Speech to Parliament - COVID-19 and unemployment
25 August 2020
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Speech to Parliament - COVID-19 and unemployment

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The coronavirus pandemic is a momentous challenge for all of us. Australians have got sick, Australians have died and the economic consequences have been unprecedented. In such emergency circumstances, governments can take the unusual step of trying to cushion the impact of the worst of the economic vicissitudes through targeted and temporary measures. JobKeeper and JobSeeker have been important measures to ensure that Australians stay connected to jobs and that our communities are cushioned from the worst economic impacts of COVID-19.

Around four million Australians will be benefiting from JobKeeper payments at the end of the September quarter. Those Australians are keeping their jobs and remaining connected to their employer, while JobSeeker has helped the 1.46 million Australians faced with unemployment during this time. The government's done exactly what it needed to do. Many Australians are out of jobs through no fault of their own, and the additional financial support the government is providing is necessary to get Australians through the worst of the economic challenges and back on their feet. These measures, as I say, are targeted and temporary. However, we have to prepare for their gradual relaxation. The coronavirus supplement of $550 per fortnight will remain in place until 24 September. Beyond this date the coronavirus supplement will reduce to $250 a fortnight until the end of the year, when the supplement is due to finish.

While the measures that have been put in place have been so crucial and necessary during this time, if continued as they are now they would hinder Australia's recovery. Unemployment is not good for the country, but, first and foremost, it's not good for the individual. In addition to the financial hardship caused, there are also undeniably significant psychological, social and health consequences. The personal cost of unemployment can be devastating and have lifelong ramifications.

Recently, there've been people calling for not only a permanent increase to the former level of Newstart payments but also for the current rates of the JobSeeker payment to be sustained. While a compassionate position is understandable, I'm alarmed when I hear how many people are insisting on sustaining a system that was intended exclusively for a time of crisis. These levels of support are not only unsustainable for the government financially but detrimental to Australians who are currently dependent on them. Ultimately, left as they are, they will unintentionally perpetuate a state of unemployment for many Australians. Already, there have been real challenges presented by the increased level of support in place, and these challenges are likely to grow as we seek to rebuild the country.

In my role as chair of the Joint Standing Committee on Migration, which is currently conducting an inquiry into the Working Holiday Maker program, I've heard countless stories of Australians previously working in agriculture and in horticulture walking off the job as soon as JobSeeker commenced. The CEO of AUSVEG told the inquiry:

Even recently, when jobseeker payments were raised, many growers have reported that they've had workers collect their final pay cheques and leave because they'd rather go home and receive the jobseeker payment than work on the farm.

The managing director of Agri Labour raised similar concerns. He said that, when the rate of unemployment first started to rise earlier this year:

We were inundated with a 300 to 400 per cent rise in Australian applications. Four weeks later, after the announcement of the jobseeker and JobKeeper, we had a completely sharp decline. In many cases, we actually had permanently employed Australians resigned from their work to take up the jobseeker payments because there was a marginal difference in what they would take home.

There's something fundamentally wrong when Australians are actively resigning from their jobs and choosing unemployment over employment. Such actions leave sectors such as agriculture and hospitality desperate for workers despite the rising unemployment rate. There's a cohort of workers available that just doesn't want to do the work. In my electorate, a recruitment agency contacted me because they've had five casual workers on JobKeeper who refuse to turn up to work. These workers have made themselves uncontactable, despite receiving the fortnightly payment. This is an appalling story of the abuse of a system that was set up to ensure Australians could stay in jobs. It's being used by some people to freeload on their fellow Australians. These actions are leaving employers without staff and stripping other unemployed Australians of the opportunity to work. This is so disappointing at a time when Australians should have each other's backs.

There will always be people who are out of work and looking for jobs. During those hardships, it's the responsibility of government to provide financial support. However, we mustn't do things that inadvertently discourage and disincentivise people from taking up work. In addition to unintentionally encouraging high levels of unemployment and making it difficult for employers to find workers, one of the risks of accepting the helping hand of government is that it will foster a dependence on the state. Sir Robert Menzies addressed the importance of fostering independence from government in his 'The Forgotten People' speech in 1942 when he said:

… we have nothing but the warmest human compassion--toward those whom fate has compelled to live upon the bounty of the State, when we say that the greatest element in a strong people is a fierce independence of spirit … The home spiritual so understood is not produced by lassitude or by dependence; it is produced by self-sacrifice, by frugality and saving.

I saw an example of these values and actions recently when I visited a franchisee in my electorate who had used JobKeeper to keep his employees in jobs and his business open. He was incredibly thankful for the support JobKeeper had been to his business that would otherwise have faced closure. However, he was also proud to tell me that the business no longer needed JobKeeper and would no longer rely on government support, because his business had returned to a level that enabled him to pay his employees full wages. That is the pride that Australian businesses should have when they no longer need to rely on JobKeeper. To find a job such that they're no longer dependent on JobSeeker is also an aspiration that Australians must have.

History shows us why it's so important to get people back to work as soon as possible. The longer someone is unemployed the harder it will be for them to find a job. A Reserve Bank of Australia paper published in 1993 explored the relationship between unemployment and job vacancies. It looked particularly at the time between 1979 and 1992, in the lead-up to the recession of the 1990s. It stated that men who'd been unemployed for fewer than three months at the start of the quarter had a 43 per cent chance of moving off benefits by the next quarter, and those who had been unemployed for one to two years had a roughly 20 per cent chance of leaving unemployment benefits within the quarter. In other words, their chances were 53 per cent lower than the men who'd been on benefits for fewer than three months. After two years, the chance of leaving benefits fell to just 15 per cent. The paper stated that this data shows very clearly that exit rates decline as the duration of unemployment increases. The reasons for this diminishing chance of obtaining employment includes employers using long-term unemployment as a screening mechanism and the erosion of job skills due to the long duration spent out of employment.

The study of long-term unemployment income support recipients undertaken by the Department of Social Services, DSS, between 2015 and 2016 showed similar findings. Nearly 55 per cent of people who had been on benefits for up to three months had exited payment within the year. However, only 31 per cent of those who had been on benefits for one or two years were no longer on benefits by the end of the study. This means that their chance of exiting benefits within a year were 44 per cent less than those who had been on benefits for only three months. Only 23 per cent of those who had been on benefits for two to five years were off benefits by the end of the year, along with just 13 per cent of those who had been on benefits for over five years. The DSS concluded: 'The longer a person's income support duration, the more likely it is that they will still be on payments 12 months later.'

There's an inherent lesson for young people who are experiencing their first economic decline of a lifetime. It's true to say that young people have been disproportionately affected by COVID. As the 2018 RBA publication Labour market outcomes for young people states:

Poor labour market outcomes early on not only affect an individual's future employability but also have persistent negative effects on lifetime earnings.

Researchers also find that those who graduate in weak economic conditions are unable to fully shift into better jobs even once the economy picks up again.

They also found 'a similar deterioration in labour market outcomes for those younger workers who entered the labour market in Australia after the global financial crisis compared to previous cohorts'.

The challenge we face today is preventing the unemployed from being long-term unemployed. Long-term unemployment is a human tragedy for each and every person who finds themselves in that situation. As lawmakers, we need to learn from previous economic downturns and focus ourselves on a series of important questions. How do we prevent people who face significant discouragement and defeat this year from developing a sense that there is no opportunity and nothing to aspire to? How do we reignite the fight in the Australian spirit that seeks to contribute and be part of something bigger? How do we transition out of this crisis in a way that celebrates and rewards Australians who take pride in their work and pursue freedom and independence? And how do we make it easier for businesses to take on people who have been out of the labour market? Businesses in my electorate tell me that they're increasingly taking advantage of the opportunity to take on new apprentices, but that they still find it daunting giving ordinary workers a chance because of the threat of unfair dismissal and employment related compliance costs. It's these questions that we as a parliament and as a nation will need to address ourselves to in the coming months.