Estimates Debate — Vote Employment

Thank you, Mr Chairman, for allowing me to take the call. I am not overly surprised that there is not a call from the Opposition on this, as we have had no hearing requested in the estimates on Vote Employment for the last 2 years. Opposition members did not ask the Minister to come before the Social Services Committee this year; they did not ask the Minister to come before the select committee last year. On something as important as Vote Employment, I think it is quite surprising, to say the least. It is quite surprising that Opposition members are pretty much hands-off on issues around employment, and there are no real questions from them.

So instead of calling the Minister to account, as it could have done—that is the parliamentary process, after all—instead of asking the Minister to front up to Vote Employment in front of the select committee and answer some questions on employment, the Opposition has been very silent and there has really been no call from Opposition members to see this as an area of importance. That has been very evident in their actions. It is not just all talk, it is very clear in their actions, and, of course, there are no calls tonight, as I can see so far, on this. I hope Opposition members do have something to say on employment, and might stand up and ask some questions, because I am looking forward to that.

Employment, of course, is crucial, and there is absolutely no doubt that we have seen some very tough times in the last 3 to 3½ years. As we came out of the global recession, we saw the unemployment rate rise and we saw more people unemployed. We saw both employment go down and unemployment increase. We saw fewer people in the market place and in the labour market. We also saw hours reducing, which was quite interesting. When we looked at how businesses and corporates and those sorts of jobs responded to the recession, we saw a great reduction in hours worked. We saw people being reduced down to a lot more part-time work, which was tough on people, particularly those who were struggling anyway, and on the minimum wage or close to it. To then have their hours reduced was really tough on them.

We introduced, in those early days, the 4-day week, so people could go to the 8-day fortnight and reduce their hours, and there was support for them from the Government. What we heard and what we saw was that that was greatly received by businesses, because it gave them options and let them see what could be done. They did not need the Government to tell them to do it. They were responsive enough and had great enough relationships with their employees that they could get together and make arrangements amongst themselves to try to keep people in work wherever possible. That is certainly what this Government thought would happen and how we thought it would go.

As far as Vote Employment is concerned, we saw the unemployment rate top out there. We did not see it get as high as in some other countries, but then again we did not hold ourselves exactly against the comparison with Australia, either. We saw the United States at 10.1 percent, and Ireland going into double figures and higher; it got be to really, really tough.

💬 Hon Pete Hodgson: What have we done to deserve this high-paid commentary on the lives and times of our society?

We have a bit of chipping in from the Opposition right now. Anyone who is unfortunate enough to have to watch Parliament will not be surprised that we are getting a little bit of chipping in from Opposition members, but we do not actually get them asking the Minister to go in front of the select committee. We do not hear them taking a call on Vote Employment, so, as per usual, it is hot air blowing across the Chamber, but no real action, no real accountability, and no real holding to account either, from Labour, and that is a fact.

We now have 2.2 million New Zealanders in work—61,000 jobs have been created since 2009. We are seeing more full-time jobs now than we did, more women in work, increasing wages, and more hours for those workers who are in jobs. What has happened is the labour market has responded. Businesses tightened up when they had to, they went through some tough times, but now they are actually increasing hours. We see it through the household labour force survey. We see them taking on more women—which I am always pleased to see.

The number of young people in work has been concerning not just to Parliament but to New Zealand overall. We certainly have had some concerns around the 16 and 17-year-olds, and their rate has certainly increased. But we have seen an increase of more than 5,400 young people in work over the last year to June, and we have also seen the number of them not in employment, education, or training go down.

I thank the Minister in the chair, the Minister for Social Development and Employment, for a very good speech, but, more than that, I thank her for her commitment over the last almost 3 years of looking at employment issues. In particular I thank her for the work this Government has done for young people who are not employed, for finding ways to help them back towards the workforce, and for helping them find the courage to put their heads up, to go out and look at what is happening in the world, and to seek skills so they can join the workforce.

I will talk a lot more about what the Government has done over the last 3 years, but also about our plans under this Budget and where we think we need to head with young people. Before I do that, I must say I think it is a very concerning thing for all New Zealanders that the Opposition will not take a call on this issue. Opposition members will not take a call, it seems, on employment in New Zealand, or on youth unemployment. I think they will be taking calls on many other things that are important to them, but I do not think it is wise for us to guess what they are.

Employment is a very important thing to all people in this Parliament. Youth unemployment is of particular importance to the Government and, I know, to the Minister. I challenge members of the Opposition to stand up, take a call on this part of our debate, and tell us about some of their policies, moving forward, to get young people into work. I guess if they do not take that call the public will decide that either it is not of importance to them or they do not have policies in those areas.

💬 Darien Fenton: What about your policies? What’s that party doing? It’s your responsibility at the moment—not for long.

The member opposite has asked me to talk about some of our policies. I have only 5 minutes, and a huge amount of work has been done over the last 3 years, as Minister Bennett has had a very focused approach to what we must do with young people in New Zealand.

One of the reasons that we have had increased unemployment levels for young people in New Zealand is the recession. But rather than using that as an excuse, as other parties would in this Parliament, we have merely said that this is an opportunity for us to focus more on young people, to bring greater skills to them, and to look at some of the reasons why in many parts of New Zealand youth unemployment has been much higher than it should be.

Certainly in the Bay of Plenty youth unemployment has been higher than any of us would want for very many years under a number of Governments. Why would this be? It would be in part because of a lack of education and a lack of direction, and because the previous Government, over 9 years, said it was all right for young people to sit on an unemployment benefit. They put some fuzzy things around them, and said it was OK to leave them there for a period of time.

In my electorate of Rotorua last year I had the opportunity to welcome back the first group of young people who went on the Limited Service Volunteers scheme. I invited them to my electorate office and we had a small morning tea. I wanted to hear from them about whether they thought it was a good programme. What I saw, and what I learnt, was quite remarkable. Young people who had not done well at school, who did not have a lot of confidence, who probably would not look somebody in the eye, who were not well placed to get out into the workforce, and who would have otherwise languished on a benefit for far too long went off and spent 6 or 8 weeks away on the Limited Service Volunteers scheme. They came back with a positive attitude and with a plan. I met a young man—

💬 Hon Steve Chadwick: A total failure.

The member opposite says “a total failure”. A total failure, I say to the member opposite, is leaving young people to languish on the unemployment benefit and saying that that is good enough for them.

I met a young man who did not have much going for him. When he came back to Rotorua he stood up straight and told me that he actually wants a job now. He enjoyed it. He enjoyed the time that he had spent there. I saw him a few months later, and he was out in the workforce. It was not full-time work, but that young man would not have had the confidence to find work otherwise. I congratulate the Minister in the chair, the Minister for Social Development and Employment, not only on what we have done over the last year but also on the extra money and extra places for 1,500 young people a year to go on the Limited Service Volunteers scheme.

Kawerau is a great example of a place that we have heard a lot about on the TV screens of late. Can I say to the people of Kawerau that I know they are very proud of their town. I met another young man who went out on the Limited Service Volunteers scheme. That town had to work quite hard to get that person on that scheme, and his life has, in part, turned round. But it is not enough for us to just let young people go through a scheme, say that that is good, and then put them back where they were. This Government has a lot more support around that.

It is a privilege and a great opportunity to take a call in this debate on the estimates for Vote Employment—or unemployment. We have just heard both the Minister in the chair, the Minister for Social Development and Employment, and the member for Rotorua castigating Opposition members because they were not prepared to stand up and take a call in this debate. They said that the Opposition was not prepared to put its policies forward. The ACT Party is very proud to support the National Government. We are a confidence and supply partner with the Government, and most of the legislation that passes through this House passes with the support of the ACT Party. But I have to say that when it comes to youth unemployment, we take on the role of the Opposition. If the Labour Party is not prepared to stand up and talk about what is required to address youth unemployment, then the ACT Party certainly is.

Youth unemployment is one of the greatest tragedies of our time, because it is largely preventable, and the Minister and Mr McClay know that well. New Zealand has a disastrously high rate of youth unemployment. Last week Statistics New Zealand released figures showing that the rate of youth unemployment has risen to 27.6 percent. Think of that: more than one in four young people is unemployed. What is worse, more than one in three young Māori people is unemployed.

Although the ACT Party is a confidence and supply partner of the National Government, it does not believe that the Government is taking this issue seriously. Although it may have implemented multimillion-dollar schemes to effectively bribe employers to take on young people, it has not been prepared to acknowledge that that simply has not worked. The Minister of Finance can stand up at question time and defend the Government’s record on spending, but tens of millions of dollars have been put into schemes to employ young people, and there is a much simpler solution.

The numbers are truly staggering. Some 41,000 young people are out of work. That is enough young people to fill the nearby Westpac Stadium and to then spill out on to the pitch. Youth unemployment is at the highest level it has ever been, even after taking into account the effects of the recession, and the biggest tragedy is that it is entirely preventable. An estimated 12,000 young people are unemployed as a direct consequence of the abolition of the youth minimum wage. Let me repeat that: 12,000 young people are unemployed as a direct consequence of the abolition of the youth minimum wage. While unemployed young people are scraping by on the dole, there is a solution that is not being taken advantage of. They are missing out on vital work experience.

Unemployment robs young people of their sense of self-respect and their self-sufficiency. There is no dignity in sitting around waiting for a weekly welfare cheque, and that is exactly what the scrapping of the youth minimum wage has done. I hear people ask why abolishing the youth minimum wage pushed so many people out of work. Supporters of abolishing the youth wage argued that doing so would give youth a livable wage, but it did not. When given the choice between employing an older and more experienced worker and taking a punt on a young person lacking in maturity, lacking in experience, and fresh from school—and having to pay that person exactly the same as what that older, more experienced person would be paid—it is no surprise that an employer will choose the older person virtually every time. One has only to talk to employers in New Zealand to know that that is true, and I cannot believe that the Minister for Social Development and Employment, who is sitting in the chair right now, has not spoken to employers and does not know that to be a fact. I think that is a tragedy, because there is an opportunity to do something and it is not being taken up.

In abolishing the youth wage, the Government forced young people to compete with experienced workers, which placed young people at a serious disadvantage. I ask members in the supposed Opposition why employers would employ a 16-year-old or 17-year-old fresh out of school who is without experience when they can employ someone with more experience and more maturity. Why would they do it? The answer is that they are not doing it, and that is reflected in the statistics. It is reflected in the over 12,000 extra young people who are denied that opportunity. If Labour members opposite do not see that, it shows us how completely out of touch with reality they are.

An entire generation of young people has grown up without the work experience that generations before them have benefited from. The 16 and 17-year-olds who are unemployed today will continue without that experience as 19, 21, and 22-year-olds, never having had a job. That cycle has to stop.

The ACT Party fought tooth and nail for the youth rate to be reinstated. We submitted a member’s bill in 2010 that would have effected change and curbed youth unemployment. National, Labour, the Greens, and the Māori Party voted against that bill. Since then youth unemployment has continued to skyrocket. It was the ACT Party, and only the ACT Party, that showed it really cared about youth unemployment. The tragedy is that the Minister in the chair knows that and the members on the National benches know that.

There are 12,000 young people sitting at home, unemployed, without the benefit of the experience that getting on the first rung of the ladder would give them. The key to getting a pay rise is work experience. It is the experience that comes from having that first opportunity. One of the great myths created by those who oppose having a youth wage is that reinstating it would simply shuffle jobs from the old to the young. Nothing could be further from the truth. Reinstating the youth minimum wage would create new jobs. Employers who currently cannot afford to take on an extra staff member because they have to pay that person $13 an hour may be prepared to give a young person—an apprentice or a person in training—that opportunity at $9 an hour. The tragedy is that this Parliament passed a law that makes it illegal for the employer to do that. Let me repeat that: this Parliament—first Labour supported it, then it was supported by National—passed a law that makes it illegal for an employer to offer a young person, straight from school and without experience, a job at $9 an hour. Instead, this Parliament has decided to send those people to the scrap heap and has sent them to register for the unemployment benefit at $4.50 an hour.

Mr McClay talked about young people languishing on the unemployment benefit. Well, I say to Mr McClay and I say to National members that if they want to address this issue, they should actually have youth rates. They should have the courage of their convictions. National members know that when this proposal was put up by the previous Labour Government, they rallied against it. They spoke against it and they campaigned against it, yet when they had the chance to actually do something about it, they refused. They voted against Sir Roger Douglas’ member’s bill to reinstitute youth wages.

The tragedy is that the members of the National Party actually know it. The members of the National Party are more likely to have had employment experience, to have been in business, and to have actually employed people. They—those business people and those employers—know more than anyone in this Chamber how to employ people, and about the economics of employing staff. If an employer has an opportunity to employ someone who is mature, who is older, and who has experience, and would have to pay exactly the same to a young, inexperienced, immature youth, the employer will go for the more experienced person virtually every time.

We sit here and talk about employment. The Minister stands up and says that the Opposition is not prepared to debate this issue or to put up policies. The ACT Party has put up a policy, and it certainly is one we intend to campaign on. If we can come back into this Parliament after the election, we certainly hope to get it through and hope to get some spine and backbone into the National Government following the election. Thank you.

I could not let the comments of the Minister for Social Development and Employment on this particular issue, Vote Employment, and how it affects a lot of young people in New Zealand, go unnoticed. Labour believes that the escalating level of youth unemployment is unacceptable in a country like New Zealand, where we pride ourselves on being the best place to bring up our kids. Labour believes that youth rates are no response to tackling the real and serious issue of ensuring that our kids have a great future. Youth rates just will not cut it. We have to invest in lifting kids’ skills while they are at school, ensure that our kids stay at school longer, invest in their training opportunities, and, if we need to, pathway them earlier towards their career choice. That is why programmes like Gateway and the Secondary Tertiary Alignment Resource—and many schools throughout the country will tell us this—provided real opportunities to get a job. Youth rates are not the answer.

In fact, employers currently have the ability to introduce a training wage, but they must be committed to contributing to the training of that young employee. That starting rate is $10.40 an hour, but employers must continue to invest in training opportunities for young people on that rate. Labour says we should lift the minimum wage to $15, yet the Minister is doing nothing about it. She says it is OK for young people not to have their skills invested in, and to be shipped off to the Limited Service Volunteers programme. Well, we have actually had feedback in our communities that that is not all it is cracked up to be. Yes, although some young people who are disenfranchised from their communities or have been disengaged from education have got on to the programme and had some positive gains, long term in terms of employment opportunities the Limited Service Volunteers programme frankly does not cut it. It does not secure those young people a commitment from the Defence Force that they will get a placement.

In fact, I visited a military training entity, and it had about five kids at the time who were all doing their test to get into the Navy. Some of them had fallen out of school early. Some were absolutely committed to a future in the Defence Force. Do members know what I heard? A couple of them had done their test, but they were at the lower level of the achievement standards for the Defence Force and they just had to wait until a space was available. They were being told that actually the Defence Force is taking higher - skilled and qualified young people into the defence forces. These young kids that we are talking about—the ones who have been disengaged from school and are trying to make a start for themselves—are left languishing. I suspect that the Minister has no sense at all about what is happening with regard to this group of young people.

If members visit private training establishments, they will hear real concerns being expressed about the changes afoot in funding for 18 to 24-year-olds to secure their places on level 1 and 2 National Certificate of Educational Achievement courses that are being introduced by the Tertiary Education Commission. That will do nothing to build and invest in the skills of those young people, so that they can have at least the foundation skills to scaffold on to a career pathway. What is the Government doing about that? Real solutions to youth unemployment have to ensure that we invest in young people’s skills, that we invest in real opportunities for apprenticeships—and there is nothing about that; the Government is being very silent about the issue of apprenticeships—and that there are jobs out there.

The Government is also being very silent about the Mayors Taskforce for Jobs, which was absolutely committed to ensuring that youth unemployment would be tackled and reduced, community by community by community. It took the leadership of local mayors for us to see youth unemployment in communities like Te Kūiti brought down to the level of single figures. That was incredible, because it was a stakeholder commitment to say: “This is a challenge for all of us, but we will commit to it as long as the Government can partner it. And the business community has to partner it, as well.” It was a whole response. Government members are very quiet about the Mayors Taskforce for Jobs and its achievements. Instead, we are hearing that the Limited Service Volunteers programme is the solution to youth unemployment. Well, I think not. Far too many Māori and Pacific young people are suffering at the hands of the extensive changes in the education sector and in the investment in skills sector by this Government, and that has meant that youth unemployment continues to increase. That is unacceptable—and the Minister sits there, silent.

Vote agreed to.

Vote Social Development