Budget 2020: Fears JobMaker wage subsidy disadvantages older JobSeekers

The Morrison government allocated $4 billion in Tuesday's budget for the JobMaker hiring credit, which will pay businesses between $100 and $200 a fortnight for hiring workers aged up to 35 years

Workers will need to do a minimum of 20 hours a week averaged over the quarter, and have received received the JobSeeker Payment, Youth Allowance (other) or Parenting Payment for at least one month out of the three months prior to when they are hired.

Businesses will be able to claim a maximum of $10,400 per extra position created for the first year of employment.

They will have to prove the new hire will increase the overall headcount in order to qualify.

However Labor has accused the government of racking up a trillion-dollar debt while leaving hundreds of thousands of Australians behind.

Treasurer Josh Frydenberg confirmed in Question Time on Wednesday gross debt would hit $1.7 trillion by 2030.

While the scheme was expected to create 450,000 jobs over the next three years, Labor's employment spokesman Brendan O'Connor said there were 928,000 people aged over 35 currently on JobSeeker who would miss out.

They would also be competing with a subsidised workforce for jobs, Mr O'Connor said.

"This government has a terrible track record when it comes to labour market programs - think the failed and exploitative Youth Path Program," Mr O'Connor said.

"This hiring wage subsidy does nothing to encourage secure jobs, particularly at a time when we are facing record high underemployment."

Mr Frydenberg also fended off claims businesses could sack older workers and hire younger cheaper workers in their stead under the scheme.

"The head count has to be higher, and the payroll needs to be higher and so that is the integrity test that is designed to support additional people coming on to that business," Mr Frydenberg told the National Press Club.

ACT Council of Social Service chief executive Emma Campbell said there was "no decent safety net" for older people unable to secure work. Before the pandemic, half of all JobSeeker recipients were aged over 45.

"We're calling for the wage subsidy for young people to be urgently extended to people of all ages who have been unemployed for a year or longer," Dr Campbell said.

EveryAGE Counts co-chair Dr Marlene Krasovitsky said older women were less likely to return to the workforce if they lost their job and were facing higher levels of unemployment as a result of the downturn.

"Acknowledging younger workers have specific needs, older workers facing unemployment also require specific needs. There's no reason that JobMaker should be age specific," she said.

However University of Melbourne economics professor Jeff Borland said the direct effects of COVID-19 were still much more pronounced for younger workers.

"As of August, hours worked by young people [aged] 15-24 years were still down by 12 per cent compared to March - whereas for those aged 55 years plus hours had come back to be just 1 per cent below in March," Professor Borland said.

"As well, experience suggests that young people will be worst affected if the current situation turns into a longer and more broad-based recession. So my view is that at the moment it's sensible policy making to focus a major employment initiative on young people."

While Professor Borland acknowledged the wage subsidy could inadvertently create more casual or part-time jobs rather than full-time jobs, he argued that could actually be more effective in terms of helping young workers get a foot in the door.

"If one person is hired for 40 hours of work a week only one person is getting work experience. It's a year [of work] so anyone employed is getting a substantial amount of work experience so in that regard it can be argued two people ate better than one," he said.

Wage subsidy schemes were most effective when targeted at young people who needed a chance to prove themselves, as they gave employers confidence to take on someone less experienced.

"A lot of employment schemes in the past have been for young people with relatively longer duration of unemployment," Professor Borland said.

"As I understand this scheme is going to be for people who've had a short duration of unemployment which in a way is who a wage subsidy is most effective for."