effort to break two promises in one sentence. We know now that there are still some 87,000 young people on benefits, but most worrying is that 47,000 of those have been unemployed for more than 12 months.

In the recent budget, we saw that the minister and the Howard government had an opportunity to put more resources into labour market programs. While the government failed to make any new investment in help for the unemployed, it did have the money to provide $700 million in superannuation tax cuts for the wealthy and $500 million in tax cuts for big business. They were the priorities of the government. It will not spend money on human capital and on helping the vulnerable in our community but it will spend money in helping the top end of town.

We all know about the PM’s priorities. He spent $10 million on overseas travel. He could have circulated the globe seven times or gone to the moon, which some of us over here would have liked, but he has actually travelled so far he also could have come back. The total cost to the taxpayer of the St Regis Grand Hotel in Rome was $171,000, including $10,000 for a late check-out fee. That fee is more than an unemployed person receives to survive for a whole year. Just because, as the member for Lingiari said, the Prime Minister could not get out of bed in time to check his bags out of the hotel, it cost a further $10,000. That says something about the priorities of this government.

These massive cuts in help for the unemployed are considered by this government to be an achievement. I am sure the minister when he responds today will talk about how they are really putting in resources, because he says that when he is talking on commercial radio or when he is talking in this House. But when he talked to the Australian Financial Review in March he said that this government had cut $2 billion from labour market programs over the past five years. The minister said that—absolutely, he was fessing up at that time. He was telling the truth, and that is a good thing.

Mr Brough interjecting—

The DEPUTY SPEAKER (Hon. I.R. Causley)—Minister, you will have 20 minutes.

Mr ALBANESE —Since 1996, funding for employment assistance and labour market programs in Australia has fallen from 0.84 per cent of GDP down to 0.39 per cent of GDP. The funding has been halved. On an international comparison, Australia invests 43 per cent less than the OECD average on help for the unemployed. If you have cut-price labour market programs then guess what? You get cut-price results. That is why, in spite of the fact that there has been economic growth and employment growth, there are more long-term unemployed today than there were when the government came to office.

It is about to get a hell of a lot worse. With the government’s Job Network 3, as of 1 July, in two weeks time, 53 per cent of Job Network offices around the country will close. What that translates into is the loss of 691 regional sites and a further 410 metropolitan sites. Of the current 2,087 sites, 1,101 will close permanently. This is a government that is closing more offices that help the unemployed than it is keeping open.

Mr Fitzgibbon —It is 50 per cent in the Hunter.

Mr ALBANESE —These closures mean that many smaller towns in areas such as the Hunter will be left without Job Network provision. The unemployed in those towns will have to travel further to get the help that they need to find a job. For job seekers in larger towns it simply means less choice and more pressure on those offices that are remaining open. This dramatic cut in employment services comes at a time when many communities, particularly those in regional areas, are still enduring unemployment rates of more than 10 per cent and youth unemployment is stuck at over 30 per cent. Today we had a dorothy dixer asked of the minister about regional offices, and he made an announcement about offices opening in places like Ceduna. Guess what? For the last months, if you were unemployed, went to the Centrelink office in Ceduna and asked for assistance, they told you, `Sorry, there is nowhere you can be referred to.’ You got absolutely no help whatsoever. What the minister did today with this so-called announcement was actually acknowledge what the opposition has been saying for months: a large part of Australia has been completely without services.

Back in 1999, when the government announced a significant increase in the number of sites as part of Job Network 2, when it moved from Job Network 1 to Job Network 2, this is what the then Minister for Employment Services, the current minister’s boss, the member for Warringah, said:

Job Network 2 will mean very positive outcomes for regional Australia. There will be more than 2,100 Job Network sites across Australia, which is a 50% increase in the 1,400 sites under the first contract. This means better service coverage for job seekers and employers across Australia, including those in rural and regional localities.

Minister, you cannot have it both ways. You cannot move from 1,400 sites to 2,100 and say that it gives you better services, and then, when you cut it back to even fewer sites—986 to be exact—than there were under Job Network 1, say that there is no loss of service. It is illogical and it is simply about cost cutting.

What the minister will do, I am sure—after some months of pressure and after a few radio debates we had—is stand up and say, `Even though our own department’s figures and my own press releases say that we are getting rid of 53 per cent of sites, we are actually creating more.’ What the minister invented in the last few weeks is the argument that labour hire companies, such as Manpower and Drake, are Job Network offices. He said that if you simply place a job then you can be counted as a Job Network office. Minister, that is not the Job Network. You are trying to mislead the Australian population and it is absurd, because people know that Employment National offices are closing up everywhere and people know that services from the not-for-profit sector and the for-profit sector are closing up everywhere as well. You cannot fudge reality. On 1 July all the offices will be boarded up and the workers whose job it was to provide or find jobs for the unemployed will be on the other side of the counter themselves, because they will be unemployed.

But it gets worse. If you work for Employment National, this minister has managed it so that you will be entitled to a redundancy payment on 1 July because you are unemployed. But guess what? In the meantime, if you find yourself a job, you miss out on the redundancy payout. It is the world’s first ever work to welfare program, Minister. You are providing a financial incentive for people to become unemployed, and that is a disgrace. We are talking about committed people—many of whom came from the CES and went to Employment National—who were never in that sort of business to make money; they were in it out of commitment to their fellow Australians and providing them with jobs.

I want to also take this opportunity to talk about the Job Network performance. Within the Job Network, intensive assistance—soon to be repackaged as customised assistance—is the highest level of assistance available. It is targeted towards those with the greatest barriers to employment. The government’s own figures show that, while 44 per cent of participants were in employment three months after completing this program, only 18 per cent were in full-time jobs. The situation for disadvantaged job seekers is even worse. Only one in eight found a full-time job after completing intensive assistance. In fact, the $286 million underspend on the Job Network since 2001 is a direct product of the system’s failure to find jobs for the unemployed at a rate anticipated by even the government. Bob Correll, the deputy secretary of the minister’s department, during last month’s Senate estimates hearings, said:

… the outcome rates that were built into some earlier estimates were probably overstated.

You bet they were, Minister, because the system cannot provide the results that it was said it would provide. But Job Network 3 has made some changes. The providers, though —wait for this—do not even know what the current proposed star rating system will be, and the contract is about to start on 1 July. I ask the minister to take this opportunity to explain the way that the system is going to work, because we know that equity considerations have actually been taken out. When they evaluate how Job Network offices are going, equity will not come into it. Forget about disadvantage; we will treat everyone as if they are all exactly the same. Forget about Indigenous people. That is why, as the mem-ber for Lingiari has stated, that Julalikari, the only provider in Tennant Creek, has missed out on a contract. They have given it to a company based in Mackay, and the minister’s explanation to the member here last night was, `Oh well, there are Aboriginals and Torres Strait Islanders in Mackay; why not Tennant Creek?’ That is just an absurd argument. 

When it comes to how it is going to work, this is transparency Howard government style. This is how it will work. It is from a draft document which has gone out for discussion. See if you can work it out:

That is the system that they have to work out.

Mrs Crosio —Have you made that up?

Mr ALBANESE —I have not made that up. I seek leave to table the document so the minister can explain how this works.

Leave granted.

Appendix A: Regression Details

In response to the November 2002 Draft Discussion paper, NESA asked that the details of the regression that underpins the Star Ratings method be made available to JN members. These details are provided below.

Questions relating specifically to the technical detail of the regression method, or to broader aspects of the Star Ratings system, may be directed by e-mail to:

[email protected]

Regression Equations

Following Access Economics’ recommendations, two model functional forms are used, logit and the probit. While in practice they produce almost identical results, the coefficients will differ significantly because they relate to different distributions.

The probit model has the functional form of:

The logit model has the functional form of:

Mr ALBANESE —That is the system. Job Network providers are ringing my office and saying, `Please explain it.’ I admit, Minister: I do not know. I have a degree in economic statistics, I sort of know what it means, but I do not understand that system, because the system is not transparent, is not working and is failing unemployed Australians. The fact is that people who are going through the system have advised—and this was revealed in the Senate estimates committee process—that 49 per cent of people participating in intensive assistance had already been through the program previously, 23 per cent had been through it twice, and five per cent had done it at least four times.

Remember what Minister Brough himself said on 27 February 2001. He said 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.

The fact is that this government’s system is not delivering for unemployed Australians. The government refuses to put the resources in because it has an ideological obsession with the way the system works. If you have an ideological view based upon profit, it is not surprising that some people are easier to get into jobs than others. There is a natural incentive in there to keep people in the unemployment queue, which is why the long-term unemployment rate is so bad. Look at the cuts that are occurring: 53 per cent in the Hunter and North Coast region; 70 per cent in western New South Wales; 49 per cent in Brisbane; 55 per cent in southern Queensland; and 86 per cent of offices are closing—dropping from 108 to 15—in greater Western Australia. That is what this government is delivering. It is an absolute farce. The minister said last night that he wants to ensure that every cent of that money will be going towards the assistance of unemployed people. No, Minister: under your system, much of it goes to profit—profit that should be being used to help the unemployed into jobs. (Time expired)