Towards A New Deal For The Unemployed Anthony Albanese - Shadow Minister for Employment Services and Training

Speech

Transcript - NESA 2003 National Conference, Melbourne - 21 August 2003

INTRODUCTION

In Parliament last Thursday, I was listening to the Employment Services Minister wax lyrical about the computer system for Job Network 3 and my thoughts turned to Douglas Adams's The Hitchhiker's Guide to the Galaxy.

The focal point of this four-part trilogy is the computer ‘Deep Thought'. In it they asked the computer to explain: "The ultimate answer, the secret to life, the universe and everything".

Deep Thought responds that it could provide the answer – but that it would take seven and a half million years.

When the big day arrived, Deep Thought warned that they weren't going to like the answer, but they demanded to know anyway.

Of course, the answer was 42!

Perplexed that it had taken seven and a half million years, Deep Thought responded that the real problem was that they didn't have the question to which the answer is 42 and suggested that a bigger computer would needed to search for the question. Of course, the name of this bigger computer is Earth.

This story is a reminder of the main message I want to leave you with today. To paraphrase Bill Clinton, the Government has forgotten: "it's the people stupid!"

The Government is so obsessed with the system that they have forgotten that it's about serving the unemployed and supporting the providers who are committed to that task.

It's time to put people back into the equation.

That's why I appreciate this opportunity to hear from those who work on the frontline. I realise that this is a very difficult time for many of you – I know that you have been working long hours, coping with a great deal of stress and feel that in spite of your tremendous efforts you just can't get the results that you want for unemployed Australians.

You have had a lot of pain, but due to the system you have had little gain. The lack of cash flow has led many of you to question your ongoing financial viability within the Job Network.

Many of you have told me that the frustration has been made even greater because nearly all the problems now being experienced were ones you identified during the consultation phase that took place prior to the development of Job Network Mark 3.

I have no doubt that the only reason the Job Network is still functioning is because of the "never say die" attitude of Job Network providers, Centrelink staff and a number of public servants who are busting a gut to simply make the system work.

It is extraordinary that the Government concedes that elements of Job Network 3 such as the roll out of JobSearch kiosks and telephones will not be completed for some months. Mal Brough must be the only person in Australia who didn't know that July 1 was the day after June 30.

Now I don't know what Mal Brough and Tony Abbott are going to say tomorrow, but if I was the Minister – a Minister who took his responsibilities seriously – I would admit that I had got it wrong, that the financial modelling and indicative business levels which underpin the viability of the system was based on incorrect data.

Furthermore, in order to quickly restore financial certainty I would immediately set up a joint planning group involving providers.

We'll have to wait and see but no doubt tomorrow you will hear that everything is fine apart from a few "greedy" jobseekers who need to be taught a lesson. I can only hope I'm proven wrong.

Today in my speech I will focus on a possible way forward. But firstly I would like to briefly outline what I see as the key issues in labour market policy.

THE MIRACLE ECONOMY

We are often told by members of the Government as well as commentators from the financial markets that we are reaping the benefits of a "miracle" economy. This view is not only gratuitous self-gratification, but reflects the superficial level at which many in the economic profession judge economic success. Growth numbers, inflation targets and budget surpluses may give Treasury economists a warm inner glow but there are very real human implications behind the numbers they analyse, the decisions they make and the economic philosophies they pursue.

Or as economist John Maynard Keynes once said:

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else."

Take economic growth. Economists sometimes forget that economic growth is a means to an end, the purpose of which is to maximise the living standards of all Australians. Over the past decade Australia has experienced a prolonged period of almost uninterrupted economic growth and while this has reduced the official unemployment rate, a closer examination reveals that our society is today less fair and no closer to the achievement of full employment. The benefits of greater prosperity have not been shared.

Today 626,900 Australians are officially jobless. However this figure tells only part of the story and disguises the true magnitude of the policy challenge before us.

Earlier this month the Chief Executive of Australian Chamber of Commerce and Industry, Peter Hendy, echoed this point in his response to the July Labour Force figures when he said:

"It is also ominous that full-time employment has now fallen for the sixth consecutive month in trend terms while the level of unemployment has during that same period continued to rise. It is also a matter of concern that even with the sharp fall in the seasonally adjusted participation rate the number of unemployed has nonetheless gone up.

There has been a persistent view amongst decision makers that the Australian economy is impervious to the international trends which surround it. These figures should be a reminder that this is not the case."

While I do not endorse all the remedies put forward by ACCI, I certainly support their diagnosis.

Overall, the Australian labour market has been sluggish with most employment growth occurring in part-time and casual work, often in low paid and low skilled industries and occupations. Furthermore, these jobs are often characterised by greater insecurity and few protections from unfair dismissal and workplace exploitation.

It is undoubtedly the case that many appreciate the flexibility of part time work and for jobseekers it can open the door to better opportunities. However, it is apparent that an increasing number of people are being forced to accept part time employment as an only option. In particular, the number of people working part time but wanting more hours has increased almost four-fold over the past 20 years. Almost 600,000 Australians are underemployed and probably not getting the financial security they need.

While part time employment has surged, permanent full time employment fell from 74% of all employees in 1988 to 61% by 2002. The growth that did occur in full time employment occurred largely amongst the most highly skilled and paid occupational groups.

Furthermore, almost nine out of every 10 of the net jobs created in the "miracle" economy of the 1990s, paid less than $26,000 a year – nearly half paid less than $15,600 a year.

These labour market conditions have disproportionately impacted on our society.

Probably most concerning is the increasing number of children growing up in households where there is no breadwinner. More than 850,000 children, or 17.4% of all dependent children, now live in households where no parent has a job.

According to research undertaken by the Department of Family and Community Services:

"International comparisons show that joblessness affects a larger proportion of families with children in Australia than in most other industrial nations…"

The significant increase in the participation rate amongst women and the slight decline in male participation rate over the past 20 years was not simply a "rebalancing" of labour market opportunities between the genders. These changes occurred in difference households. Rather than coming from those households where men were unemployed or out of the workforce, many women who entered work already had a partner in work.

The end result is the polarisation of households into work rich – where all adults work – and work poor – where no adult works. Over the 20 years to 1999 the number of families in which no adult was employed increased by 229,000, the number of families in which two adults were employed increased by 395,000.

Prevailing labour market conditions have also significantly impacted on older workers. In particular, the average duration of unemployment for mature age workers is twice that for younger workers. Furthermore, the participation rate of older workers is 10 percentage points below the overall national rate with many having exited the labour market prematurely and ended up on benefits such as the Disability Support Pension.

Other groups confronting poor employment prospects include people from non-English speaking backgrounds, indigenous Australians and the low skilled.

Furthermore, the prevailing labour market conditions have caused a significant rise in the levels of long-term and hidden unemployment.

Despite a decade of economic growth the number of people on unemployment benefits for more than 12 months is higher today than when the Howard Government was first elected. Very long-term unemployment has more than doubled from 135,657 people in 1996 to 281,289 by 2003.

A further 1.16 million Australians who are counted by the ABS as ‘not in the labour force' would still like to have a job. These people form a large pool of hidden unemployment, many relying on social security payments as their only source of income.

Finally, unemployment has become increasingly concentrated in particular regions of the country. This has given rise to communities in which worklessness is no longer the exception, but the norm. While areas such as Pittwater in New South Wales, enjoy an unemployment rate of less than 2%, communities such as Hervey Bay in Queensland are enduring limited job opportunities and unemployment rates of over 20%.

RESTORING FULL EMPLOYMENT AS A NATIONAL PRIORITY

The statistics I have outlined thus far not only cast serious doubt over the "miracle" economy claim but also underscores the challenge before us as policy makers – it is significant but by no means insurmountable.

Our starting point is a society that still wastes too much of the talents of too many of its people.

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 collective good.

But this will not happen without us as a nation choosing to make it happen.

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

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.

While a robust economy with strong and stable economic growth is an essential foundation for full employment, experience shows 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 largely impervious to improvements in economic conditions.

Without a doubt, reducing unemployment and increasing labour force participation rates requires well functioning active labour market programs. It is for this reason that the problems currently plaguing the Job Network are of so much concern.

A SYSTEM IN CRISIS

Just 7 weeks into Job Network Mark 3 and already we have witnessed a frenzy of activities from the calling of numerous crisis meetings, the establishment of Interdepartmental committees, the re-engineering of the much vaunted Work for the Dole program, thousands of phone calls to jobseekers and of course, the distribution of $30 million in emergency funding to providers.

Let me be blunt. All these activities have simply been about making sure providers are able to keep their doors open and their staff employed, rather than developing a system that works for the unemployed.

It is unfortunate that the only response from the Government is to deny responsibility and launch gutless attacks on the unemployed.

In one of his more remarkable attacks, Minister Brough accused jobseekers of being "greedy". In an extraordinary outburst, the Member for Moncrieff, Steve Ciobo, tried to up the stakes by referring to 40,000 dole bludgers on the Gold Coast alone.

This from a Government that happily sits by while the executives of our top companies grant themselves an average 40% pay rise over the past 12 months – a weekly pay rise that is greater than what a jobseeker receives in a year on NewStart Allowance. The hypocrisy and nastiness of some in the Government clearly knows no bounds.

But lets get the facts straight and for this I will make reference to the survey of providers conducted by NESA during the early phase of the transition to ESC3. I have no doubt that it was the results from this survey that finally forced the Government to provide emergency funding.

Without trying to be melodramatic, the survey revealed a system teetering on the verge of collapse. In particular, it found that 90% of providers surveyed reported that their cash flow and revenue was well below what they had budgeted for and been promised by the Government. In dollar terms, providers reported that their cash flow was down by a massive 40% as the number of jobseekers attending meetings with their providers slump.

Based on this industry feedback NESA concluded:

"…if Job Network Members are not provided with substantial additional funding then we will see most providers retrenching staff within weeks and a number of providers actually ceasing to trade with a month."

Hence the arrival of the Government's $30 million.

The Government will need to repeat this bailout, unless it accepts the need for real reform and restructures incentive payments to Job Network providers to reflect real costs, protect cash flow and ensure the viability of the system.

I for one do not think that blaming, vilifying and bludgeoning the unemployed is the remedy. Nor do such attacks provide you, the providers, with the sense of financial certainty I believe you desire most.

The immediate troubles confronting the Job Network are three fold.

Firstly, the financial modelling and indicative business levels which underpins the viability of the system appears to have been based on suspect data provided by the Department of Employment and Workplace Relations and Centrelink. In particular, due to inaccurate Centrelink data the pool of jobseekers – and therefore the level of work ultimately available to providers – has been continuously revised down.

I understand that the figures started at 770,000, then became 720,000, then 630,000. I'm told the real figure may be more like 520,000 – meaning that there is only 75% of the anticipated business available to providers.

The Government must come clean on when they knew these figures would be substantially less than in their Indicative Business Levels – some providers have told me they feel very mislead about these figures.

The second issue is Centrelink's "automated referral" system.

This impersonal system may be cheap but its reliability seriously undermines cost effectiveness.

In particular, it fails those jobseekers without permanent addresses such the homeless and those with reading and writing difficulties, which according to the ABS is about half the very long-term unemployed. In addition, a large number of jobseekers are simply confused, told to turn up at Job Network providers they have never heard of before or at times that do not take into account their personal circumstances.

Given these realities it is little wonder that providers are experiencing such high non-attendance rates.

A personal interview and direct referral from Centrelink would be far more effective. A trial already conducted by the Government found that the vast majority of jobseekers do turn up when Centrelink adopts such a personal approach.

For these reasons enhancing the effectiveness of the gateway between Centrelink and the Job Network to ensure that jobseekers both understand the services available to them and are able to access them promptly, will be a Labor priority backed up by additional investment.

The third significant challenge confronting this bold new world of privatised employment services requiring immediate attention from the Government is the whiz-bang EA3000 IT system. To date the Government has spend somewhere between $50 and $70 million developing this system.

Contrary to the Minister's claim that it is "world's best IT", the feedback I have received raise serious questions about the platform's reliability and stability. In an article which recently appeared in Computerworld, Australia's leading IT newspaper, an IT manager from a Job Network provider was quoted as saying:

"All the providers I have been in contact with have indicated that EA3000 is the dog we expected. In terms of impact, we are no worse off than other providers, job seekers are clearly being impacted"?

A major component of this IT system is of course the Australian JobSearch database. This system seeks to auto-matches jobseekers with job vacancies. The vacancy information sent via various electronic means is supposed to be tailored by the jobseeker's skills, work experience and areas of employment interest.

However, as we have witnessed over recent months the information being sent to jobseekers is far from individually tailored. For example, Joanna, a 53-year-old Tasmanian woman and former art gallery worker, was matched with a job requiring a chainsaw licence. Or Rosa, a 56 year old woman from Daylesford who suffers from high blood pressure and severe arthritis but was matched with a job in the Army Reserve as a Combat Medic.

This is also the same system that allowed an escort agency and a company wanting to launder money in Australia to advertise for workers.

But while some of these examples make for good humour, they highlight the limitation of technology in the delivery of individually tailored support services. Furthermore, if jobseekers are going to be continuously inundated with pointless information then their frustration and disillusionment is only likely increase, further undermining their job search efforts. This will only make your job more difficult.

However, these problems with auto-matching should come as no surprise to the Government. Back in July 2002 Jobs Australia warned:

"To undertake auto-matching five days a week could be counterproductive in promoting job search activity. Auto-matching will not increase the pool of available vacancies, so the likely result will be that job seekers will apply for more jobs and be forced to deal, on average, with a higher number of rejections. … We expect high levels of frustration and burnout for jobseekers experiencing, and required to experience, a regime of frequent rejections."

Instead of launching gutless attacks on the unemployed, the Government should acknowledge the problems associated with their JobSearch website and take action to enhance the filtering of job vacancy information send to jobseekers.

All in all we appear to have a government more interested in investing in complex computer systems than the unemployed.

The Government's mismanagement of the transition from ESC2 to ESC3 has prompted me to write to the Australian National Audit Office asking that they conduct an independent audit into the design and administration of ESC3 – a contract involving $2.5 billion in taxpayers' money. I have taken this action for the sole reason that I believe the ultimate losers from a dysfunctional Job Network will be the unemployed.

In light of these challenges I do not envy your position nor doubt your ongoing commitment to the unemployed. I recognise that Job Network providers see public service as a calling not just a career, far more about altruism than about self-interest. I am certainly reminded of this every time I step into a Job Network office and discover just how many of you have made the shift from the now dismantled CES or Skillshare to the Job Network. Without a doubt your collective knowledge and experiences with jobseekers is the Job Network's most important strengthens.

TOWARDS A NEW DEAL FOR THE UNEMPLOYED

I now wish to move beyond the immediate transitional problems to consider the overall structure of the Job Network and where I see the need for change.

Labor understands that the clock cannot be turned back. Furthermore, the flexibility of the Job Network model and its emphasis on employment outcomes is welcomed. However, we appear to have a Government more obsessed by the theoretical model it has created and how perfect it looks displayed on a flow chart rather than ensuring that the system enjoys the confidence of people it is meant to serve. Such a mindset sees the system not as a means but an end in itself.

Job Network providers and job seekers cannot afford the disruption created by this transition period – which is worse than the transition to Job Network 2.

The key to making any transition smoother is to actually listen to the providers. I guarantee that your voice, your concerns and your ideas would be very much at the forefront of the system under a Labor government.

Underpinning this Government's approach to labour market programs is a philosophical belief that simply keeping jobseekers active and completing regular assessment tasks will magically lead to future employment opportunities.

The Government's obsession for keeping jobseekers "active", or as the Minister has said: stop them watching Oprah, has resulted in the implementation of one-sided mutual obligation initiatives such as Work for the Dole and the "Dole" diary.

Research jointly undertaken by the University of Melbourne's Centre of Public Policy, the Brotherhood of St Lawrence and the St Vincent de Paul Society and contained in a report entitled Much Obliged found that for many disadvantaged jobseekers satisfying the Government's mutual obligation regime was a job in itself.

Or as the report put it succinctly:

"In effect … the system operates for many disadvantaged jobseekers not as ‘welfare to work' but ‘welfare as work'."

In other words, we have a Government that on the one hand complains about a growing culture of welfare dependency, while on the other imposes on the unemployed a punitive regulatory regime that actually inhibits their efforts to find work and move off welfare.

By contrast Labor's starting point is the jobseeker and how best government can serve their legitimate desire for meaningful employment. Put simply, Labor has a different attitude to the unemployed.

Furthermore, 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 now matter how many diaries you ask them to keep or meetings to attend.

From this premise I wish to raise two specific proposals. But at the outset I wish to stress that the proposals I will briefly outline are not at this stage official policies of the Labor Opposition. Instead I raise them for your consideration and feedback.

Firstly, I believe strongly that the effectiveness of Customised Assistance – the assistance targeted mostly at those jobseekers with the greatest barriers to employment and what was previously called Intensive Assistance – is being greatly reduced by a flawed funding structure and inadequate levels of government support.

While over the life of ESC2 the employment outcomes achieved by Intensive Assistance (IA) did ebb up, this improvement only came about by a rise in the number of IA participants finding part-time employment. The numbers moving into full-time employment has remained fairly static at around 17 to 18 percent. The experience for disadvantaged jobseekers was even worse – only 12.5 percent secured full-time employment.

Specifically, inadequate funding means that those who gained access to Intensive Support will not get the help that is most likely to improve their employment prospects. For example, under ESC2 only 5% of IA participants got any form of work experience, and despite the fact that half the unemployed have completed nothing more than basic schooling only 14% received vocational training.

I believe the effectiveness of Customised Assistance could be improved if government encouraged and facilitated a greater uptake of both these types of assistance. In particular, I wish to look at wage subsidies.

When the Howard Government slashed labour market funding, dismantled the CES and contracted-out employment services, JobStart, the Working Nation program that provided the long-term unemployed with a subsidised job within the private sector for 6 months, was quickly abolished.

That decision was shortsighted.

According to research undertaken by ACOSS, JobStart was proving much more successful at moving people into unsubsidised employment than IA, at a comparable cost.

In addition, a wage subsidy program is already a key component of the Government's Indigenous Employment Policy and in 2001/02 achieved an employment outcome of 64.7 percent – well above IA's employment outcome rate of 45 percent.

Calls for a greater role for wage subsidies within the Job Network extend well below the usual suspects in the community sector. In its submission to last year's Productivity Commission inquiry into the Job Network, the Australian Chamber of Commerce and Industry (ACCI) wrote:

"ACCI acknowledge that there are some employers who see a role for incentives to employ long term unemployed people (eg JobStart) and would like to see this type of arrangement returned."

The view from this diverse group of public policy makers is clear: subsidised work experience does have the capacity to overcome the loss of skills and motivations experienced by those who have been out of work for sometime.

I see our challenge as providing you the providers with the resources that would enable them to expand this opportunity to more jobseekers, giving you an additional tool in which to combat long-term unemployment.

Some may dismiss such an approach as too expensive. To them I would point out that the Commonwealth will pay out over $5 billion in unemployment benefits this year alone. Why not put some of that money to another use and at the same time give jobseekers the experience of working in a mainstream workplace again?

Unlike such programs as Work for the Dole, the central purpose of wage subsidies is to use people's social security payments to actively reconnect them to the mainstream labour market and the opportunities that brings. Essentially, properly targeted wage subsidies turn passive welfare into active welfare.

While I do not argue that wage subsidies alone are the answer, I do believe they would enhance the overall effectiveness of the Job Network.

The second specific issue I wish to comment on and seek your feedback is the need for a policy framework that ensures unemployment does not become geographical concentrated or ghettoised.

As I have mentioned earlier, while nationally unemployment has been ebbing lower, communities in areas such Wide Bay in Queensland, the Tweed and the Illawarra in New South Wales, Outer Western Melbourne, Northern Tasmania and many aboriginal communities in the Northern Territory and Western Australia are enduring unemployment rates of well over 10%.

In light of these circumstances, I believe a more concerted, strategic approach from the national government is required to ensure that all communities and regions of Australia benefit from economic growth. Such an approach would see the national government pilot something along the lines of ‘employment zones', or targeted regional investment, in a number of communities suffering high levels of long-term unemployment.

As I see it, we need to develop local responses to local labour market realities. We should coordinate the expertise and knowledge of local community representatives including those from the local chamber of commerce, the local TAFE colleges and schools, local welfare services and local government.

Targeting regional communities with high unemployment would also streamline the array of labour market programs provided by the various levels of government thereby avoiding duplication.

Given the integral role Job Network members play in their local communities, the labour market knowledge they have acquired and their ongoing relationship with employers, I believe their involvement would be essential to the success of employment zones.

I am acutely aware that rural and remote job network providers are doing it tough. In particular, there is no doubt that Indigenous Australians aren't getting the employment services they were promised. We will be doing our best to shame the Government into action.

At the end of the day, the national government has to play a far greater strategic role in job creation if the concentration of unemployment and welfare dependency is to be avoided.

As I said at the outset, I raise these two specific issues for the purpose of encouraging public debate over how labour market programs can be enhance and more jobseekers assisted out of welfare into the meaningful employment.

Finally, as Labor's national conference approaches we are well down the policy development track but given the collective experience and knowledge of people in this room, I would still encourage those who have policy suggestions, or want to provide feedback on the ideas I raised here today, to contact me as soon as you can.

CONCLUSION

Australia currently has a government consumed with issues of national security and border protection. However, when it comes to providing the financial security that only a job can bring this same Government has no commitment to full employment.

Labor recognises that such a commitment needs not only requires good economic policies, but a Job Network functioning effectively and in partnership with government.

It is not good enough to ignore the problems in the system and dismiss legitimate concerns.

But what we are seeing from the Government is an emerging pattern of behaviour.

When the sector raises an issue, the Government blames the unemployed – this is designed to appeal to the voters. When Labor raises an issue, the Government says we are attacking the sector – this is designed to appeal to you, the providers.

I think the Government's got it wrong – and they've got you wrong.

When jobseekers are being asked to identify people's intelligence or whether they vote Labor based upon caricatures used in psychology to determine prejudice, the Government has a direct responsibility to intervene. To do otherwise is to penalise those providers who are delivering quality services.

I know that you want the system to be of the highest quality.

To achieve that you need a partnership and an attitude from Government that recognises the Job Network's greatest asset is not its computer system. Its greatest asset is you – the people on the frontline.

We don't need a computer like ‘Deep Thought' to tell us the secret to life, the universe and everything – the secret is making a positive contribution to your community. In your vocation it's the fulfillment that comes from knowing you have made a real difference in someone's life.

That's why you've chosen your career path – and that's why I'm in politics.

I look forward to working with you to that end.