Cutting payments and employment supports puts young people at risk

5 May 2014

Australia’s peak community sector and youth affairs bodies today expressed deep concern at proposals to deprive young people of payments and employment services, that would make it harder for them to get ahead, especially those with no family support or from low income families.

“We want to see more opportunities for young people to build a future for themselves and participate fully in our society, but the draconian measures being considered would only create hardship at a time when young people are struggling to get a start in the world,” said Dr Cassandra Goldie, CEO of the Australian Council of Social Service.

“How will young people get a leg up if we force them to wait six months after graduating before they can get any assistance? And how will keeping 22 year olds on the lower paying Youth Allowance until they are 25 years help them get a job? Dr Goldie asks.

Mr Craig Comrie, Chair of the Australian Youth Affairs Coalition (AYAC) said, “this proposed cut in income would mean that some of the most vulnerable young people could end up homeless and put them on a downward spiral that would make their job prospects even worse. We cannot assume that all parents can support their children until they are 25, especially when we know that the parents of unemployed young people have low incomes themselves.”

“The neat tag line ‘earn or learn’ would be more appropriate if it involved real incentives and investment in programs that are effective. However, the complete opposite is being proposed, including a reduction in funding for employment assistance, which will make it harder for many people to find work.

Dr Goldie said, “it will be even tougher if effective programs such as Youth Connections and the School Business Community Partnership Broker program, which have been hugely successful, are discontinued. Youth Connections has helped many thousands of young people who had disengaged or were at risk of disengaging from education or employment. It has achieved excellent results in an increasingly tough job market.

“Similarly, the wage subsidy scheme has been very effective in getting people who have been out of work for extended periods into ‘real’ jobs. Recent figures from Senate Estimates show 47 per cent of Wage Connect clients who completed the 6 month job placement retained their positions after the program ended, which is more than double the results achieved under the previous work-for-the-dole scheme,” Dr Goldie said.

“How can we even consider cutting crucial programs that are clearly working at a time when youth unemployment is growing? The latest figures show youth unemployment is twice the general unemployment rate (12.2%) and as high as 20% among 15-24 year olds in some parts of the country,” Mr Comrie said.

“We urge the government to steer away from such hard line proposals that will only make the situation worse.”

“Young people are crying out for opportunities to develop their skills and get a crack at their first job that will put them on the road to a decent future. We would be harming their chances by wielding a bigger stick while taking away assistance at a time when they need support the most,” Dr Goldie.

Media Contacts:
Fernando de Freitas – 0419 626 155
Craig Comrie (AYAC & YACWA) – 0405 972 978

Background Stats:
• The number of Youth Allowance (other, non-student) recipients rose 6.8% from 106,244 to 113,456 between February and March 2014.
• At March 2014 there were 216,363 young people receiving Youth Allowance (student) making a total of 340,000 young people on Youth Allowance.
• March figures reveal the number of Newstart recipients has grown 7.5% over the previous 12 months, from 682,120 to 733,601.
• Long term Newstart recipients increased 9.2%, from 443,932 to 485,069 people.
• Youth Allowance (single) = $207.20 per week.
• Newstart Allowance (single) = $255.25 per week
• Those not eligible for Newstart who previously were will be $48.05 a week worse off, or $100 per fortnight.
• The national unemployment rate for young Australians aged 15 to 24 years hovers around 12% per cent – double that of the headline figure.

Commission of Audit recommendations

1. Force young people who are unemployed to move home in search of work:
• Require young single people aged 22 to 30 without dependants or special exemptions to relocate to higher employment areas or lose access to benefits after a period of 12 months on benefit;
• Will remove access to income support for young people who are unemployed but can’t move.

2. Tighter income tests for Newstart Allowance:
• Increasing the income test withdrawal (taper) rate to 75 per cent for Newstart Allowance and pension recipients;
• Cuts the incomes of many income support recipients and discourages part time employment.

3. Cuts to employment services:
• Reduce average cost per jobseeker for Job Services Australia providers from 2015;
• This will make it harder for many people to find work.

4. Scrapping wage subsidies
• Wage subsidies for employers employing long term unemployed people to be cut – proven to be a very effective programme;
• Recent figures from Senate Estimates show 47 per cent of Wage Connect clients were in paid employment at the end of the six-month program – more than double the results achieved under the previous work-for-the-dole scheme;
• In the last two years, the Wage Connect scheme was paused part way through the year when the annual cap of 10,000 places was reached before the end of the year, indicating strong employer interest in the program.

Youth Transitions programs at risk:
• The Federal Government funds the Youth Attainment and Transitions programs, including Youth Connections and the School Business Community Partnership Broker program;
• They have been funded since 2010 and are delivered across Australia by a large range of organisations including youth specialist NGOs and local or State Chambers of Commerce;
• Together they cost $124M in a full year ($77M YC and $44M Partnership Brokers);
• There is wide speculation they will not be re-funded in the May budget although it would cost only $62M in the forthcoming financial year 2014-15 as they are funded to 31/12/14 already;
• Youth Connections serves young people still at school, about to leave school or those who have recently left school;
Nationally, 67 organisations deliver Youth Connections over 113 service regions, assisting over 70,000 young people.