By Darin Ritchie
The latest VECCI poll shows a significant majority believe that unemployment benefits for those aged under 30 should be subject to reform, in order to address skills and labour shortages.
While Tuesday’s federal budget included new initiatives to address skills in young people and changes to eligibility for the disability pension, it is possible that further reform should be considered to address concerns raised by respondents over welfare cheating and systemic disincentives to work. The key is getting the right balance between the ‘stick’ and the ‘carrot’.
The results of the snapshot blog poll found that 57.3% of respondents agreed with Tony Abbott that unemployment benefits should be cut to those under 30 to encourage them take up unfilled jobs. A third (32.9%) did not support cutting benefits, 3.7% were unsure, and 6.1% selected ‘other’.
Respondents did indicate concern that simply cutting benefits would not do anything to address low skill levels, and that consideration should be given to an individuals specific circumstances.
It can be said that many believe that welfare reform is needed to address irregularities in the system, to provide support to people genuinely looking for work who pose barriers, and to create an incentive to shift from welfare to work.
The budget includes several features that support both a harder line as well as providing incentive and opportunity for people to gain productive and meaningful employment, and include:
- A national training guarantee for every Australian under the age of 25.
- Income-contingent loans to undertake diploma level and above qualifications at TAFE (similar to what has been available in the university system for years, and introduced recently by the Victorian Government).
- More funding for literacy and numeracy training for job seekers.
- A Critical Skills Investment Fund for employers to train existing workers and unskilled job seekers to take up skilled roles in the resources, construction and renewable energy industries.
These initiatives, along with other changes to Australian Apprenticeships, provide opportunity for unskilled young Australians to get the skills needed by employers.
In addition, the government announced changes to eligibility for the Disability Support Pension which takes up part of recommendation 86 from the Henry Tax Review. It will for the first time assess whether people have a capacity to work rather than being placed on the pension with no job search obligations. People with a disability will be able to access job search support and training to enter the labour market and maintain a level of independence and dignity, while meeting skill and labour needs in the economy.
However, the Henry Review also made other recommendations which should be considered as part of future reforms, such as creating incentives to shift from welfare to work through the tax system and to reward and address the costs of undertaking education and training.
Such approaches will be critical to create the right mix of incentives and obligations to reduce youth unemployment as well as to meet industry labour needs if Treasury projections of a return to full employment is achieved by mid-2012.