Issues raised by submitters
The committee received 15 submissions regarding the bill, and the
majority of these submissions are generally supportive of the bill and the PaTH
For instance, the Australian Chamber of Commerce and Industry (ACCI),
submitted that it strongly supports the Youth Jobs PaTH initiative 'as an
important avenue to secure jobs for young unemployed Australians'.
ACCI indicated that the PaTH program is:
...vital in ensuring jobseekers have a better chance to be well
prepared for the workplace, with the ultimate aim of securing a job. Tens of
thousands of young Australians will get their first opportunity in the
workforce via the Youth Jobs PaTH program, with PaTH providing "real job"
work experience that many young job seekers lack.
The Brotherhood of St Laurence also supported the bill and the PaTH program:
The demands of a rapidly changing modern Australian economy
are proving profoundly testing for a significant proportion of young
Australians. Youth unemployment – at around 13 per cent nationally – now sits
at double the rate of overall unemployment. The Brotherhood of St Laurence
(BSL) welcomes the introduction of the Prepare, Trial, Hire (PaTH) program as a
positive investment in addressing this issue, by providing young
unemployed people with the opportunity to gain the real world work experience
they need to move into employment.
Submitters were united in their views on the impact of youth
unemployment and the urgent need to provide the means for young job seekers to
find secure work. For example, the Australian Council of Social Service (ACOSS)
It is unacceptable that in Australia there are 130,000 young
people who are unemployed, and over half a million people of all ages who are
Organisations such as Interns Australia, UnitingCare Australia, Per
Capita, Anglicare Australia, Jobs Australia, ACOSS, and Children and Young
People with Disability Australia (CYDA) raised several issues with the bill and
the PaTH program, including for example:
lack of definition around the term 'internship';
absence of greater detail about the operation of the PaTH program
amount of the incentive payments provided to interns under the
development of a 'churn' culture.
This chapter examines these issues.
Definition of 'internship'
Interns Australia noted that the bill refers to payments made to an
individual placed in an internship, but it does not provide a definition of
'internship'. As highlighted in Chapter 2, the only definition of
internship is in the Explanatory Memorandum. Interns Australia expressed
concern about the lack of a definition:
The term is not defined in Australian employment law, and
recent case law has highlighted that many internships are employment
relationships. Not only does the use of this term create confusion about
the rights of the participants in the Youth Jobs PaTH program, it creates
confusion about the rights of individuals undertaking internships in other
areas, intensifying the creation of a corrosive unpaid internships 'culture'...
UnitingCare Australia raised similar concerns about the need for a definition
of internship. Its submission cited the Fair Work Ombudsman's 2013 report Unpaid
work arrangements – exploitation or experience and argued that:
The guidance offered by the Ombudsman seems to suggest the
Youth Jobs PaTH program internships may constitute employment relationships and
as such should enjoy the protections offered to those relationships.
Alternatively, the program could be considered as part of the National Work
Experience Program, but greater clarity is required to determine the nature and
treatment of the internships.
UnitingCare Australia also reported concerns about interns' access to
workers' compensation schemes, given the ambiguity around the definition of
It is unclear the extent to which different schemes operating
in states and territories will extend to provide the appropriate protections
for young people undertaking PaTH. As previously noted, this issues largely
relates to ambiguity around the nature of work that will be undertaken whilst
participating in the program, and if this subsequently defines participants as
'volunteers' or 'employees' – the former may prevent their ability to access
workers’ compensation. Further consideration is required regarding how
protections can be provided for young people voluntarily undertaking work
placement through the program.
The Department of Employment's submitted that host businesses would be
required to comply with state and federal workplace health and safety
legislation and will, as part of participation in the PaTH program, undergo a
risk assessment by employment service providers.
Further, the Department explained that it has insurance arrangements in
place to cover job seekers and these will be extended to interns in the PaTH program.
The arrangements include:
Group Personal Accident Insurance which covers job seekers that
are injured while participating in approved activities, including travel to and
from the activity;
Combined Liability Insurance which covers job seekers' liability
arising from their negligence that cause personal injury to third parties or
damage to third parties property while participating in an approved activity.
According to the Department of Employment, 'unpaid work experience,
including in the private sector, has been a feature of Australian Government
employment services and an accepted activity for job seekers to undertake for
Further, the Department pointed out:
The importance of work experience was recognised as part of
the Social Security Legislation Amendment (Employment Services Reform) Act
2009. These amendments were primarily designed to ensure that job seekers
can undertake certain work experience activities and placements that are not
approved programs of work (but are approved in the sense of being approved
activities in an Employment Pathway Plan), without being treated as employees.
The Department's submission is clear regarding the employment status of
participants in the PaTH program:
PaTH interns are not employees. PaTH internship placements,
as with National Work Experience Program placements, will be covered by these
provisions and designed to be supervised work experience placements, not a job.
Accordingly, merely participating in an internship in accordance with a Job
Plan (Employment Pathway Plan) will not make that person an employee under the Fair
Work Act 2009.
The Explanatory Memorandum also clarifies the nature of the internships:
Both businesses and eligible young job seekers will be able
to choose to participate in an internship. Further, businesses and eligible
young job seekers will be able to co-design internship placements... They [interns]
will undertake unpaid work experience and will not be employees of their host
Details about the operation of the PaTH program
Jobs Australia expressed concerns that the details of the PaTH program
had not been included with the bill:
Other aspects of Youth Jobs PaTH internships, in addition to
those set out in the Bill, should therefore be the subject of legislation which
can be considered and scrutinised by the parliament, rather than being
implemented by administrative means which might seek to exempt interns and the
employers providing placements from the provisions of the Fair Work Act and
other relevant legislated workplace protections and requirements.
Interns Australia called for greater detail to be provided around:
The creation of 120,000 new workers over four years who are
classified as 'interns', without any detail on what the rights of those interns
The expansion of the notion of internships under the PaTH program
into industries such as retail, hospitality and motor trades; and
The incentive payment of $1,000 being provided to businesses
taking on interns.
Interns Australia's submission argued that without detailed information
about these issues included in the bill, including how such issues would interact
with the Fair Work Act, the PaTH program would result in confusion for job
A joint submission by a group of youth advocacy organisations also
raised concerns about the lack of detail about the PaTH program. The
organisations maintained that the consultation process conducted by the
Department of Employment on the first phase of the PaTH program was inadequate:
This is an important piece of policy and legislation.
However, the consultation process is flawed. The first piece of consultation
conducted by the Department of Education allowed only two weeks for response.
The consultation was conducted on the first phase of the program and despite
'welcoming feedback' on other elements of PaTH there was no process. While the
Department received over 70 submissions, the response to feedback on the first
phase was a mere 2 pages.
These youth organisations considered that the bill ought to be delayed
until the details of the PaTH program are finalised:
As the bill enacts the PaTH initiative, we urge the Committee
to recommend that the passage of the bill be delayed until the policy details
are clear, until community-government stakeholder relationships are in place to
support the program, and until the government is satisfied that its investment
will achieve the stated program objectives.
The Department of Employment's submission, whilst not committing to
include further particulars in the bill, does set out a range of program
parameters and lists various safeguards related to the PaTH program.
Incentive payments to interns
Interns Australia raised concern about the amount of the incentive
payments offered to interns as part of their placement. The Explanatory
Memorandum indicates that the fortnightly incentive payments would be $200, in
addition to the job seeker's income support payments. Internships would require
between 15 and 25 hours of work per week, or 30 to 50 hours per fortnight.
Interns Australia raised the following concerns about the incentive payments:
Interns Australia questions the nature of these payments and
how they interact with the interns' legal status under Australian employment
law. For clarity, it would be preferable for the payments to reflect minimum
wage, or equal between $600–$1000 per fortnight. Alternatively, the interns
could be required to work fewer hours.
Per Capita also expressed concerns about the incentive payments to
interns and argued that these payments should be in line with the minimum wage:
We believe that the Trial (internship) part of the program
should be designed such that interns receive at least the minimum wage. This
could be accomplished by either limiting the number of hours, or by increasing
the weekly supplement above $100 where required to meet minimum wage levels.
The Australian Council of Trade Unions (ACTU) argued that the PaTH program's
intern placement would 'undermine the minimum wage system':
The current program settings, hours worked and additional
payments per fortnight, mean that the interns in this program are paid below
minimum wage, potentially creating pressure on existing employees' wages or
conditions. The ACTU is concerned that the scheme may encourage employers to
replace existing minimum wage workforces with government sponsored interns or
to reduce their wages or conditions. Interns are not paid superannuation or
subject to worker’s compensation and so represent a significant saving to
employers when compared to regular employees. While the Minister has dismissed
this concern, it is not clear how employers will be prevented from utilising a series
of interns, for whom the employer is paid by government, to replace either
current or future paid workers. This would not only result in the program
failing to achieve its aims of moving unemployed young people into work, but
would also devalue the work and labour of currently employed young people.
Conversely, ACCI stated that the payments for interns would provide a significant
incentive for job seekers to undertake a placement:
Industry has the places to meet the demand of the program;
however employer experience shows that unemployed youth require considerable
support when moving from unemployment into entry level positions. The $200
payment is an important incentive for young people participating in the program
and should be seen as recognition of the young person's determination to gain
better job prospects.
Apart from its role as an incentive, from a practical
perspective the extra $200 on top of their NewStart or Youth Allowance will
assist the young person in covering costs associated with participating in the
work experience. Therefore, it is essential to preserve the maximum value of
the additional fortnightly payment through it not impacting on other income
The Brotherhood of St Laurence (BSL) also appeared to endorse the amount
of the incentive payment:
The BSL supports the Social Security Legislation Amendment
(Youth Jobs Path: Prepare, Trial, Hire) Bill 2016. The legislation will enable
the successful implementation of the PaTH program by ensuring young jobseekers
on income support receive an additional $200 per fortnight to compensate them
for costs involved in undertaking a PaTH internship (e.g. transport).
The Department of Employment noted that the incentive payment
supplements a participants regular income support payment:
The $200 fortnightly incentive paid to PaTH interns is on top
of their income support. The incentive is paid by the Government and is not a
‘wage’. If a host organisation paid a PaTH intern, the PaTH internship would
Many submitters raised concerns about the PaTH program, arguing that it
would lead to a 'churn' culture. For example the ACTU argued that intern
positions could displace permanent employees:
Additionally, the internship positions created under this
program are likely to displace paid jobs for other young people. The fraction
of 'internships' that turn into paying jobs will also not be new positions, but
will replace employees that the organisation would have hired under normal
circumstances. This is a fundamental flaw in both this program and in the
government’s approach to unemployment. There are simply not enough jobs and any
program that ignores job creation is going to [be] ineffective in addressing
Alternatively, as Anglicare Australia argued, interns may be not be offered
positions once the employer has received the $1000 host organisation incentive:
There has been very little detail available on how government
or employment service providers will monitor companies who might exploit the scheme.
Appropriate and effective safeguards are essential to prevent businesses
'churning' through interns or displacing current or future employees in their
use of the scheme. While we believe that businesses should be held accountable
for exploitative practices, we also believe that the government must show
leadership and responsibility in its stewardship role, particularly in the
context of taking a whole new approach.
Per Capita too argued for the need to include monitoring in the PaTH program
to protect interns against churn culture:
There must be appropriate monitoring of employers to ensure
that they do not 'churn' interns and subsidised workers in order to reduce
their staffing costs. Young workers being let go at the end of their subsidised
employment period could result in decreased, rather than increased confidence
and may not improve their employment prospects.
The submission from the Department of Employment set out measures to
protect against churn in the PaTH program. These include:
program guidelines, in combination with the jobactive Deed 2015–2020
and the Transition to Work Deed 2016–2020, to make clear to employment service
providers the parameters of the program;
monitoring activities will help ensure that host organisations
appropriately use the program; and
department's program assurance strategy will be applied to PaTH
In addition, the Department currently provides program assurance of
employment services through:
prevention – using guidelines, simple policy and IT systems
deterrence – making clear the penalties of non-compliance
detection – identifying non-compliance through data analytics,
the Tip-off Line, the National Customer Service Line, provider audits, and the
rolling random sample process
correction – including strategies to act on non-compliance such
as recovering payments, imposing additional conditions, or terminating contract
Definition of internship
The committee notes the concerns of several submitters regarding the
absence of a definition of 'internship' in the bill. However, the committee is
aware that the Department of Employment has included in the Explanatory
Memorandum to the bill and in its submission a clear definition of 'internship'.
These supporting materials make it abundantly clear that a young job
seeker who chooses to participate in the PaTH program is engaging in unpaid,
supervised work experience placements and is not entering into an employment
relationship with the host business.
The committee is of the view that the inclusion of these clarifications
within the Explanatory Memorandum and the Department’s submission adequately
addresses the ambiguity raised by submitters. The committee urges the
Department of Employment to consider adding the definition to all future materials
published in relation to the PaTH program.
Detail about the operation of the
The committee recognises the concerns voiced by several submitters in
relation to the limited detail about the operation of the PaTH program. However
the committee notes that the bill only relates to two specific aspects of the program:
internship payments and youth subsidy wage bonus.
The committee believes that the appropriate place for the program
guidance requested by submitters is in supporting materials produced by the
Department of Employment. As with any government program of this type, guidance
about the program implementation and additional information should not be bound
by the necessary constraints of the legislative process. The committee
considers that the responsiveness and flexibility required by the program would
be best achieved through departmental publications, rather than through
However the committee is cognisant that the program is to begin in April
2017 and both job seekers and employers need to prepare to take part in the program.
The committee therefore urges the department to have regard to the issues
raised in submissions relating to questions about the program implementation.
The committee recommends that the Department of Employment consider the
issues raised in the submissions received by the committee, and in particular
work to publish clear guidance on all aspects of the PaTH program so that job
seekers and employers have clarity about their rights and responsibilities.
The committee notes the comments made by various submitters in relation
to the adequacy of the internship incentive payments under the PaTH program.
The committee views the incentive payment of $200 per fortnight as sufficient,
given that this payment is clearly designed to be an incentive and not a wage.
The first schedule to the bill allows for the $200 incentive payment to
be made in addition to the intern's income support payments. The committee
considers that this measure is important to protect an intern's support
payments, as well as to facilitate the incentive payment which will defray
costs associated with the internship, such as transport.
The committee acknowledges the concerns raised by submitters in relation
to the potential for the PaTH program to have the unintended consequence of
creating a churn culture.
The committee considers that the safeguards outlined in the Department
of Employment's submission will be adequate to prevent a churn culture in the
PaTH program. These safeguards are already established as part of the
Department's scrutiny of other programs, and the committee has confidence in
the Department's continued vigilance.
A theme that recurred throughout the submissions was an acknowledgement
that high levels of youth unemployment impact on the broader social and
economic future of Australia. Submitters agreed that urgent action is required
to help Australia's unemployed youth find secure jobs. In general, submitters
were supportive of the establishment of the PaTH program.
The bill is integral to the implementation of the PaTH program. It will
progress key parts of the PaTH program, including protecting income assistance
payments of PaTH program interns. It is clear to the committee that unless the
bill is passed, the PaTH program cannot begin as scheduled in April 2017.
Accordingly the committee supports the passage of the bill.
The committee recommends that the bill be passed.
Senator Bridget McKenzie
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