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Tuesday, 28 October 2014
Page: 12334


Mr TAYLOR (Hume) (20:07): The Social Security Legislation Amendment (Strengthening the Job Seeker Compliance Framework) Bill is designed to ensure that jobseekers in receipt of income support meet their mutual obligations requirements. Central to this is the requirement for jobseekers to attend scheduled appointments with their employment provider. This bill is another example of how the government is focussed on delivering outcomes—not just processes or press releases. I came to this place to deliver outcomes, not just optics, and this bill is a fantastic example of how we are seeking to do this.

I am a bit disappointed that the member for Shortland has left the House, because I thought we could have had a chat here about what really drives employment in an economy. I went back to my old economics textbooks from my bachelor and masters degrees to have a look at what drives jobs growth. I have heard a lot about this idea of a jobs plan, so I looked under 'J' in the indexes and there was nothing there. Then I looked under 'P' and there was nothing there either. But then I looked in the text and there was a story about jobs plans, so I was delighted to find that jobs plans were there. The textbooks said that the Soviet Union had jobs plans. It turns out, though, that they had a hell a lot of unemployment—the Soviet jobs plans did not work.

I am absolutely confident that a jobs plan coming from those opposite will have no impact on unemployment and employment in this country. I then thought I would do justice to this issue and I would take a look at what really does drive employment. What I discovered in my textbooks was a very simple story—there is the demand side and the supply side. Let us talk about them. The demand side is all about creating jobs, and we hear about this from the opposition but they do not really understand what it involves. It turns out there are three factors in creating demand and jobs in the economy. Firstly, there is government consumption—there is no doubt about it, that is the one they are best at. The trouble is that they have spent all the money so there is no more room for government consumption. Secondly, we move to private sector consumption—we can try and up that but under their term of government we saw private debt levels escalate to record levels in this country, higher than almost any other Western country in the world—I think the Irish are ahead of us—and it is clear now that the consumer is not going to be there creating jobs for us and we are seeing that it is a tough time in retail. Thirdly, there is investment, and of course what they miss is that we had a mining investment boom of $120 billion a year, which under their government was threatened. It was threatened by a mining tax and it was threatened by red tape at every level. As we got into government we saw mining investment on the verge of collapse. Fortunately, our Minister for Industry and our Minister for the Environment have been working hard to turn this around, and they have made billions and billions of dollars worth of approvals to get these jobs going in the 12 months we have been in government. Already we are starting to see the fruits of their very hard work.

But there is another side to investment, which is infrastructure investment. We are undertaking the biggest infrastructure investment program in this country's history—the Snowy Mountains scheme many, many times over. We are motivating the states to get on with the job of building roads and building railways, and that is exactly what they are doing. We understand the demand side of the economy does not need a jobs plan, it just needs good, hard-headed economics—something those on the other side of the House have no comprehension of. The textbooks then told me there was another side to this—the supply side. The supply side is all about getting potential employees into a position where they are seeking jobs, where they want jobs and where they are skilled for jobs. Part of that is about our industrial relations system, but that is not the focus of this legislation. The other part of it is the job search system. That is exactly what we are focused on here.

I thought I would research the job search system a little more and see what the experts—not the member for Shortland—had to say about job search systems. Specifically I want to talk about the work of British economist Stephen Nickell. Stephen Nickell has been researching in this area since the late 1970s and has co-authored a text and a number of papers on this issue of job search systems. The primary focus of that work is creating a framework for the purpose of understanding unemployment and how job search systems impact on unemployment. I was lucky enough to be taught by him in my time at Oxford as a graduate economics student. Nickell highlights four important features of an employment system that drive unemployment—benefit levels, the duration of the benefit, the extent of the benefit system's coverage and the strictness of enforcement. Specifically, Nickell points out that the strictness of the enforcement of an unemployment benefit system is of absolutely crucial importance to influencing unemployment. Stephen Nickell is from the left—he is not from my side of politics. But he understood, as a good, hard-headed economist, that the unemployment benefit system and job search are absolutely crucial in influencing unemployment. This is particularly so for countries with a relatively generous level of benefit, which includes Australia.

Nickell spent a lot of time looking at active labour market policies—measures which provide active assistance to the unemployed to improve their chances of obtaining work. Once again, he found that well-directed active labour market policies are effective tools in reducing unemployment and in particular well-directed job search assistance tends to have consistently positive outcomes. He points out that those policies are only needed in countries with high unemployment benefits because additional pressure on the unemployed is not required if benefits are very low relative to potential earnings in work. It is a good thing that we have a generous benefits system, but the quid pro quo of having a generous benefits system—and these are the words of Stephen Nickell, not Angus Taylor—is that you need additional pressure on the unemployed to ensure that they get into jobs. So we have here strong and rigorous research and support for the proposition that strictly enforced unemployment benefits and well-directed job search assistance improve employment outcomes and reduce unemployment. That is from one of the gurus of labour market economics and one of the most respected labour economists the world has ever seen.

The government are committed to building a strong and prosperous economy, promoting workforce participation and helping job seekers to find jobs. We are also focused on ensuring that job seekers remain in employment over the long term. We are investing $5.1 billion in employment services to better meet the needs of job seekers, employers and employment providers. Our objective is to promote strong workforce participation by people of working age and, importantly, to help more job seekers move from welfare to work, because there is no better welfare than a job. To do this we will be providing stronger incentives for employment providers to deliver high-quality services, we will be making the expectations we have of job seekers very clear in terms of active participation and we will be reducing the level of regulation, complexity and red tape for employment providers—and they have been wrapped in red tape in recent years by the former government.

This refocus of employment service arrangements will complement measures announced in the recent budget, including changes for job seekers aged 18 to 30 and the restart wage subsidy to support mature age employment. It will also build on other government programs, including the job commitment bonus for young Australians and relocation assistance to take up a job.

As has previously been the case, we expect that there will be a mix of employment providers. That will include for-profit and not-for-profit organisations involved in delivering these services across Australia. We are simply interested in organisations that are going to deliver outcomes and we are simply interested in making sure we pay them for delivering outcomes not optics.

There are a range of other changes that we are making in concert with this. The training will be more targeted. Job seekers will not undertake training for training's sake. We will be simplifying and extending the mutual obligation framework to ensure that job seekers remain actively engaged while looking for work. This is not a box-ticking exercise. It has to be far more fundamental than that.

We will also be placing job seekers into one of three service streams based on their risk of becoming long-term unemployed and any serious non-job related issues. This is incredibly important because it is going to ensure that funding and rewards are directed to the employment service providers who are able to find jobs for those in the most critical situations. We should not be paying employment service providers the full tote, the full amount, for someone who can find a job for themselves. We should be paying them to find a job for someone who is struggling to find a job.

These changes—and there are a range of them, as I have outlined—and investment in employment services are all about helping job seekers find a job and keep that job. Part of the payment we make to the employment service provider will not be for finding the job in the first place; it will be for making sure that that person stays in a job. That is not something that those opposite decided to do, but it is something we know really counts. They have to keep their job, not just get it in the first place.

If we are to maximise the value of this investment, it is vital that our job seeker compliance framework encourages people to take responsibility for their actions and encourages people to be active and engaged in the job search process. As I said earlier, Australia's welfare system is based on the principle of mutual obligation—that is, people in receipt of taxpayer funded income support, such as Newstart, are required to undertake certain activities in return for their income support. This includes attending appointments with their employment provider for help with job search and to monitor progress in finding and keeping a job.

Currently, if a job seeker fails to attend an appointment, their income support payment is suspended or put on hold and once the job seeker agrees to attend a rescheduled appointment the suspension is lifted and they receive full back-payment. It is not as though there is a lot of incentive there to turn up in the first place. Good people and motivated people will always turn up—we know that. We have to provide an incentive. As I said earlier, great research from people like Stephen Nickell tells us that that is the case.

The system as it currently stands does not provide sufficient incentive for people to do the right thing the first time. Of the 12 million compulsory appointments in 2013-14, almost 4.5 million were not attended by job seekers. This is an absolutely astounding non-attendance rate of 35 per cent. We have heard from previous speakers all the reasons given by some of those people for that. There are legitimate reasons in some cases but certainly in other cases there are not.

Under this bill from 1 January 2015 a job seeker's payment will be suspended following a failure to attend an appointment. If the job seeker does not give a reasonable excuse for missing their first appointment or does not give reasonable notice of the excuse when it was reasonable for them to do so, they will not receive back-payment once that appointment is rescheduled. It is important to recognise that this bill will not affect the majority of job seekers who do the right thing. If a job seeker has a reasonable excuse for their failure to attend an appointment then the suspension and the loss of income support does not apply. Existing safeguards and protections for vulnerable job seekers remain in place.

I am constantly focused on bringing new job opportunities into my electorate of Hume. We are lucky to have relatively low unemployment. I recognise that much employment comes from fast-growing small- to medium-sized businesses. The investments they make for the future are also the source of new jobs, whether it is new quarries, abattoirs, breweries, poultry businesses, aircraft manufacturers or education service providers. I spend time with these people to make sure they are creating jobs. The flip side is we need to have people who are actively searching for work with the appropriate level of support. That is exactly what this legislation is intended to achieve. I commend this bill to the House.