Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation and Apprenticeships and Training) Share this | Hansard source

Thank you for the opportunity to speak on this ministerial statement on the reform of employment services. I want to start by looking back, and then I wish to look forward. Looking back at last year, what were some of the important measurements of employment and unemployment? The unemployment rate fell to 4.2 per cent. That was at that time the lowest level of unemployment since November 1974. It was its lowest level in a generation; it was the lowest unemployment rate in over 33 years. We had a participation rate over 65 per cent. That was then the highest ever participation rate. There were more people working in Australia than ever before. Since 2002, employment growth has been 2½ per cent, which has created about 250,000 jobs a year.

Last month, the latest Statement on monetary policy from the Reserve Bank predicted that average employment growth over the next 12 months will slow to less than one-third of what it was over the last five or six years—that is, to three-quarters of a per cent. This has led analysts to conclude that 100,000 Australians are likely to lose their jobs over the next 12 months. The budget, which came down in May, had already forecast that Australia would lose 134,000 jobs over the next 12 months.

The Job Network was a fundamental reform of employment services undertaken by the Howard government. Unemployment was 8.1 per cent when the Howard government replaced the inefficient Commonwealth Employment Service with a privatised Job Network on 1 July 1998. We saw unemployment fall from 8.1 per cent to four per cent under the Job Network. There was an aside in the budget estimates about the name of the new Job Network; the departmental people did say that there will be a name change. I was disappointed not to find out what the new Job Network will be called, but we do have one suggestion from the Labor side. Victorian Labor Senator Gavin Marshall has suggested ‘Commonwealth Employment Service’ may be a name you want to consider, minister. That is a suggestion from your own side.

The Job Network saw the introduction of a work based welfare system focused on a work-first approach. A privatised employment services model which assessed and rewarded performance based on the achievement of outcomes allowed for a competitive market and offered greater choice for job seekers. Australia really pioneered this area of employment services. There is enormous interest around the world in how Australia has delivered a very cost-effective employment services system. Mutual obligation, known best in the community through signature programs such as Work for the Dole, has been very important in allowing people to give something back, in building a work culture, in learning workplace skills and in building a sense of self-esteem.

The track record of the Job Network speaks for itself. The most recent net impact study in 2006 indicates that the suite of services offered by the Job Network is comparable or exceeds the level of high-performing programs internationally. In particular, Job Search Training delivered a net employment impact of 11.2 per cent; one-on-one Customised Assistance delivered a net employment impact of 10.1 per cent; Work for the Dole achieved a net employment impact of 7.3 per cent; and Mutual Obligation achieved a net employment impact of 8.2 per cent. All four of those programs achieved a high level of net employment impacts. It remains to be seen whether the replacement employment services model will be able to sustain these employment outcomes and employment impacts.

When we examine the 2008 budget and the new employment services model, we see that there will be 134,000 fewer people in the labour force over the next 12 months. Based on the Reserve Bank’s forecast, 100,000 Australians are likely to lose their jobs over the next 12 months. At the same time that we have information that there will be a lot more job seekers requiring employment services, the government are providing $279 million less for employment services over the three years of this contract. This is the equation: there will be more job seekers and less money to help them find a job.

The new employment services model was designed in an entirely different economic environment to the one we face only six months later. It was designed at a time when labour growth was strong, when unemployment was at its lowest in 33 years and when the economic outlook was still positive. As we know from the Reserve Bank’s latest Statement on monetary policy, the outlook now is far less rosy. With predictions that upwards of 100,000 Australians are set to lose their jobs within the next 12 months, the new employment services model falls well short of offering these workers early intervention and appropriate support. This is one of the key departures from the Job Network: there is a much lesser emphasis on early intervention under Labor’s proposed employment services model.

Under the new model, job seekers will be streamed into one of four streams. Those with recent work experience are most likely to be streamed into stream 1. The exposure draft released by the government indicates that 53 per cent of new job seekers will be referred for stream 1 services. What does that mean? The services offered to job seekers in stream 1 will be little more than assistance in writing a resume and provision of a brief overview of local labour market conditions. There is no incentive for employment service providers to get those job seekers back into work quickly. What we see is that only 12.8 per cent of the funding available will be spent on that 53 per cent of job seekers, which is more than half the total number of job seekers; and only 27.4 per cent of funding for employment services is allocated for people in stream 1 and stream 2 taken together—people who are judged less needy—which is 77 per cent of job seekers. So the second simple equation is that three-quarters of job seekers will be receiving one-quarter of the funding for employment services.

Early intervention is very important in getting people back into a job as quickly as possible. Given that we are now facing a climate of job insecurity, a big risk is being taken by decreasing early intervention with employment services. At a time when 100,000 workers are set to lose their jobs, the new employment services model shows a remarkable lack of foresight and inflexibility.

When we look at compliance—this has been a very important part of what we did through Work for the Dole—under the new model, we see that mutual obligation has been substantially watered down. Under Labor’s proposed new model, job seekers will not have to undertake Work for the Dole until they have had a minimum of 12 to 18 months assistance from an employment services provider. At present, job seekers undertake Work for the Dole or another mutual obligation activity after six months, as Work for the Dole gives job seekers a work-life like experience and it can give them the skills that they need to engage or re-engage in the labour market.

The compliance regime has been further weakened by the Rudd Labor government, with the Minister for Employment Participation and the Department of Education, Employment and Workplace Relations writing to employment service providers requesting an end to the participation reporting of non-compliant job seekers. Employment service providers have been written to and have been asked not to breach people who do not attend interviews, who do not attend meetings with their employment service providers, who do not attend work experience placements and who do not attend Work for the Dole. These measures were only introduced by the Howard government to respond to a growing concern with deliberate work avoidance. Under the new regime, we may well see the revival of the dole bludger.

When we look at the integration in the employment services model, we support, in principle, the integration of the seven programs into the one contract. Ultimately, had we been re-elected last year, this is something that we would have considered, although the opposition believes that an argument can be made in favour of keeping the Personal Support Program and the Job Placement Employment and Training Program, JPET, separate, because they are different in nature from the other five programs; these are more in the nature of pre-employment programs that are targeted at people who are victims of domestic violence, who are homeless, who have mental health issues—those who have a number of barriers to employment and who need a lot of help to get them into the position of being ready to go into an employment program.

Still on the topic of the Personal Support Program, it needs to be said that, whilst the minister in his statement did point out that 27,000 job seekers remain on the waiting list for this program, the government did nothing in the last budget to alleviate this. Under the former coalition government, the 2007 budget provided funding for an additional 2,000 places. It was open to the government to do this in the 2008 budget, but they did not.

The Productivity Places Program is Labor’s new training program to provide training for people outside the workforce. It also provides upskilling for existing workers but, as we are considering employment services, I will leave ‘upskilling’ for another day. The Productivity Places Program has been troubled since its inception. From the outset, it was plagued with delays and an inability by the federal government to get the states and territories to sign up to it. We have had reports that some of the best training providers have not tendered for this program. We have also had reports from employers who are still sceptical of the value of the Productivity Places Program. So I think the jury is still out on the Productivity Places Program. I think there are some teething problems that the government needs to address with a remedial program. It would be a very cynical exercise if this program were about providing only increased qualifications without enhancing people’s ability to get a job from it.

The opposition support the concept of employer brokers; we think it is a good idea. We believe that greater involvement of employers in the area of employment services is positive and should be welcomed. Having said that, I would say also that employer brokers, as conceived in this model, represents $6 million of a $3.7 billion employment services contract. It is just a little bit that has been tacked on to the top. It is not integral to the model. It is a good idea, but it is really a very small part of and not central to the whole model.

In summary, this employment services model has some good parts, which the opposition supports. We think the integration and rationalisation of several programs is a good idea, as is the idea of employer brokers and the innovation fund; we had a similar fund under Job Network. However, our concern is that, when 100,000 workers are likely to lose their jobs over the next 12 months, we believe that the government is moving to a model which will have poorer employment outcomes.

The opposition would like to see the modelling of the projected employment outcomes to be satisfied that this replacement is as good as the Job Network was in finding job seekers a job. One demonstration of this is that three-quarters of job seekers will now be receiving only a quarter of the assistance that they received previously in finding a job. Also, we believe that the Productivity Places Program was poorly conceived. It has been poorly implemented; it will not work as it has been presently conceived; and it needs some remedial work done to it very quickly.

In conclusion, the government is planning to spend less money on employment services—$279 million less—over the three-year employment services contract at a time when unemployment is projected to rise. The opposition does not think that is a good idea. Surely more will be spent on employment services as we see the number of jobless and job seekers rise.

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