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Employment policy: jobs priority no. 1

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Australian Democrats


Employment policy





Jobs Priority # 1



The Australian Democrats believe that reducing unemployment must be Australia's number one priority. For two decades, successive Governments, Coalition and Labor, have failed to deliver work for all who want it. In the 1970s, our unemployment rate averaged just 3.9 per cent. In the 1980s, it doubled to 7.6 per cent. And in the 1990s, it has averaged 9.3 per cent. Such a waste of human skills, such deprivation of human dignity, is unacceptable in a civilised society.


The Coalition promised in 1996 that moving to full employment with rapid job creation would be a key policy priority. Yet, in the first two and a half years of the Howard Government, only 280,000 new jobs were created, less than half that created in the previous two and a half years.


Labor has set an unemployment target of 5% for a new Government. But this target is a complete fraud. Labor's job creation policy released so far has been nothing more than a rehashing of the same tired policies that saw unemployment reach a post-war high of 12.2 per cent, or almost a million Australians, when Kim Beazley was Paul Keating's Employment Minister.


Neither of the major parties is prepared to use the power and influence of Government for a concerted attack on unemployment. Both are more concerned with keeping the financial markets happy than creating a healthier labour market.


The Democrats reject the 'do nothing' token policies of Labor and the Coalition. We believe there are many sensible and practical things that Government can and must do to generate jobs. Yet actions by this Government, endorsed by Labor, have done the exact opposite of reducing job creation opportunities.


Around half of the $7 billion of harsh and unnecessary budget cuts made by the Howard-Costello Government and now adopted by the Beazley-Evans Opposition came from programs to assist the jobless.


Yet, both Labor and the Coalition want to give the surplus created by these Budget cuts to high income earners lucky enough to have jobs. The Democrats believe that the first call on the social dividend from a Budget surplus built on the backs of the jobless should be to assist the jobless.


A long-term commitment must be made to reducing unemployment through creating new jobs and providing the assistance to enable unemployed people to take up these new jobs.


The Australian Democrats are committed to the development and implementation of initiatives to create jobs where they will be of greatest benefit, to job seekers and the community as a whole.


Our plan is affordable. It offers achievable plans to generate real, new jobs. It offers plans for a better trained, more flexible workforce. And, it offers real hope to the two million plus Australians who want the right to work.


The Democrats five pronged approach


The Democrats plan to address unemployment in five ways.



• Economy wide policy setting designed to promote jobs and growth.


• Sector by sector initiatives designed to enhance the ability of key industries to genera te new jobs.


• A Public Sector Action Plan to make sure that the Federal Government plays its role in job creation.


• An overhaul of jobs programs to make them more effective in getting the jobless back into work.


• A particular effort to combat the una cceptably high unemployment of young Australians and of mature aged Australians.



The Failure of Current Policies.


The employment policies both Labor and Coalition are simple - hope that economic growth will come along and do the job for them. Even since the great "resources boom" mirage of the Fraser-Howard Government in 1980, the approach has been the same. If someone doesn't have a job, it's not the Government's fault, but someone else's.


The Coalition Government has taken blame even further, and now blames the jobless for being unemployed. This can be clearly seen in the Work for the Dole scheme with its implication that the unemployed are not motivated to find work. It is also seen in the harsh and unreasonable restrictions placed on access to financial assistance. It is there in the huge cutbacks in staff to service welfare recipients through Centalink. And, it can be seen in the huge cutbacks to jobs and training programs designed to help the unemployed back to work.


The Coalition's harsh Budget cuts have, even by the admission of the Reserve Bank and the Treasury Secretary, slowed employment growth. More than 59,000 public sector jobs and 25,000 Telstra jobs have been slashed over the past two years, while cuts to in dustry programs including the R&D tax concession have cost 16,000 manufacturing jobs. Yet, more than half of the new jobs created to replace these skilled, permanent jobs, have been casual and part-time.


Labor promises more of the same.



• The failed pri vatised employment market, Job Network, will be retained under Labor.


• Work for the Dole will stay.


• The harsh spending cuts to social services will mostly stay.



Labor's tax package rewards those with work, but leaves those without work further and further behind. Labor appears set to return to the policies of Beazley and Crean as Employment Minister of having the best trained dole queues in the world without any corresponding policies to promote the creation of new jobs.


Australia deserves better, far better than Labor's sloganeering about reducing unemployment when they have no policy, no plans and no real desire to tackle the issue of jobs head-on.


It deserves better than the politics of blame that characterises the Coalitions approach.


The Democrats are determined that the next term will see maximum pressure put on the Government of the day to get serious about unemployment.


An ecconomy better able to generate jobs.


The Democrats believe that the current economic policy settings of the Coalition Government, largely endorsed by Labor, will not make major inroads into unemployment. Treasury itself now concedes that unemployment will not fall this year. And, with the gloomy prognoses for the world economy in the next few years, hope of an economic boost seems well off.


The Democrats believe that economic policy needs to be re-ordered to promote jobs growth. We propose:


Boosting Government spending on infrastructure to generate jobs.


We propose additional spending of $1 billion over three years for infrastructure projects. Research by the World Bank, the University of New South Wales and the National Institute of Economic Research shows that infrastructure spending is one of the most effective policies that Governments can pursue to boost private sector growth and generate new jobs. Each one billion dollars of infrastructure spending generates up to 18,000 public sector and 7000 private sector jobs when flow-on effects are counted according to one study. The Democrats would give particular priority to mass transit transport (e.g. rail) to upgrading sewerage and water supply infrastructure and local works in regional areas.


Refocussing monetary policy on unemployment.


The Reserve Bank Act requires monetary policy to be a balance of promoting low inflation and low unemployment. The current Memorandum of Understanding between the Governor of the Banks and the Treasurer pays virtually no attention to unemployment, and sets instead a fixed inflation target. As a result, Australian businesses face one of the highest real interest rates in the industrialised world. The Democrats would seek to have the Memorandum revised to set an unemployment target, and require the Bank to pursue employment growth even if this means a modest rise in inflation.


Tax reform to encourage jobs.


The Democrats believe that Australia's indirect tax system actively discourages employment. We have already announced proposals to introduce a 20 per cent rebate on payroll tax for companies prepared to create new, permanent jobs


(Employing More Polluting Less: A Payroll Tax Initiative) and our commitment to major reform of the indirect tax system to reduce the tax impost on Australian made goods, thereby encouraging exports (A Fairer Tax System, More Jobs) . We do not, like the Government, believe that tax reform is all that is needed to create jobs. Indeed, the Coalition is guilty of massively overemphasising the role of tax reform. But, aligned with other policies, tax reform can remove impediments to job certainty and should be pursued.


Promoting job security in industrial laws.


Part of any employment policy must be trying to retain as many current workers in their jobs as economically possible. The Democrats Industrial Relations Policy (Security, Productivity and a Fair Go) seeks to slow the casualisation, downsizing and contracting out of the workforce. This would include a review of the Workplace Relations Act to place contractors on the same footing as employees, a review of the Corporations Law to prevent companies restructuring to avoid payments and a review of taxation arrangements to remove tax benefits for retrenching or contracting out workers. We also propose a $250 million Working Life Fund, based on the Swedish model to provide incentives to employers to retrain and redeploy workers rather than retrench them.


Industries better able to generate new jobs.


Manufacturing Industry


Manufacturing has lost 33,000 jobs in the last year, partly on the backs of the deep and shortsighted cuts to industry assistance programs. To boost manufacturing and its ability to generate new, high skills jobs in value adding industries, the Democrats propose:



• restoring the 150% R&D tax concession (see Tax Reform policy);


• removing the cap on the Export Market Development Grants Scheme;


• establishing a National Industry Council to facilitate the development of sectoral industry plans and research on how to meet new and emerging opportunities in industry ($15 million over three years);


• freezing tariffs at 1995 levels (when the World Trade Agreements took effect) and reducing them only if our trading partners do likewise;


• extending the Shipbuilding Bounty and re-instating the Book Bounty;


• overturning National Competition Policy and allowing Governments to give absolute preference to local suppliers.





Tourism and hospitality provided more jobs growth (46,000 new jobs) than all other export industry companies in the first two years of the Howard Government. But, the industry is now in trouble due to the Asian crisis. Recent figures show that 14,000 jobs have disappeared from tourist accommodation in non-metropolitan areas in the last year, with nearly half of those in Queensland. To slow this fall, the industry has called for more promotion of holidaying in Australia for Australians, as well as ensuring that International tourism enjoys the same tax-free status as other exports. We propose:



• A Domestic Marketing Initiative to encourage Australian tourists to holiday at home rather than overseas (Cost: $60m over three years)


• Taking the GST off tourism packages sold offshore so that tourism is treated on the same basis as other export industries.





The retail sector employs around 1.3 million people, Australia's largest employer. Yet, employment growth has been stagnant for most of the last two years. To a large extent, this has been because of the continuing loss of market share of the labour intensive small retailers. We propose:



• Strengthening the Trade Practices Act to improve the protection of small busines ses against unfair business conduct, and to give the ACCC the power to break up large corporate conglomerates into smaller, independent, competing companies;


• Establishing a Uniform Retail Tenancies Code to give small retailers a fairer deal against large property owners.





The environment industry is already a major employer, employing around 300,000 people. As the global market for environmental management services and technology grows, Australia, as a leader in technology in many areas, has the potential to grab a large share of the market. Indeed, a Parliamentary Committee has suggested that up 150,000 jobs could be created in environment industries with the right policy mix. A recent 1997 DEET study conducted by the Australian Conservation Foundation and the ACTU estimated that up to 100,000 new jobs could be generated in the supply of renewable energy products and services, and the flow on savings to businesses. We propose:



• Broadening the National Greenhouse Strategy to industry targ ets and firm specific plans, thereby generating job opportunities in energy efficiency activities ($30 million over three years);


• A national recycling program which will reduce the need for landfill while generating many jobs in labour intensive activities ($30 million over three years);


• Expanding the Regional Environment Employment Program to accelerate the work of revegetati on and rehabilitation of and waterways ($120 million over three years);


• Doubling the size of the Youth Conservation Corps, with more attention to accredited training within it, to marry the commitment of young people to the environment with practical work experience ($99 million over three years);


• Establishing a special program within the Small Business Loans Scheme (see Services) to encourage environmental businesses with long term growth potential.





Construction has enjoyed modest employment growth over the last two years with around 23,000 jobs as a result of the modest growth in the housing industry. But, with housing growth now moderating, we need to pay attention to the continuing decline in public housing. New public housing starts fell by a third in the three years to 1997, despite waiting lists rising by 20,000 to over 236,000 families. Yet, despite advice from the Industry Commission about the cost effectiveness of public housing, the Coalition cut funding by $150m over three years. We propose:



• Increasing spending on public housing by $375 million over three years, creating around 1300 jobs a year and moving 3700 families off waiting lists.


• Restructuring the proposed First Home Buyers scheme to fully compensate for the GST impact on new homes rather than providing a windfall on existing ones.





The services sector - property and business services, recreation and personal services - comprises just 17 per cent of the labour market but has provided 69 per cent of new jobs over the last two years. Any employment strategy must be geared towards ensuring that the labour intensive services sector continues to expand. Small business is the engine room of growth in this sector. We propose:



• $150 million for a Small B usiness Loans Scheme to help reduce the risk premium on loans with low collateral but strong growth potential by providing loan guarantees;


• Establishing an Office of Service Industries reporting to a Cabinet Minister aimed at ensuring coordinating economic, taxation, employment, training and other policies to maximise the jobs potential in the service sector ($15 million over three years).





Communications should be the growth industry of the next century. Yet, the sector has lost 20,000 jobs in the last two years. While the sector tends to be capital intensive, Australia needs to ensure that we are at the cutting edge of information technology and supporting and encouraging local industries. We propose:



• $45 million over three years to support an Information Technology Industry Plan with grants for research and support for venture capital projects with economic growth potential;


• Opposing the Sale of the rest of Telstra.



Government is better able to generate new jobs.


Government is an important employer. The cost in employment terms of the savage Budget cuts over the past two years has been much higher than the public realises. Around 80 per cent of the net industry job losses in the last two years, some 60,000 jobs, disappeared from the public sector. Many of these were in vitally important public services which Australia could not do without.


Public sector job losses have hit hard in regional Australia. A study by the Council of Small Business Organisations shows that for every public sector job lost in a country town, another two or three private sector jobs follow. Smaller Government is not necessarily better Government. The $7 billion of harsh spending cuts have seen tens of thousands of jobs lost and the quality of services provided to Government pared to the bone.


Governments have a major role and responsibility as employers, as well as service providers. The Democrats recognise this. We propose:



• A two year freeze on public sector retrenchments and downsizing unless une mployment falls below 5 per cent;


• Opposing job destroying privatisation, national Competition Policy and contracting out of services;


• Investing $1 billion over three years in public infrastructure;


• Increasing spending on Centrelink by $60 million a year to allow the immediate empl oyment of 1000 additional staff to improve service standards and the quality of advice;


• Increasing spending on schools and universities; (see Education policy) •Increasing spending on public hospitals; (see Health policy)


• A Country Service Guarantee, with a National Inquiry into services in country areas to ensure that every country town has access to a reasonable level of Government services, with additional offices provided if they don't. (Cost: $30 million over three years)



Job Programs that do the job


In 1996, the Coalition promised to maintain funding for labour market programs. It was, indeed, the only commitment that was in bold type in the Coalition's 40-page Employment policy. But, a promise in bold turned out not to be a "Core" promise, and more than $1.8 billion was cut out of employment programs. The number of unemployed who cannot be assisted with skill development and training, or other intensive job search help, has fallen from around 800,000 under Working Nation to just 400,000 now. This is despite a 15 per cent rise in long term unemployment under the Howard Government. Indeed, if there is any measure of a failure of this Government's labour market programs, it is that the percentage of unemployed who are long term unemployed has risen from28 per cent two years ago to 32 per cent now.


The Democrats regard these outcomes as a policy indictment. We regard the semi-privatised Job Network as a bold, but disastrously failed, attempt to make a profit out of the unemployed. We regard the acceptance of the Jobs Network model by the Labor Opposition as a callous sellout of the interests of unemployed Australians. Active labour market programs CAN work. Indeed, Australia has run some of the most successful programs in the world. We could learn from the experience of other countries in terms of tailoring programs to the needs of regional communities, to the needs to particular classes of jobs seekers, and to the emerging needs of industry.


Flexibility is one thing. Funding is another. And, without a major injection of funds, our labour market will continue sliding into a two track system, with the long term unemployed falling further and further behind. We propose:



• The ending of the failed Job Network "competitive" model and its replacement, after a proper review, with a system accessible to employers and the unemployed free of charge with minimum training standards, maximum use of community based organisations in case management, and greater accountability;


• Doubling the size of the New Enterprise Incentive Scheme to 12,500 places, which has an 82 per cent success rate of getting the unemployed into their own, permanent businesses (Cost $75million)


• Re-establishing the direct public funding of Skillshare to provide community training for up to 120,000 unemployed. This scheme, which has a 47 per cent success rate of getting the long term unemployed into jobs, was regarded internationally as one of the most innovative of its type. It should never have closed. It should immediately be re-opened. (Cost: $130m)


• A Training Rejuvenation Fund to reduce the financial strain on TAFE Colleges as a result of Commonwealth funding cuts, with view to developing new, relevant courses for the workforce of the next century ($250 million over three years fr om the Federation Fund);


• Intensive case management for the long term unemployed with the funding of an additional 500 case managers and appropriate back up courses and services ($150 million a year).



Getting the resources for the really hard jobs - the young and the old


Youth Unemployment


In February 1996, youth unemployment stood at 27 per cent. Now, it is 30 per cent, getting close to the 32 per cent figure when Kim Beazley finished as Employment Minister. This simply is not good enough. It is a monumental waste of human resources to say to 90,000 young Australians that we have no use for them. But, it gets worse - 64 per cent of young Australians have casual or part-time jobs, and a quarter of them would like more hours if they could get it. Adding that in, then 46 per cent of young Australians are either unemployed or underemployed.


This is undoubtedly the area of greatest concern. Current employment policies have scapegoated young people and provide little hope or opportunities for meaningful, sustainable employment.


Young people are particularly disadvantaged in the labour market and yet receive inadequate assistance and support. The Common Youth Allowance, which bringing unemployment entitlement levels up to those paid to students, is still insufficient support, particularly for job seekers negotiating the Job Network.


This has increased costs through increasing the difficulties young people face in accessing assistance (where they are eligible for any assistance at all) and through the harsher activity tests which require young job seekers to search for work, at their own cost or have their benefits reduced.


Many young job seekers, and early school leavers in particular, are especially disadvantaged as many are not eligible for income support at all, and have been forced to become reliant on their families.


The Federal Coalition promised in its employment policy Pathways to Real Jobs , to "through its National Job Creation Strategy, ensure that a greater number of real jobs are available for young people".


This has not occurred, Instead, the Federal Government has implemented a 'Work-for-the-Dole' scheme, which provides short-term, isolated work experience, which young unemployed people must undertake in order to continue to receive income support.


There is no corresponding program for mature-age unemployed persons.


The scheme does little to enhance the job prospects of young unemployed people as without accompanying job creation initiative and integrated training and accreditation targeted to the needs of local industry, young people are unlikely to find work at the end of their participation in the scheme.


The goal of the program is ostensibly skill and attitudinal development to better enable participants to find work. There are better ways of achieving these objectives.


The Australian Democrats recognised that the process of transition from education to work as no longer as clear-cut as for previous generations, but that many young people now undertake part-time or casual work to support themselves through study and training. They should be encourages to view this work as part of their vocational training process. Initiatives should be provided to help young people escape the trap of insecure and low-paid casual or part-time work, and assist them make the move to permanent, meaningful employment.


To this end, the Democrats propose a Youth Employment Strategy, incorporating a Youth Guarantee.


This would involve a system of early intervention to identify young people at risk of leaving school early, and develop measures to address their vocational training and work goals, without forcing them to stay at school. The Common Youth Allowance ignores the needs of many young people by compelling them to remain at school, placing great strain on our educational system without actually providing the resources to accommodate the needs of students whose interests may best be served outside the classroom.


The Youth Employment Strategy would integrate education, training and work experience at the secondary and post-schooling levels, which would directly involve the individual young person. Perhaps most importantly, offer them choices and clear directions, rather than compulsory participation in a short-term initiative unlikely to be suited to their needs or those of local industry.


Under the Strategy young people would receive career counselling in their last year of compulsory schooling detailing the paths by which they may choose to enter the workforce. Those young people not in school would receive equivalent career counselling from their case manager. The Youth Guarantee would give them the choice of:



• Remaining in full-time education with the option of pursuing tertiary education. The Australian Democrats are committed to providing universally-accessible, free higher education;


• Entering full-time work, through apprenticeships and traineeships;


• Subsidised employment with appropriate on-the-job training incorporated toenable further skill development and with a prospect of permanent employment and advancement; or


• Entering an accredited vocational training program in their chosen field, inclu ding integrated paid work experience with a view to the needs and growth potential of local industry.



A part of the Youth Guarantee, increase incentives to employers to take on apprentices to at least the level that they were prior to the Government rem oving their tax deductibility earlier this year. This will help arrest the decline in apprenticeship commencements, which fell from 49,742 in 1994-5, to 43,930 in 1995/6 to 40495 in 1996/7. (Cost $135 million over three years).


The Youth Employment Strategy would replace the Work-for-the-Dole scheme ($690 million over three years).


Mature Aged Unemployed


Being aged over 45 years and unemployed is to face the prospect of never working again. Half of the 210,000 workers in Australia aged over 45 who have lost their jobs have never found work again. The mature aged unemployed face an average period on the dole queues of 68 weeks, half of them are long term unemployed. These are depressing statistics. Yet, the only policy change offered by the Coalition Government was to force workers to dip into their superannuation savings for retirement first before being able to access unemployment benefits. This is, by any standards, an outrageous policy.


The Democrats regard the issue of mature aged unemployment as requiring two approaches. The first is to prevent the mature aged losing their jobs if possible. And the second is to provide a means by which their life skills can be put to use in the community even if the labour market will not buy them. We propose:



• Im proving job security by increasing retrenchment benefits and notice periods particularly for workers aged over 45 years and reducing the tax and corporate incentives on companies to downsize, contract out and retrench;


• Establishing a Working Life Fund to provide incentives to employers to retrain and redeploy workers in preference to retrenching them;


• Establishing a Community Services Program to provide 20,000 community service sector support jobs utilising the skills of the mature aged unemployed in home and community care, in hospital and in schools; (Cost $945 million over three years.)


• Restore the means test exemption for superannuation assets for those aged between 55 and 65 for social security benefits. (Cost $198 million over three years.)





1999/00 2000/0  12001/02

Infrastructure Spending    320  330  350

Infrastructure Borrowing Concession   -75  -75  -75

Working Life Fund     125  125

EMDG Scheme     170  180  190

Industry Council     5  5  5

Tariff Pause      -900  -960  -1020

S hips Bounty      6

Books Bounty      7  7  7

Services Council     5  5  5

Domestic Tourism Promotion    20  20  20

Environment Industry Initiatives   50  50  50

Green Corps Expansion    30  33  36

Small Business Loans Scheme   50  50  50

Public Housing     125  125  125

IT Sector Plan      15  15  15

Centalink Staffing     60  65  70

Country Services     10  10  10

NEIS expansion     75  80  85

Skillshare funding     130  135  140

Training Rejuvenation Fund    125  125

Federation Fund revenue    -125  -125

Case Management     150  150  150

Youth Guarantee     220  230  240

Apprenticeship incentives    45  45  45

Community Services Program   300  315  330

Over 55s super assets test    67  66  65

1010  1008  897




© 1998 Australian Democrats