Morrison's JobMaker spin doesn't match substance - Speech, House of Representatives


We know that the Prime Minister has a marketing background, and never has this been clearer than when the Treasurer announced the program we're debating tonight. The Treasurer's budget speech stated:

Treasury estimates that this will support around 450,000 jobs for young people.

Support 450,000 jobs: what would most people take that as meaning? I imagine most people listening thought, 'Beauty, 450,000 more jobs!' But, no, that wasn't what the Treasurer meant. The Treasurer meant that the total number of people who could be eligible for this program is 450,000. The maximum possible number of applicants is 450,000.

Putting aside the fact, that, obviously, some of those people would have found a job absent the program, you have another example of the government's marketing spin over policy substance.

The fact is we're not going to see 450,000 new jobs created. Just because 450,000 people are eligible for the program, it doesn't mean that that's actually going to be what happens when the rubber hits the road. Labor's concerns over the gap between the government's rhetoric and their actions goes to another wage subsidy scheme, the Restart Program, which pays a subsidy of up to $10,000 for hiring new employees over the age of 50. When it was announced in 2014, the coalition promised to spend $520 million to help up to 32,000 older Australians find a job every year. Yet, over the time it's been in place, just $254 million has been spent to help 51,190 mature-age people into work. Of those 51,190 people, only 30,000 remained in employment for 13 weeks or more and there were 21,000 who lasted less than six months. So the government has a very poor track record on follow-through with programs of this kind.

The fact is young people have been hurt by this downturn. That's undeniable. We have evidence from Treasury which talks about the scarring effect, which suggests that the damage to the careers of young people graduating into a recession can be seen in their CVs up to a decade later. Treasury research, written by Dan Andrews and others, finds that the scarring effect of recessions on young people might have grown larger over time. But it doesn't follow from that that you want to do nothing to support older workers.

It doesn't follow from that that you want to suddenly turn the tap off for anyone who passes the age of 35.

The fact is the government's proposals need to be considered in their entirety. This holds true when we think about the government's accelerated depreciation measure—the instant expensing measure. I'm a strong supporter of innovation; I believe that we need to have more innovation in order to sustain productivity. But it's vital that that innovation go alongside investment in education. In their terrific book The Race Between Education and Technology, Harvard economists Claudia Goldin and Larry Katz argue that inequality is a function of how quickly innovation and education advance. When you have education accelerating alongside innovation, you get growth with equity. When you have technological advance but educational stagnation, the gap between the haves and the have-nots grows wider. That's because, as economists have long argued, technological change is skill biased. Skill-biased technological change means that automation tends to increase employment opportunities at the top end and decrease employment opportunities at the bottom end. It means that, as you have computerisation, that makes the most effective lawyers more productive but a robot vacuum cleaner can take the job of a human who is cleaning the office.

That's why at the last election Labor had significant policies for investing in education alongside our proposals for accelerated depreciation measures. We recognised that those two went together and that, when you invested in schools, in vocational training and universities, at the same time you can encourage firms to invest in automation.

But the budget didn't do that. In the face of the biggest human capital crisis in a generation, the budget encouraged investment in physical capital instead. In an article for the Australian Tax Forum, the Tax and Transfer Policy Institute's regular updates, Michael Coelli, from the University of Melbourne, warned of the risk this might engender. He pointed out:

But many capital goods installed in Australia are purchased from overseas.

He pointed out:

According to the Australian Bureau of Statistics (ABS) figures, Australia imported nearly $79 billion in capital goods in 2018/19, while total private investment in new machinery and equipment in Australia was $83 billion …

He also noted:

Many new capital goods use new technologies which require fewer workers to run than outgoing assets based on older technologies.

He said:

In some cases, new capital goods directly replace workers via automation. This includes industrial robots in manufacturing, automated warehouses, specialized software and artificial intelligence (AI) technologies and driverless vehicles, among others.

He concluded:

The end result of bringing forward investments in new capital assets may well be fewer jobs in many cases.

That means that it may be the case that the government's encouragement of firms to invest in new capital without commensurate human capital policies could lead to a bias away from jobs rather than towards them.

Michael Coelli also said of the wage subsidies:

We must wait to see whether these subsidies come at the expense of new hires among unemployed workers 36 and older, at the expense of full-time jobs by encouraging jobs just reaching the 20 hours a week threshold, and whether the jobs remain beyond the length of the subsidy program (one year).

And that's a real concern for many of us given the government's track record on the Restart Program, given the fact that, when we looked at the Restart Program, we found that many of those who were assisted by the program did not remain in the program beyond 13 weeks.

We also have a government which is rolling out loan schemes at a time when other countries are going for equity injections. A new paper by the OECD titled COVID-19 government financing support programmes for businesses notes that many other countries are choosing equity injections, recognising that there is limited appetite for borrowing among SMEs.

They give examples: the German Corona Matching Facility, a two billion euro package; the Lithuanian Aid Fund for Business; Finland's investment stabilisation financing program; the British government's convertible loans program, which is able to turn into an equity injection; the Irish Strategic Investment Fund; and the Italian special fund for capital strengthening investments. The OECD's paper even argues that it might well be the case that the government return is greater for equity injections than it would be for low-interest loans. We can see this in the take-up of the government's SME loans program. During the course of this year, we've seen an increase in lending to large firms but an eight per cent fall in lending to small businesses. Small businesses aren't taking up those SME loans. The facility has been massively undersubscribed, and the government is failing to look at other alternatives, such as equity injections.

We also have the misuse of the JobKeeper scheme, to which the government is turning a blind eye. We have seen at least three Australian billionaires receiving significant dividends when their firms received JobKeeper support. JobKeeper was meant to be a program to support the jobs of battlers, but, instead, it has ended up helping to line the pockets of billionaires. Overwhelmingly, Australian firms have done the right thing. Indeed, one firm reached out to me recently and said: 'We don't want to be named, but we were eligible for JobKeeper and we chose not to take the money. We decided we didn't need that money'. They might well have pointed out that, with 160,000 people slated to lose their jobs between now and Christmas, it makes sense for scarce taxpayer dollars to be spent where they're needed most. At a time at which the New Year's Day presents for a million unemployed Australians will be JobSeeker snapping back to $40 a day, it's not appropriate for firms to be receiving JobKeeper and paying out large executive bonuses.

That's my view, but it doesn't appear to be the government's view. It is, however, a view that's shared by the Business Council of Australia. Their head, Jennifer Westacott, told David Speers on ABC's Insiders program that she didn't think it was appropriate for firms getting JobKeeper support to pay out executive bonuses. Yet, a slew of firms have done so, just as a large number of firms have used JobKeeper to pay dividends. As a recent example, just last week we saw bullbar-maker ARB getting $18.3 million dollars in JobKeeper. They qualified for JobKeeper because of an early downturn in their revenue. But, over the course of this year, they've seen an uptick in profits. Their profits are up on last year's, yet they're continuing to receive JobKeeper subsidies from the government. And they have paid a hefty dividend to shareholders. All this is happening at a time when the government is saying they can't afford to extend JobKeeper to a million casuals, they can't afford to extend JobKeeper to the university sector and they can't afford to extend JobKeeper to arts workers. It's all happening at a time when Volunteering Australia has said of the federal budget that it allocated no new funding to reactivate volunteering, at a time when many charities are feeling like they are the Liberal Party's forgotten people.

Labor supports wage subsidies. We took a wage subsidy program to the last election. When the crisis hit, we looked around the world and saw that many other countries were putting wage subsidy programs in place, because that connection between employer and employee is harder to build than it is to break. Employment relationships, like romantic relationships, snap quicker than they are built in the first place. So it is important that government maintains that connection to work. We called on the government to implement a wage subsidy scheme, and they were slow off the mark. The Prime Minister initially said it wasn't necessary, but, eventually he came around and acquiesced to put in place the JobKeeper scheme. According to Treasury, that's now accounted for some 700,000 more people maintaining a connection to work than would have been the case otherwise.

But we've criticised the government for excluding more than a million people from their JobKeeper scheme. In the case of universities, they changed the rules three times to exclude the university sector from JobKeeper. The result has been 11,000 job losses, with possibly another 10,000 to come. Universities are being brutally hit by the government at a time in which a clever country would be investing in education, at a time in which a clever country would be saying, 'We have fewer overseas students; let's ensure that every school leaver who has the smarts to study at university has a place there waiting for them.' Why would we want young Australians to be languishing, receiving unemployment benefits, when they have the smarts to go to university and where the university can take them on? That would be a smart play that would boost Australia's productivity in the future and would avoid the scarring effect of unemployment.

And yet we have this hodgepodge of programs. We have capital subsidies without education investment. We have wage subsidies with a sudden cut-off at 35. We have a government which has a poor record on its youth PaTH program, which has been widely criticised for a lack of outcomes, little to no training and delivering wage subsidies to firms like Coles and Hungry Jack's. The fact is that young people have done it tough under the Abbott-Turnbull-Morrison government, and this program is not the comprehensive support for young people that their generation so desperately needs.


Authorised by Paul Erickson, ALP, Canberra

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.