The Future of Employment Services: A Labor Perspective

Speech

Transcript - Jobs Australia 2002 National Conference, Adelaide - 25 October 2002

Check Against Delivery

Introduction

Thank you for inviting me to participate in your conference.

I very much appreciate this opportunity to hear from those who work on the frontline, delivering services and support to unemployed Australians. I am of the firm belief that you learn more by going directly to where people live and work than by sitting in an office in Parliament House.

I appreciate that this conference comes at a time when many of you are feeling a great deal of stress about the new contracts – about how it will work and how your agency will survive the upheaval. There is no doubt that the changes you are all being asked to make are monumental. One Job Network provider described the Job Services Contract 3 as a "completely new beast".

But firstly I thought I would provide a little background for those who know little of me and my parliamentary history.

I was first elected to Federal Parliament in 1996 as the Member for Grayndler, an electorate located in Sydney's inner-West. It is also the area in which I grew up.

For those of you who don't know Sydney, the inner-West is a thriving, exciting place to live. It is a far different place today than it was when I was growing up. There is no doubt that I got lucky – I lived in a public housing estate where disadvantaged people remained marginalised from opportunities.

My involvement in politics has always been about trying to help the kind of people I grew up with, and that is why I jumped at the chance to take on this particular portfolio. There can be nothing more important than helping those from a background of limited opportunities and material wealth into the security of a job to advance their economic and social position.

Since entering Parliament, and through my participation in various Parliamentary and Labor Party committees, I have had the opportunity to put my commitment to social justice into practice.

Between 1998 and 2001 I served as Parliamentary Secretary to the Shadow Minister for Family and Community Services, Mr Wayne Swan. In 2001 I was given added responsibility as Parliamentary Secretary for Aboriginal and Torres Strait Islander Affairs and Parliamentary Secretary for the Arts.

Following last year's Federal Election I was promoted by Simon Crean to the Shadow Ministry, firstly in the Ageing and Seniors portfolio and now as Shadow Minister for Employment Services and Training.

The Scourge of Unemployment

I come to this portfolio at a time when we as a nation still waste too much of the talents of too many of our people. Unemployment is without question still one of the greatest challenges we face.

Unemployment is a scandal of wasted potential. Unemployment saps the confidence and self esteem of our fellow Australians. It damages the social fabric and has profound consequences for social cohesion. As has been seen in other countries, ignored and neglected, left to a fate to be decided solely by market forces, unemployment creates a permanent underclass.

Today 622,700 of our fellow citizens are without a job. In addition 672,100 Australians currently working part-time want more hours and a further 1.16 million who are counted by the ABS as ‘not in the labour force' would still like to have a job.

In total, nearly 2.5 million Australians are not getting the financial and social stability that comes with having enough work – that's over 20% of the Australian workforce!

Unemployment amongst our Indigenous communities is currently running at six times the national average.

The most disturbing of all statistics mentioned in relation to unemployment has to be the number of children growing up in households where there is no breadwinner. More than 800,000 children now live in households were no parent has a job.

Unemployment is the key determinant of poverty in our society today. Data compiled by Bob Gregory and Peter Sheehan show that in 1972-73, 21% of the unemployed lived below the poverty line, but by 1995-96 that figure had risen to 78%.

The duration of unemployment is also closely linked to poverty. While 13% of households where the head was unemployed for less than 8 weeks were in poverty, the poverty rate for households where the head was unemployed for over a year was 79%. These statistics are particularly disturbing given the increasing proportion of long-term unemployed people. In 1973, just 5% of unemployed people had been out of work for over a year. Today that figure stands at around 30%.

As well as being poor, the long-term unemployed are often disadvantaged in other ways. According to figures compiled by the ABS, half of those who are out of work for more than 2 years cannot read or write.

But despite their exclusion from the mainstream labour market, the unemployed and in particular, the long-term unemployed are entitled to the benefits of economic prosperity and a chance to contribute to it. Returning the long-term unemployed to the productive process of the nation not only returns them to the income, social interaction and creativity which work provides, it taps their potential for the good of our nation.

It is for this reason that we must renew our national commitment to the achievement of full employment.

A Vision of Full Employment

Any political party that claims to hold strong social justice convictions must have at the heart of its agenda for the nation the goal of full employment. Great political parties exist for great public purposes and nothing is a more important social cause than the eradication of mass-unemployment.

Labor is a party founded on the principles of social justice and a commitment to full employment is enshrined in our Platform.

Full employment is more than creating the circumstances where everyone who wants work can find it with relative ease. It is central to tackling poverty and social exclusion. It is the foundation for a fairer, more inclusive and prosperous society.

Some would argue that full employment is a worthy ideal but achieving it in a modern economy is impossible. Or even if it were possible, would prove too costly.

To those who say full employment is impossible: international experience has proven the opposite – even in a modern Western economy. Unemployment in the UK is currently 5%, Denmark 4.3%, Austria 3.6%, Norway 3.6% and the Netherlands just 2.4%. These international experiences provide crucial lessons for public policy makers here in Australia.

Those who may question the cost of striving for full employment should consider the costs of doing nothing. The incalculable social costs of family breakdowns, crime, poor health outcomes, social dislocation and division. Large numbers of unemployed people also demand large budget outlays on social security and other welfare measures.

But above all government is about more than the management of issues or programs. Government must be about the pursuit of ideals, of lifting people out of poverty and despair and providing them with the opportunities to realise their full potential.

This is the great dividing line, the great issue of principle between Labor and the current Coalition Government.

Labor believes that government has a responsibility to invest in individuals who make up communities. The Coalition believes that individuals only prosper when government gets out of their way.

But the achievement of full employment requires more than a conscious and concerted effort from government. It requires government working cooperatively with unions, the private sector and community-based organisations.

In other words, we need to build a progressive national consensus for full employment.

While a robust economy with strong and stable economic growth is an essential foundation for full employment, past experience has shown that new jobs inevitably go to new entrants to the labour market and not to the long-term unemployed. Long-term unemployment has a structural aspect that is immune to improvements in economic conditions.

This is the experience from the economic recoveries of both the 1980's and 1990's.

Despite a decade of economic growth and decline in overall unemployment, long-term unemployment is today higher than it was when the Howard Government first took office in March 1996.

It is no coincidence that this deteriorating situation coincided with the Howard Government's decision to cut funding to employment assistance and labour market programs by 50%, or $1 billion a year. In the process the Government scrapped much of the assistance put in place by the previous Labor Government's Working Nation program, irrespective of how effective that assistance was.

On the one hand the Government complains about a growing culture of welfare dependency, while on the other it savages the very programs that would assist the unemployed off welfare and return them to the economic and social life of our community.

We have a government that specialises in vilifying the victims of economic change.

Deficiencies In The Current Job Network Model

The Job Network, established in 1997 without parliamentary debate or community consultation, is now the Government's flagship assistance program for the unemployed. The Job Network replaced programs delivering specific services with a much more open-ended funding regime centred on employment outcomes. Within the Job Network, Intensive Assistance, soon to be repackaged as Customised Assistance, is the highest level of assistance available and is targeted towards those with the greatest barriers to employment.

It is correct that Labor has been critical of the Job Network. However, I would like to assure you that that criticism has been of the system and not the performance of individual providers or your commitment to helping the unemployed. I recognise that Job Network providers, and in particular those from the not-for-profit sector, see public service as a calling not just a career, far more about altruism than about self-interest.

I therefore trust you will view the following comments within that context.

While I welcome the flexibility and emphasis on employment outcomes that underpins Intensive Assistance, fundamental flaws in the funding structure and inadequate levels of government support have greatly undermined the effectiveness of the program.

Specifically, inadequate funding meant that last year one-quarter of the long-term unemployed were denied access to Intensive Assistance. Inadequate funding also meant that those who did gain access did not get the help they needed. Only 5% of Intensive Assistance participants got any form of work experience, and only 14% got vocational training.

Job Network providers are provided with too few resources and too few incentives to invest in helping disadvantaged jobseekers.

But it's not just the Labor Party and Job Network providers voicing these concerns.

Last month both the Productivity Commission and Department of Employment and Workplace Relations released detailed evaluations of the Job Network's performance. Both assessments provided strong evidence that the current funding model is seriously flawed.

The Department's report found that participation in Intensive Assistance raised the employment prospects of the long-term unemployed by a mere 0.6%! As the report acknowledged:

"…the overwhelming majority of the jobseekers who obtained jobs after participating in Intensive Assistance would have got jobs anyway."[1]

On top of this, the Productivity Commission found that:

"Many jobseekers receive little or no assistance while in the apparently intensive phase of assistance. This is popularly called ‘parking' in the industry."[2]

The report also went on to say:

"…the existing Intensive Assistance program is neither intensive nor assistance to some disadvantaged jobseekers."[3]

Given these findings it should therefore come as little surprise that the employment outcomes being achieved by Intensive Assistance compares unfavourably to those that were being achieved under the most effective Working Nation programs: Jobstart and Jobskills.

As a result jobseekers are being recycled through the Job Network. Information obtained by Labor through the Estimates Committee process reveals that 49% of people participating in Intensive Assistance had already been through the program previously. 23% had been through the program at least twice before and 5% have done it at least four times!

Importantly the Productivity Commission in its report did consider the implications of the changes recently announced by the Government and which will form the basis of ESC3. Specifically, the Commission concluded:

"The proposals for Customised Assistance under the Active Participation Model guarantees a much higher level of interaction with jobseekers … However, there is no guarantee that individual jobseekers will get access to any Job Seeker Account funds or that the 3 day a week requirement need amount to genuinely significant assistance. Accordingly, some jobseekers with large barriers to employment may not get much direct assistance from the Job Network."[4]

The Productivity Commission paints a rather bleak outlook for the employment prospects of the 383,000 Australians who have been on benefits for more than a year.

In addition, if the Government gets its way with respect to Disability Support Pensions the pressure on the Job Network is only likely to increase. These changes will dump tens of thousands of people with disabilities and significant employment barriers into a system already overburdened and under-resourced.

The two reports I have referred to do not suggest that active labour market programs are pointless or a waste of money, but they do indicate that without adequate funding their effectiveness will continue to be greatly reduced. The deficiency in the Job Network is obvious: not enough is being invested to improve job outcomes for disadvantaged jobseekers, particularly those lacking recent work experience and skills.

Whereas under the Keating Labor Government funding for employment assistance represented 0.67% of GDP, that figure under the Howard Government has declined to just 0.39% of GDP. On an international comparison, Australia invests 43% less than the OECD average on help for the unemployed.

A serious effort to tackle unemployment and move Australia towards full employment does present short-term financial costs for government, but I believe they are costs worth bearing.

The establishment of Job Seeker Accounts for Indigenous and mature-aged jobseekers is a welcome, if belated acknowledgement that current levels of investment in disadvantaged jobseekers has been inadequate. However, at around $900 it won't buy enough of the help really needed such as paid work experience or vocational training.

The lack of investment by the government in assisting jobseekers is matched by a draconian social security breaching regime that strips money away from the unemployed, hindering their efforts to find work.

Labor does not countenance social security fraud. We do not want to provide comfort to those few people who break the rules.

However it is clear that breaching rules have been twisted simply to save the Government money.

In the financial year just gone, 260,000 Australians were breached for as little as missing a phone call from Centrelink. Taking 18% of a person's meagre Newstart or Youth Allowance for 26 weeks for such a breach is out of step with community expectations and does nothing to encourage job-seeking effort.

Everyone knows that putting police speed radars at the bottom of the hill is just revenue raising – the current breaching regime is no different.

Labor is determined to reform the current breaching regime and to this end we will be moving amendments to the Government's welfare reform legislation to make it fairer.

Labor's Agenda

Labor is committed to refocusing the Job Network on the needs of jobseekers and in particular, those confronting significant barriers to employment.

The details of these reforms are currently being developed and refined by Labor as part of the comprehensive policy review being coordinated by Deputy Labor Leader, Jenny Macklin.

This is a process open to the public. Given the collective experience and knowledge of people in this room, I would encourage those who have policy suggestions or ideas to make submissions directly to my office. The closing date for public submissions is December 1 this year.

Of course, you'll need to be careful what you say. With the rolling over of 60% of contracts this week, there is a complete lack of transparency from the Government regarding the details. It is extraordinary that a confidentiality clause is compulsory for each provider to participate in this process. So much for open government and accountability.

In the meantime I am currently reviewing the details of the various submissions Jobs Australia has already made to the Government on how the operation and effectiveness of the Job Network could be improved.

While the specifics of Labor's reform agenda for employment services are still being developed, there are number of issues we are keen to address in close consultation with providers and jobseekers.

Firstly, Labor wants to ensure that the provision of assistance to the most disadvantaged jobseekers is commercially viable and that all long-term unemployed are receiving the assistance that best meets their needs. The current funding system shifts all of the risk of investing in disadvantaged jobseekers from government to you, the providers.

Secondly, Labor will examine reconfiguring the incentive structure to encourage early intervention. Services need to be provided early in the unemployment cycle before unemployment becomes entrenched.

Thirdly, Labor wants to ensure that Job Seeker Classification Instrument (JSCI) is more than a tool for the rationing of employment services; it must be a means for ensuring that jobseekers are directed into appropriate assistance.

Finally, Labor wants to open up access to Job Matching services so that people who are part-time workers or working in a job with limited prospects can access information about other employment opportunities.

Conclusion

In 1945 the Curtin Labor Government tabled its White Paper on Full Employment declaring that the eradication of the "evils of unemployment" would be pursed with "utmost energy and determination". This document laid down the social and economic foundations for post-war Australia and elevated full employment to the centre of national political debate.

While the White Paper was undoubtedly a document of its times, the vision, political determination and sense of collective effort underpinning it are values which today's policy-makers would do well to rediscover.

However, if the goal of full employment is to become anything more than an aspiration, an effective Job Network is absolutely essential.

While the current Government believes that simply keeping jobseekers active will lead to future employment opportunities, Labor recognises that without relevant skills and recent experience in a mainstream workplace, jobseekers will continue to find it difficult convincing employers to take them on.

Instead of finding new ways to breach the unemployed, the Government must refocus the Job Network on the needs of jobseekers and entrust providers with the resources and incentives they need to assist the long-term unemployed move permanently from welfare to work.

When tabling the White Paper on Full Employment, the Minister for Post-war Reconstruction, Mr Dedman, told the Parliament:

"The policy of full employment is the Government's positive contribution to the security of the individual. Full employment spells opportunity, and opportunity opens the way for achievement."[5]

That statement is as true today as it was in 1945.

End

[1] DEWR (2002), Job Network Evaluation Stage 3: Effectiveness Report: p81

[2] Productivity Commission (2002), Independent Review of the Job Network: p xxxii

[3] Productivity Commission (2002), Independent Review of the Job Network: p 9.29

[4] Productivity Commission (2002), Independent Review of the Job Network: p 9.29

[5] House of Representatives Hansard (1945): p 2238