The Department of Treasury is working with the Council of Small Business Organisations Australia (COSBOA) to address key aspects of the JobMaker hiring credit scheme, after the peak body raised serious concerns about the program in a submission to a Senate inquiry.
Speaking with SmartCompany this morning, COSBOA chief executive Peter Strong says he now believes there will be room to move on key design elements of the scheme, which was announced on budget night, but is yet to be legislated for.
The scheme, which will pay employers up to $200 a week in hiring credits when they take on unemployed young people, was referred to the Senate for an inquiry amid debate about its tight eligibility criteria and the potential for older workers to be discriminated against in favour of younger job-seekers.
On October 19, COSBOA used its submission to the inquiry to highlight serious concerns about the design of the program and the lack of consultation with small businesses.
However, Strong says meetings have since taken place between COSBOA and Treasury about the implementation of the program and “how it will work on the ground”.
“We’re putting together an advisory group that they will meet with,” he says.
While Treasury did not confirm it is working directly with COSBOA to address these concerns when asked by SmartCompany, a spokesperson for the department said it is “conducting a series of targeted stakeholder meetings” and inviting submissions from interested parties in response to the JobMaker exposure draft rules.
The public consultation process will run until November 27, said the spokesperson.
“The government will consider the outcomes of the consultation in the formulation of the final rules for the JobMaker hiring credit,” they added.
In the submission, COSBOA said its members were “perplexed” about how the JobMaker scheme was designed, and by whom, detailing issues with what it said are unnecessarily complex arrangements.
COSBOA was also concerned the subsidies themselves were too low, especially for employees aged between 30 to 35 years, who would attract a credit of $100 per week.
“Given the apparent complexity of the hiring credit administration process, for small businesses, in particular, the subsidy amounts are insufficient to motivate additional hiring,” said COSBOA.
“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% higher than the proposed amounts.”
Big businesses are also unlikely to be motivated to recruit new workers based on receiving an additional $100 a week, said COSBOA, and would treat the credits as “an accounting exercise rather than a motivator to recruit”.
“They will simply include the subsidy payments as income in their balance sheets. If this likely scenario eventuates it will result in the scheme being ineffective and will lead to considerable wastage of taxpayer funds.”
Additionally, small businesses would face potentially “onerous” administrative burdens if they opted into the program because of quarterly eligibility assessments, said COSBOA.
In its current form, the program requires employers to confirm their eligibility on a quarterly basis, before receiving the credits quarterly and in arrears from February 1, 2021.
Part of the eligibility criteria requires businesses to show an actual increase in headcount as a result of hiring the JobMaker-eligible worker, which Strong says raises issues for employers who may have been eligible at the start of a quarter but had other employees leave the business before the end of the quarter.
“This unnecessarily added administrative complexity is a disincentive for recruitment through the scheme,’ COSBOA said in its submission.
“Historically, Commonwealth labour market programs have required eligibility to be tested only once at the beginning of subsidied employment.
“COSBOA understands that quarterly reporting is probably intended to ensure continued ‘additionality’. However, the Single Touch Payroll system does not yet have the necessary new functionality needed for it to quickly become the platform for quarterly reporting.”
While software providers were able to add single touch payroll reporting functions to their platforms earlier this year to help employers manage JobKeeper payments, COSBOA said it has been advised that the same functionality would not be suitable for JobMaker reporting requirements, and because of the lack of pre-budget consultations with these providers, the work to address this has not yet begun.
Strong said this morning the key to making the JobMaker scheme work is to build in flexibility to allow for tailored approaches in local communities, rather than the one-size-fits-all approach that was used for JobKeeper.
JobKeeper was about “keeping people together”, says Strong, and the motivation was there for businesses and their existing employees to “stay together”.
In contrast, the JobMaker scheme is about bringing together employers and new job-seekers, and is therefore “a whole different ball game”, he says.
“It needs to be something that is very flexible and suits the needs of the community, and some communities will have a lot more unemployed people than others.”
While Strong acknowledges the need for the government to “move quickly” on implementing programs to address unemployment, he believes it would make sense to run a series of pilots in areas that need them the most first, rather than simply rolling out a national program.
This would allow for support to be provided to both employers and job-seekers, especially those who have never been unemployed before, he says.