Carrots rather than sticks

In 1993 I was made redundant. At the time I had a middle management position in the public sector, and to be fair I had to pull some strings to be made redundant, but the package that the government had put on the table was simply too good to refuse, and I had a plan.

For much of my working life my job had entailed demonstrating to people the benefits to Australia of cultural diversity. I had written countless speeches for Ministers and senior public servants that presented detailed arguments why our linguistic and cultural diversity represented was an under utilised resource – it was a gold mine that no-one seemed interested in mining. My plan was to set up a business and start working that gold mine.

It turned out I was right about the gold mine – within three years of starting with a debt of $40K the business was employing 15 staff and had a turn over of close to a million per annum. By our crass commercial standards the business was a roaring success. But in the process I witnessed first hand the failure of those government institutions charged with looking after the unemployed. At the time I was dealing with the Department of Education, Employment and Training.

When I refer to the failure of government institutions such as these I need to make it clear that this is not a complaint about the public servants; on the contrary responsibility for the failure rests with our political culture and the baying of the tabloid press that make it very difficult for our politicians to make the necessary changes.

As a result we have a system that the people who work in it on a day by day basis know can be readily transformed and improved but the political risk of making the changes are simply too great so we continue to muddle along.

So how did working my little goldmine give me insights into the way we fail the unemployed? Prior to setting up my little business I had been doing my homework.  Sounding out opportunities and reading up about doing business. As I was eligible for unemployment benefits I registered for the dole and soon found myself queuing up every fortnight to hand in my form. It was here I learnt my first lesson.

Signing on for benefits is a very good way to destroy people's self-belief and confidence. You come into a depressing world where in order to get your benefits you have to prove that you are not cheating the system; it seems as if everyone assumes that you are a thief about to steal from the taxpayer.

No doubt it was more noticeable coming into the system for the first time – since then I have learnt that the long term unemployed simply accept it as going with the territory but as will become clear, it does have an adverse impact on our ability to get people back into work.

I registered for the dole for two reasons. Firstly in order to set up my business I needed to make what little money I had last and secondly because of the New Enterprise Incentive Scheme (NEIS) scheme – one of the jewels in the crown.

NEIS is one of the most successful programs that we have, and of which we should be very proud. Starts up businesses suffer a high failure rate – only about 20 per cent of start up businesses survives beyond five years. Part of the reason for that is in order to survive you need not just a good business plan but you need good legal and accountancy advice.

The problem is that advice is expensive and you need it most in the start up phase, just when money is tight. NEIS firstly helps people develop a business plan and then provides twelve months of support both financial in the way of the dole (no longer a need to hand in forms) and in the provision of an advisory service. The aim is that at the end of twelve months you are able to stand on your own two feet. The result is that NEIS businesses enjoy close to an 80 per cent success rate.

For my business it meant that small contracts started to trickle in. But it was the big contract that opened my eyes to the problems with the way our institutions manage the problem of unemployment.