The committee received 21 submissions to the inquiry. Given the very short nature of the bill itself, there was little comment on the specific provisions. Comments focused more on the broad intent of the policy based on the published Fact Sheet.
Support for the bill
There was a large degree of in-principle support for the bill—the desire to see an economic recovery with a rapid return to full employment received full support. There was also a particular recognition that the pandemic recession had disproportionately impacted young people. Those submitters who expressed broad in-principle support were:
The Property Council of Australia;
Council of Small Business Organisations Australia (COSBOA)
Australian Retailer Association;
Master Builders Association of Australia;
Australian Chamber of Commerce and Industry (ACCI);
Woolworths Supermarket Group;
Australian Council of Social Service (ACOSS);
Australian Investment Council;
Council on the Ageing (COTA); and
Institute of Public Accountants (IPA).
Professor Jeff Borland supported the bill and argued that the subsidy rate was appropriate and would assist the take-up rate by employers:
I think the subsidy rate of $200 for 16 to 29-year-olds and $100 for 30 to 35-year-olds should make an appreciable difference to incentives for hiring. It's about 50 per cent of the amount that a worker on minimum wages for 20 hours would be paid. I've used the characteristics of the employment survey for 2019 to estimate that. In 2019, for 80 per cent of workers aged 15 to 24, the JobMaker subsidy would have represented at least a 20 per cent subsidy rate. The amount of subsidy is comparable to international programs, which have had reasonably high rates of take-up by employers.
Moreover, Professor Borland thought it was entirely appropriate that young people be the focus of the bill:
My judgement is that the size of the impact on young people and the potential scarring effects are large enough that, if you were going to target any job-creation measure to a group, it would be the young people for whom it would be of the greatest economic benefit to target.
…if you were going to bias job creation towards any group, my view is that it is the young who that would be most appropriate for.
The Australian Chamber of Commerce and Industry (ACCI) supported the bill as part of the government's holistic response to the pandemic recession and its impact on younger Australians, and urged the Parliament to pass the bill as quickly as possible:
We support the passage of the legislation to implement a program which aims to encourage employers to hire and, importantly, retain new workers under 35 years of age. Given the much higher rate of youth unemployment and the potential of young people being trapped on welfare for a long period of time and the possibility of it influencing their whole life, this objective is an important ambition and one we strongly support for both economic and social reasons. While the hiring credits is an important signature program, we advocated strongly in ACCI's pre-budget submission that tackling youth unemployment was important but needs to be done holistically. So this program needs to be seen in the context of other programs that will complement it.
Master Builders Australia supported the legislation and the flexibility the bill gives the Treasurer in responding to changing circumstances:
We're supportive of the hiring credit bill and welcome the opportunity to be here to comment before this committee. We view young workers as being disproportionately impacted by this economic downturn compared to previous downturns, and this initiative will support getting young workers into jobs. We note the legislation is seeking to approve an extension of the time frame for the Treasurer to make the rules under the coronavirus economic response package and not give effect to the hiring credit initiative, and that passing of the legislation will allow the Treasurer to give effect to the hiring credit by a legislative instrument that will specify the rules around eligibility and will be developed by the Treasurer and subject to a consultation process. We welcome the flexibility in this process.
There was criticism of the bill from a number of submitters with several submitters opposing the legislation. For example, Per Capita:
…has significant doubts as to whether the scheme will deliver the 450,000 jobs the government anticipates over the next 12 months. The scheme does not guarantee the creation of any jobs, as would a program of direct government job creation in the public sector. Instead the scheme operates with an overreliance on the private sector to lift employment numbers, and actually incentivises employers to give preference to low quality jobs.
The Australian Unemployed Workers’ Union (AUWU) opposes the JobMaker Hiring Credit in its current form and argued that the bill should not pass unless the scheme is substantially strengthened.
The Tomorrow Movement also opposes the bill. They argue:
It is simply a handout to big business when what we need is the government to invest directly in creating public jobs and providing a liveable income for the 6.9 per cent of Australians currently unable to find work.
Even amongst those who gave in-principle support of the bill, there were a number of consistent concerns which focussed on the following themes.
Lack of detail about the proposed new laws
One common theme appears to be a lack of information within the bill. The bill and EM are short, and the accompanying rules and regulations had not been released when the bill was brought before the Parliament.
However, the committee notes that the rules for the Hiring Credit were released publicly for consultation on 30 October 2020 for a four-week period, prior to the legislation being progressed in the Senate for debate.
As it stands, the Australian Council of Trade Unions (ACTU) observed that the actual bill contains no detail regarding the program to be implemented.
This bill, like many which the Parliament has been asked to consider over the previous year, contains almost no detailed information about the operation of the program it purports to enable. Instead, vast powers of discretion as to the scheme’s operation are left entirely to the Minister through the issuance of rules which, while subject to disallowance, are significantly more difficult for stakeholders to examine, consider and provide input on. Indeed, the concerns outlined in this submission thus far are based on a post-budget factsheet which may, theoretically, have little resemblance to the program which is ultimately implemented.
The Council of Small Business Organisations Australia (COSBOA) commented:
COSBOA members are somewhat perplexed about how the Hiring Credit scheme was designed, and by whom. There is real concern that the Hiring Credit scheme appears to have been designed without detailed consultation with organisations representing SMEs.
Based on the level of information currently available, COSBOA has observed several aspects of the Hiring Credit scheme that are lacking in practical operational detail.
Lack of support for those over 35 years old
There was also a consistent concern voiced amongst a number of submitters that the bill may cause unforeseen and undesirable consequences for unemployed individuals over the age of 35.
COSBOA has seen no evidence to show, in the current labour market conditions, that wage subsidies are not needed for unemployed people over the age of 35. The existing Restart wage subsidy (for people aged 50 or over) requires an eligible person to have been “unemployed and on income support for six months or more”. Large numbers of mature aged workers who have lost their jobs during the pandemic will not be eligible for Restart. The focus on younger workers may result in unintended negative consequences for recently unemployed mature-aged workers.
Similarly, the ACTU submitted:
Australian unions are concerned that an age limit has been placed on this program without a strong policy basis. We understand the reality that the age group most likely to have lost their job or income as part of the Coronavirus pandemic are younger Australians and that this group is in desperate need of assistance from government both now and going forward to undertake training, find work and build their careers. What is equally true, however, is that many Australians aged 35+ have also experienced significant economic shocks, with more likely to occur in 2021 when many of this cohort who are currently relying on JobKeeper are likely to see that support end. The anxiety around what will happen to these workers, who are excluded from this program has, in our opinion, driven much of the concern around whether this programme is discriminatory.
This concern was also raised in submissions by Per Capita, the AMWU, GetUp! and COTA.
However, the committee also notes that historical data demonstrates that it is the cohort under 35 years old that are most likely impacted by the current adverse circumstances. Professor Jeff Borland stated:
….young people have been worst affected by the initial impact of COVID‑19. In August, actual hours worked were 10.9 per cent below March for individuals aged 15‐24 years and 6.8 per cent below for those aged 25‐34 years. This compares with 2.3 per cent and 0.1 per cent respectively for persons aged 35‒54 and 55 plus years.
Potential manipulation of rules to benefit business
There was notable concern expressed about the possible abuse of the scheme through the selective hiring and firing of workers:
The ACTU is concerned that the program, as outlined in the factsheet published on Budget.gov.au in the days after the Budget’s release, does not contain sufficient safeguards against unscrupulous employers taking advantage of the scheme to receive public funds, in the form of subsidies, for replacing secure, full-time workers with insecure part-time and casual workers.
However, the committee notes that the exposure draft EM sets out how this potential abuse of the scheme will be mitigated:
Ensuring that the entity has created additional employment prevents an employer from replacing their existing employees with eligible additional employees.
An entity has a headcount increase for a period if the number of employees employed by the entity at the end of the last day of the JobMaker period is greater than the entity’s baseline headcount for the period. This excess or increase in employees in comparison to baseline headcount is the ‘headcount increase amount’.
Hiring Credit insufficient
Finally, there were a number of submitters who felt the credit was not large enough to fulfil the intent of the program. COSBOA commented:
Feedback from COSBOA member organisations indicates that the Hiring Credit wage subsidies are too low. Given the apparent complexity of the Hiring Credit administration process, for small businesses in particular the subsidy amounts are insufficient to motivate additional hiring. If the Government’s goal is to motivate large-scale additional hiring by Australian businesses, to reduce unemployment by 450,000, COSBOA believes the subsidy rates will need to be at least 50 per cent higher than the proposed amounts.
The ACTU also criticised the amount of credit being offered:
The subsidy that this program provides, $200 a week for 16‒30-year olds and $100 for those aged 30-35 is relatively low. The total subsidy for a 16‒30-year-old for a year-long position is only $10,000 while a 30-35-year-old will attract a total subsidy of $5,000. While these figures, or at least the one which applies to a 16‒30 year old, is fairly congruous with other wage subsidy programmes, such as the under-subscribed ReStart program, there is very little policy rationale available for why this low number has been used… The committee should consider recommending to the government that it review the amount of subsidy offered by the program to ensure that its potential job creation effect is maximised.
The Grattan Institute had similar views:
And the low, fixed-rate credit of $200 a week (or $100 a week for 30-to-35 year-olds) for new employees will bias the scheme towards part-time and low-wage jobs, providing little incentive for firms to employ full-time staff.
The committee notes the fact that a higher credit would strengthen the perverse incentives that some witnesses claimed existed in the current scheme, for example, the potential manipulations of rules to benefit businesses.
The Treasury provided responses to address these concerns during their evidence at the public hearing.
Treasury advised that integrity measures in the Fair Work Act 2009, the Fair Work Ombudsman as well and the administrative processes of the ATO are available to protect workers from potential abuses that may occur under the Hire Credit arrangements.
Further, the Treasury advised that the ATO's protection measures were not on the bill or the accompanying rules, rather they are in 'Section 19—Contrived Schemes' part of the primary Coronavirus Economic Response Package (Payments and Benefits) Act 2020 which the proposed bill seeks to amend:
They're not a matter for the rules; they're a matter of the general act, which avails the commissioner to reverse any credits or payments that are the result of a scheme.
In response to concerns raised about older workers being disadvantaged by the proposed legislation, Treasury advised that there are provisions in the Age Discrimination Act 2004 that prevent an older worker from being discriminated against. Although Treasury conceded there are exemptions under that Act, they posited that any circumstance where an older worker loses their job or has their hours cut, that would not fit within those exemptions.
In their more detailed answer provided after the hearing, the Treasury explained:
Section 41A of the Age Discrimination Act 2004 (Cth), (about Commonwealth employment programs) provides that Commonwealth employment programs are not inconsistent with the Act where the program is primarily intended to increase workforce participation and is intended to reduce a disadvantage experienced by people of a particular age. Prospective employers may target employees who fit within these programs, including by reference to the criteria applying in the program, consistent with the Age Discrimination Act 2004.
However, as noted above, Treasury also explains that it is under 35 year olds that are most disadvantaged:
In addition to the significant number of young people who have lost employment this year, it is anticipated that the large numbers of young people entering the labour force each year will struggle to access employment in the current climate. Job ads for graduate positions and internships have fallen by 36 per cent over the year to August 2020 (Burning Glass Technologies 2020).
Expanding employment will reduce the ‘scarring effects’ of an extended period of unemployment for people that have lost employment. There are direct impacts for the individual through long-term reductions in earnings and employment outcomes as well as negative health and social impacts. There are broader economic losses in terms of human capital, lower levels of income, consumption and productivity.
The committee notes the in-principle support provided by many of the submitters. The committee is heartened at the level of support in the community to ameliorate the suffering caused by pandemic-induced unemployment.
While submitters and witnesses raised concerns about the possible abuse of the scheme, and the potential for older workers to be disadvantaged, it is clear that protections do exist within the already established laws passed in response to the pandemic and the pre-existing laws and processes that govern the ATO's operations.
The committee notes the flexibility that the rules and regulations provide the Treasurer and supports them as they allow the Treasurer to act promptly if there is an issue with, for example, the amount of subsidy provided, or safeguards for workers who had been unfairly disadvantaged.
The committee notes the disappointment of some submitters regarding the brevity of the bill and the lack of accompanying information. While only the Fact Sheet was made available initially, the committee acknowledges that it was difficult for submitters to accurately ascertain the effect the bill would have without being able to see the accompanying rules and regulations.
The committee acknowledges those submitter concerns. However, the committee also notes that the rules were subsequently published as an Exposure Draft for comment on Friday, 30 October 2020—around three weeks after the bill was tabled in the Parliament on 7 October 2020. The committee also notes the difficulty of drafting ‘final’ rules for legislation that may be amended when before the Parliament.
In future, the Commonwealth Government publishes the accompanying rules for legislation as soon as practicable after the legislation is tabled in the Parliament.
Notwithstanding this, there is nothing in the rules that causes the committee particular concern. Given the status of unemployment as a result of the pandemic—and in particular the status of youth unemployment—the committee recommends that bill be passed.
The committee recommends that the bill be passed.
Senator Slade Brockman