October 19, 2020

I am pleased to make a contribution on the Economic Recovery Package (JobMaker Hiring Credit) Amendment Bill 2020 or the JobMaker wage credit bill, which is effectively what we are debating today. I will ask people listening to parliamentary proceedings on the net to remember these five numbers—2½ million, 1½ million, 160,000, 20,000 and 17,000. They are five very important numbers that have guided my consideration of this legislation and my approach in this House. Two and a half million is the number of Australians who are out of work or in work but desperately needing more hours. That is the highest number of underemployed Australians this country has ever seen—2½ million.

There are 1½ million people in this country currently in receipt of the JobSeeker payment, formerly Newstart. The government predicts that 160,000 people will be added to the unemployment queues by the end of Christmas. So we'll have almost 1.7 million Australians receiving the JobSeeker payment. In Shortland, there are 20,000 residents in receipt of the JobSeeker payment and 17,000 in receipt of the JobKeeper payment. Those critical numbers are 2½ million, 1½ million, 160,000, 20,000 and 17,000. They point to the current weakness in the economy, the once-in-100 years recession, and the fact that the government is not doing all it can to get us out of it.

An example of that is the 20,000 residents of Shortland who are on the JobSeeker payment. A few weeks back, they suffered a cut that took $6 million a fortnight out of the Shortland economy. And JobSeeker will return to its unacceptable $40 day on 1 January, so there'll be millions more dollars pulled out of the Shortland economy then and 20,000 Shortland residents will be returned to an unacceptable level of poverty. The 17,000 Shortland residents on JobKeeper payment saw the JobKeeper payment cut a few weeks ago as well, pulling another $15 million a fortnight out of the local economy—$15 million that could be keeping cafes, restaurants and local businesses afloat. Again, we have the JobKeeper cliff early next year, where we'll see that payment disappear.

Those two payments disappearing, impacting incredibly negatively on 37,000 residents in Shortland, is symbolic of the philosophical approach of this government embodied in the budget delivered two weeks ago. It is really about passing the baton of the recession response from the government to businesses and consumers. It is a return to this government's fundamental ideology of small government. They are putting this country into net debt of $1 trillion and gross debt of $1.7 trillion and pumping that money into the economy through businesses and consumers in the hope that they will spend money to get us out of this once-in-100 years recession.

This is an incredibly risky philosophy for a few reasons, and that is the context for the JobMaker wage credit that we are debating today. Firstly, it's risky because businesses will not spend if they don't think they've got customers who will buy the products that the investment will produce. They will not buy new capital equipment if they don't foresee a new stream of customers to take advantage of that new piece of capital equipment. Businesses won't spend the investment allowance readily unless they are very optimistic about the state of the economy, and the latest business confidence figures released last week indicate that businesses are very gloomy about prospects for recovery.

Secondly, the investment allowance is a very blunt instrument. The industries most impacted by the COVID recession are not capital intensive. Five employment categories have had 50 per cent of the job losses during the COVID recession. No. 1 is retail assistants, No.2 is hospitality workers, No. 3 is retail and hospitality managers, No. 4 is personal service workers and No. 5 is plant operators. So four of the top five employment categories are in industries that are not capital intensive. An investment allowance may be attractive and important to some businesses. It will encourage, for example, a metal manufacturer to spend $1 million on a new laser cutting machine. But it is not really attractive to a cafe, whose biggest capital investment might be a new coffee machine, a new pie cart or a new van to deliver food. So a capital investment allowance is not the most focused way of getting businesses to spend money, even if you think businesses will spend money in the expectation that customers will buy.

The second issue with the government's philosophical approach is putting the money in the hands of consumers and hoping consumers will spend that money. Well, consumers quite naturally, at this stage, are very cautious. I am very cautious myself. When you've got an economy where you've got 2½ million people out of work or desperately needing more hours, people are going to be very frugal, so a lot of the tax cuts, as embodied in this budget, are going to be saved. So there's a real question mark about whether this $1 trillion of debt we're going to be in because of this government's spending will actually achieve the stated economic stimulus impact. So it is a very curious decision to, at the same time, withdraw aggregate demand by cutting JobKeeper and JobSeeker, which is what this government is doing.

That's the context for the JobMaker hiring credit that we are talking about now: a wage subsidy for those under 35. Look—this will obviously help get young people back into work, if the detail comes as promised. And we do recognise that young people are impacted by the recession. They are in the industries disproportionately impacted by the particular nature of this recession, in terms of the industries that are cut down. But the issue with this legislation is not who's included in it; it's who's excluded. Nine hundred and twenty-eight thousand Australians are excluded from this wage subsidy. Two in three JobSeeker recipients are excluded from this wage subsidy. Everyone aged over 35 is excluded from this wage subsidy. And this leads to huge issues.

Firstly, the single biggest cohort on JobSeeker is that of women aged over the age of 45. There is a huge cohort on JobSeeker of Australians aged over 45. So they are going to be massively disadvantaged when this wage credit gets passed by this parliament because, if you're an employer and you're doing a job interview and you've got two people to hire, and they have equal skills and decent levels of experience, and one's 29 and you're going to get the $200-a-week wage subsidy to hire the 29-year-old, versus a 49-year-old person, who do you think they are going to hire? They're going to hire the 29-year-old, therefore excluding that 49-year-old. That's on top of issues around age discrimination that we know affect huge numbers of Australians aged over 45 in this country. So the targeting of this wage subsidy is problematic.

I support young people getting into jobs. Assistance is desperately needed—all the assistance we can give—to help young people find new jobs. But it should not be at the expense of older Australians. So the question for the Prime Minister is: Why exclude 928,000 Australians? Why hasn't he designed a system that gives a wage subsidy to hire every single unemployed Australian in this country?

The second issue with this wage subsidy is that it provides a perverse incentive for an employer to sack someone aged over the age of 35, particularly if they're in an industry where they've got weakened industrial-relations protections under this government. There's a huge perverse incentive for them to sack someone who's 37, hire a 29-year-old to do exactly the same job, and pocket a $200-a-week wage subsidy. Most employers won't do that. Most employers will do the right thing. But there are always dodgy employers that will do the wrong thing. And this has a perverse incentive.

The other issue with the implementation of this is: the way the legislation is constructed, an employer has a much greater incentive to hire two part-time workers than one full-time worker, because he or she gets a much greater wage subsidy, per hour worked, if they do it on a pro rata basis. So, again, while part-time employment is very important and is attractive to many people in the economy, we should be encouraging full-time employment as much as possible, and that's why the way this is constructed is problematic.

It also reinforces a huge issue this government has presided over, which is the rise of insecure work in this country. Last year was the first time in the economic history of this country where we had more than half of Australian workers performing jobs that weren't full-time with leave entitlements such as sick leave and paid annual leave. That points to huge economic insecurity in this country. It points to huge issues around trying to take out a loan to buy a house or take a holiday, and this legislation reinforces that particular rise of economic insecurity.

The other issue with this legislation is the complete lack of detail. As previous Labor speakers have highlighted, this legislation is very light on detail. The government is effectively saying: 'Trust us and we will deliver.' I don't trust this government. Time after time they've demonstrated their complete inability to manage the economy and to manage administration of government programs. They've overestimated the cost of JobKeeper by $60 billion. They've bought a piece of land at Badgerys Creek for $33 million when it was worth $3 million. You've got the sports rorts affair. You've got issue after issue, highlight after highlight of this government's maladministration, so with this government 'trust us' is not an answer I feel comfortable with.

This legislation is incredibly problematic. It has some things going for it. It is useful. I support anything we can do to help young people get into employment. We need to fight the scourge of unemployment. It is the greatest scourge in this land at the moment. We have 2½ million people out of work or needing more hours in this country. There are 20,000 residents of Shortland on JobSeeker at the moment. We need to get them back to work. We need to get out of the once in a century recession. We need to get out of a recession that this government, under the Prime Minister, Scott Morrison, has deepened and lengthened, because he was slow to act and he's prematurely removing government stimulus. This legislation is important, but we need to place it in the context of this government continuing to mismanage the economy.