Kevin Andrews (Menzies, Liberal Party) Share this | Hansard source

Encouraging more people to participate in the economic life of our country is critical. It's not just an ethical responsibility; it's an economic imperative. As our nation ages, which the previous speaker, the member for Bruce, was talking about, and as workforce growth contracts over the next two decades, our push to increase participation in the workforce will be a crucial ingredient in ensuring Australia's ongoing economic growth. The principal object of reform, therefore, should be to encourage and assist more and more people to contribute and participate positively.

Consider the trends. The number of people aged 65-plus is expected to increase from 3.4 million in 2016 to 6.5 million in 2040. Indeed, the fastest growing cohort is people aged 80-plus. While the number aged 18 or less will grow more slowly and decrease as a proportion of the population, overall dependency will increase. It's projected that the ratio of dependent people who are not of working age to those who are of working age will increase from 52 per cent in 2016 to 62.4 per cent in 2040. Even these figures underestimate the extent of total dependency. For example, most 15- to 18-year-olds are dependants. Another 1.5 million people are in receipt of unemployment benefits or the disability support pension.

So, if it is not addressed, the ageing of the Australian population will have profound impacts on our standard of living. Consider the cost of the pension to the budget if the numbers double. It's estimated that currently 71 per cent of people over 65 are in receipt of the pension, including 41 per cent at the full rate. While the pension age, as has been referred to, will gradually increase to 70 by 2040 as a consequence of previous legislative changes, the pension represents an increasing burden on the Commonwealth of Australia.

The profound and rapid change to employment itself compounds the urgency of raising participation. The changes are already occurring. Since 1986 the proportion of the workforce that is unskilled has fallen from 13.5 per cent to 9.9 per cent. The professional occupation share of total employment has increased from 15 per cent to 23.5 per cent, while the technicians and trade workers share of total employment has fallen from 18.4 per cent to just 14 per cent. These are profound changes to the composition of the Australian workforce over a relatively short period.

I come to the issue that I raised with the minister. In the 2014 budget, the Australian government directed funding to the implementation of an investment approach to participation, based on the successful New Zealand model. Targeted interventions can be designed to encourage a person onto a pathway of training, a job and prosperity rather than a trajectory to worklessness and welfare. The work in New Zealand has shown that if you make an investment up-front, based on actuarial calculations and determinations looking at various cohorts, you can have an entirely different trajectory for a young person. To take the cliched example that we hear from time to time of a young person aged 16 or 17 who leaves school at the earliest possible age, who has no skills and who may be employed in a part-time job or not employed for a period of time, the work in New Zealand has shown that that young person is much more likely to remain unemployed, to be unemployed at the age of 35 and to be unemployed for a long period of time. Whereas, if you can make the right intervention with that young person, give them the skills and the training, it's likely that they will get a job, remain in a job, be in a job at the age of 35, and can have a family and all the things that people aspire to in life and therefore be on a trajectory to prosperity and a better outcome for themselves and their families.

I know that in New Zealand they're looking at extending this to the way in which they approach housing issues and homelessness, and even to the way in which the prison population is dealt with in terms of giving them skills so that they don't end up in prison once again. This is a system which I've always believed is an advance on where we have been in Australia, and I'd ask the minister, if he could, to update me on the progress of the work that's been done in that regard.

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