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Tuesday, 12 May 2009
Page: 3505


Dr SOUTHCOTT (4:16 PM) —It has been an extraordinary 12 months since the last budget. We have seen four separate phases in the government’s approach to the economy. It was only 12 months ago that the budget was very much part of the war on inflation. The Treasurer was beating his chest about how big a surplus he was going to produce, and the government’s No. 1 priority was to fight inflation. Then we had a second phase, where the government promised to create jobs. In February the Prime Minister slid away from that promise and made it only that they would create, protect or support jobs. Tonight, 12 months since the last budget, we are now about to enter a new phase in which the government will say that it is a great achievement that they have kept unemployment to only one million. That is a massive failure on the part of the government, which will now have the jobs of one million Australians hanging on their record. The government will now be presiding over the largest budget deficit in modern Australian history, the largest government debt in modern Australian history and the largest number of unemployed Australians ever.

This is a government which has a great communications strategy but a very poor economic strategy, and spin will only get you so far. The problem of jobs, the problem of unemployment, is not one that has snuck up on the government. The DEEWR leading indicator of employment has been falling for 17 consecutive months, but this government was very slow to acknowledge the problem over the horizon with jobs and the problem approaching with unemployment. The record will show that the opposition were warning the government on jobs for the last 12 months, well before any government member acknowledged the problem—back in the day when the government was talking about fighting inflation and the size of the budget surplus.

Much will be made tonight of the government’s assertion that without the cash splashes of $22 billion over the last four or five months we would see an unemployment rate of 10 per cent and an extra 200,000 Australians unemployed. Just to put that in perspective, let us say there has never been a Treasury forecast that unemployment was going to be 10 per cent. The forecasts of unemployment over the last 12 months have had a life span of about two months. In other words, two months after being published it is generally very obvious that these forecasts have had to be revised—and revised upwards. The government has always been slow to acknowledge that the job situation and the unemployment situation were deteriorating much faster than their official forecasts acknowledged.

When we go back to November last year, the UEFO predicted that unemployment would hit 5.75 per cent by June this year. This increase was forecast despite a $10.4 billion stimulus package that the government claimed would create 75,000 jobs. Where are those jobs? Where are those jobs that you promised to create last October, last November and last December? Where are they? We are still waiting for them. The 75,000 jobs are yet to eventuate, and the government has now gone for another spendathon of $42 billion, including more cash payments. Regrettably, once again the jobs promised have failed to appear. After $22 billion of cash payments, there has not been a single new job created since October last year. That is $22 billion, every one of them borrowed, which will take a generation to pay back, and not a single job has been created. The latest labour force figures show no jobs created since October last year. Only 11,400 jobs have been created since September last year.

After the failure of their two cash splashes, the government decided to lower the bar, to lower expectations and to tell us, ‘Well, actually, we have done pretty well because we have kept unemployment to only one million Australians.’ That is a massive failure on the part of any Australian government. Last year we were told they were fighting inflation and creating jobs. Then they were supporting jobs. Now the achievement of the Rudd government is that they have kept unemployment to only one million Australians. That is an absolute disgrace. As we have already heard, the government spent $22 billion on cash payments—every cent borrowed—to smooth the national accounts and to try to avoid two quarters of negative growth. The government will say that all of this is the global recession. They will also say that the budget position is somehow John Howard’s fault. They would have us believe that the Prime Minister is just in the wrong place at the wrong time. But there are several areas where the government have made things worse and not better. The government will not say tonight how their workplace relations regime, their award modernisation and their tender for employment services have impacted on jobs.

Let us look at some of the areas where direct decisions of the government have made things worse and not better. We have already had the revelation that the Minister for the Environment, Heritage and the Arts, a minister in the Rudd government, has put the emotional health of the superb parrot ahead of 1,000 rural jobs—causing temporary closures in some mills. But the gold medal performance of this government has been in the area of employment services. This minister, the Minister for Employment Participation, has compounded his mistakes. He has piled mistake on blunder. Australia had 10 years experience of contracting out employment services. Through successive contracts, the Job Network had been bedded down. Unemployment fell from 7.7 per cent in May 1998 to below five per cent in 2006 and until this year. Rather than continue with an employment services model which reduced unemployment—and which worked—the Labor government made a decision to have a big-bang change in employment services at the worst possible time. Tendering out 100 per cent of employment services has not been done since 2000. The last time it was done, there were nine months when employment services were not running at 100 per cent efficiency.

Faced with advice that the government were required to tender out 100 per cent of employment services, they made successive blunders which compounded this problem for job seekers. First, they designed an employment services model for good times. They designed a model for high employment growth, for high job creation and for low unemployment. It was a model based on the assumption that the vast majority of job seekers would find a job themselves, with few incentives for employment service providers to help them into work. Under Labor’s original model, only 12.8 per cent of the employment services stream funding was available for 61 per cent of the job seekers classified as stream 1. Their original model was unsustainable in a climate of rising unemployment and fewer job placements. It is a much more marginal model. In their budget last year they proposed spending $300 million less on employment services. That was at a time when they anticipated having 75,000 more job seekers on the unemployment roll. There was a complete lack of early intervention for the vast majority of job seekers, especially for school leavers and those who were job ready.

Second, they compounded this problem. In designing a tender they completely disregarded past performance in placing job seekers into a job. Under the most recent contract, the star ratings measured performance. In past tenders, proven performance helped determine business share. Yet Labor have emasculated the star rating and have not yet replaced it. That is why their tender has been such a debacle; that is why proven performers have not got work. They designed a tender without giving a very strong weighting to past performance. These two blunders have resulted in the startling revelation that, as unemployment is set to take off, almost one in two job seekers will have to change their caseworkers and employment service providers over the next year—that is, 38 per cent of job seekers will be required to change their caseworker and employment service provider on 1 July and another nine per cent will change during the transition period. In total, 47 per cent of job seekers will be forced to move to a new provider. New providers will have no access to paper case files of job seekers. Job seekers will be starting from scratch with a caseworker who has no knowledge of their history, abilities or limitations. This is a clear example—in fact it is the most striking example—of where the government’s own policies have made things worse.

On top of this, the Labor government are actively destroying jobs. The Job Services Australia tender alone has resulted in more job losses than there were with Pacific Brands, with the government failing still to concede exactly how many employment services caseworkers and support staff will be out of a job come 30 June. But do not take my word for it. Frank Quinlan, the Executive Director of Catholic Social Services, as reported in the Sydney Morning Herald on 4 April 2009, asked:

How can it be in the interests of either unemployed Australians or the sector to be shutting down services and opening new ones in the midst of the greatest employment crisis in a decade?

Glenn Milne in the Australian just this week said:

Rudd should have seen this coming, and more particularly, so should his Employment Minister, Julia Gillard. Instead they appear to have been sleepwalking towards the problem. There also was another minister who apparently wasn’t reading his briefs: Brendan O’Connor, who’s responsible for employment participation. If it wasn’t imposed on him from above he stands accused of designing policy based on an economic situation he knew to be completely inappropriate to the times.

We all know that this has been an unmitigated disaster for the government.


Mr Pyne interjecting


The DEPUTY SPEAKER (Ms AE Burke)—Order! The member for Sturt is under warning from question time.


Dr SOUTHCOTT —The only person who is in complete denial here is the Minister for Employment Participation. He has been very slow to act. He has compounded problem on problem. He came up with a model designed for the boom times at a time when unemployment is rising. He designed a tender which took no account of proven performance in placing job seekers into a job. He has now crafted a system where he believes it will be a good thing for almost one in two job seekers to be changing their caseworkers and their providers at a time when unemployment is rising at a rate that we have not seen since the early 1990s.

Just to put it in perspective, the Job Network had been running for 10 years before this minister got his hands on it. It had been bedded down. We had gone from a system of the Commonwealth Employment Service to a privatised contracted system. It had been bedded down and it was working. It was reducing unemployment and it was putting people into jobs. This minister has decided that it would be a good idea to have big-bang change with massive disruption to job seekers at a time when we will see one million Australians out of work by this time next year. (Time expired)