‘Youth wage aid must rise by 50pc’

Small businesses want the $200 and $100 per week youth wage subsidies to be 50 per cent higher, warning otherwise the scheme won’t be effective.
Small businesses want the $200 and $100 per week youth wage subsidies to be 50 per cent higher, warning otherwise the scheme won’t be effective.

Australia’s small business community has demanded that the Morrison government increase its youth wage subsidy by at least 50 per cent to encourage “large-scale” hiring of new workers, while retailers say they must receive the payments before Christmas if the scheme is to be effective.

The push to overhaul the signature budget measure comes as Treasury confirmed just 45,000 of the 450,000 jobs the government expected to be supported by the hiring credit would be “genuinely” new, or would not have been created if it were not for the scheme.

Labor seized on the revelation, declaring 90 per cent of the jobs supported by the hiring credit would have occurred without taxpayer-funded subsidies.

Business, industry, welfare and union groups have proposed a long list of changes to the government’s JobMaker hiring cred­it, which for 12 months pays eligible employers $200 a week for hiring a person aged 16 to 29 years old or $100 a week for someone aged 30 to 35.

Representing 1.3 million small and family-run businesses, the Council of Small Business Organisations Australia said members had said the wage subsidy payments were too low and — added with the “apparent complexity” of the scheme’s administration process — were “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,” its submission to the JobMaker Senate inquiry states.

“The lower subsidy rate for 30 to 35-year-old employees is not justifiable in the current labour market environment. The rate of $100 a week is too low to motivate small business owners to recruit a new, eligible worker. Big businesses will not be motivated to recruit new workers they have not already planned to hire.”

To receive the subsidy, an employer must show the hiring of that person has increased their business’s headcount and wages bill compared to September 30.

The new employees must work at least 20 hours a week.

Businesses will not be able to reclaim their subsidies from the government until February for the December quarter but the Australian Retailers Association said this would be too late.

“The Christmas period is a critical time for retailers, this year more than ever,” the ARA’s submission says. “Considering most retailers currently have increased cashflow pressure, whilst the ARA supports the … hiring credit, it is our view that payments be brought forward to support businesses immediately — critically, before Christmas rather than the proposed February 2021 payments in arrears.”

The Shop Distributive and Allied Employees Association, which says it is the largest Australian organisation representing young workers with more than 203,000 members aged under 35, outlined 20 recommendations, including clear protections so that casual staff could not be displaced by newly hired staff or have their hours reduced, and one payment rate for all workers.

“In its current drafting, the legislation is at risk of enabling rules that create an incentive for insecure work, an incentive for disengagement with school education, and an incentive for high staff turnover including at the end of the program — a new economic cliff,” its submission states.

Many of the groups called for the wage subsidies to apply to older workers and said there should be a review of the program in six months to ensure it was working as intended.

Master Builders Australia said in order to minimise the administrative and reporting impost on small businesses, they should be able to claim the subsidy as part of their monthly or quarterly business activity statements rather than through a separate process.

Natural attrition in one part of a business should not mean a new employee hired for an unrelated role was not counted as an additional worker, the MBA said.

The economics legislation committee is due to report by November 6, with a vote on the hiring credit bill expected later in November or December.