News & Analysis

The PaTH scheme announced in 2016 Budget a major win for not just youth, but presents an opportunity for the startup ecosystem

- May 4, 2016 4 MIN READ
2016 budget

The 2016 Budget was Treasurer Scott Morrison’s first, and from the get-go the agenda around startups, innovation, vulnerable youth, small business tax cuts and tax avoidance were cited as clear themes for the speech that ensued. You can view his full speech below.

There were a range of mixed feelings about the content within the 2016 Federal Budget from many players within the Australian startup ecosystem. The focus on the FinTech sector was quite obviously welcomed with open arms by not only financiall- focused startups but leading organisations such as StartupAUS.

However, the failure to mention or recognise with any degree of significance other leading industries in Australia, such as AgriTech, B2B Cloud Technologies and BioTech, for example, left some industry commentators, including myself scratching their heads.

But for me the stand out focus within the budget for the night was creating a new pathway for youth employment.

There is a youth unemployment crisis in Australia right now and it is only going to get worse. Currently the percentage of unemployed people under the age of 25 across the country sits at around 12 percent – this is significantly higher in regional areas, particularly within certain areas of Tasmania and Queensland.

In addition to this graduates are finding it more and more difficult to gain employment within their chosen fields post-graduation – the irony of it all is that we also have a major skills shortage in the tech space when it comes to roles that require STEM skills in Australia.

In last night’s Budget the government introduced the new Youth Jobs PaTH Programme (which stands for Prepare, Trial, Hire) and states that the Government will invest $752 million into helping young job seekers move off welfare and into employment.

The programme will consist of three stages:

PaTH consists of three stages

PaTH consists of three stages

The programme benefits both young people looking for employment (obviously) but also incentivises companies to take more of a risk and hire new talent into their business. Businesses who take on an intern in stage two of the programme will receive an upfront payment of $1,000 for doing so and from January 2017, if a business owner decides to hire an individual that has gone through the programme, the company will receive a wage subsidy of $6,500 for the most ‘job-ready’ seekers of employment and $10,000 for taking on new employees that have been deemed ‘less-ready’ by JobActive Providers (the organisations that will be chosen to partner with the Government and deliver the program).

What I found interesting is that in announcing this there was a focus on IT skills being part of the education being provided.

The first three weeks of training will focus on skills such as working in a team, presentation, and appropriate IT skills. A further three weeks of training will centre on advanced job preparation and job hunting skills.

If a potential new employee has basic STEM skills then there is an opportunity for employers to put a portion of the subsidy money towards up-skilling and educating those new employees further via programs offered by education providers like Polycademy, The Coder Factory, Academy Xi or General Assembly, to name a few.

What impressed me most though about this new policy being introduced by the government is that in addition to this program, it will also be investing an additional $89 million in supporting job seekers (which includes young people under 25) who wish to start their own business – a complementary addition that aligns nicely with the Governments National Innovation and Science Agenda.

The Government will establish new ‘Exploring Being My Own Boss’ workshops to engage job seekers to explore self-employment.

To help young people to develop their innovative ideas into successful businesses, Self-Employment Starter Packs will also be introduced. These will contain information on the services available to support job seekers to establish a business.

Finally, Inclusive Entrepreneurship Facilitators will be appointed in selected locations with high youth unemployment. Facilitators will help bring together available services and programmes (such as jobactive, NEIS, microfinance services, and start-up incubators). They will also provide practical assistance including help accessing local mentors, business partners, finance, office space, equipment and ongoing business development training.

It will be interesting to see, as this program evolves, how the government intends to equip facilitators and whether or not consultation or even a deeper involvement from the Australian startup ecosystem will be part of the roll-out agenda here.

Phil Morle, chief startup scientist and cofounder of Pollenizer, echoes this sentiment.

“As a university teacher and innovator I like the look of the new Youth Jobs Path,” he said. “Startups need help and can be the new ‘trades’ that teach young people entrepreneurship and invest in our talent economy. I am looking forward to learning more about this. I also love the idea of ‘Exploring being my Own Boss’ program. The big irony of our nation is that we take the default path to university so that we can ‘get a good job’ but then when we leave we realise that a great pathway to wealth is to be self employed.”

While there certainly is a lot of potential advantages for startups in this program, I feel that it is also my responsibility as an industry commentator to point out one of the perhaps not so obvious flaws that I hope a likely updated roll-out plan for this programme will include a remedy for.

The government needs to get clear on the word “internship”. Because what they are describing in stage two of the programme does not fit the legislated description.

Currently under Fair Work legislation anyone undertaking an internship is going through a learning experience and therefore should be getting more out of the experience than the employer. In fact an employer should see no real financial benefit to their business by having an intern. Stage two of the programme currently sees employers getting a lot of upside –  free labour, monetary incentives, and no commitment to provide the job seeker with any valuable training or skills.

We already know that Australia and in particular the local startup ecosystem has a huge problem where interns are taken advantage of and the fact that there is no obligation by businesses participating in the programme to see it from end to end – that being the HIRE part of the program – puts potential job seekers at risk of being taken advantage of.

We need to grow the number of jobs in the country. The best way to do that is skill up that 12 percent – we need to ensure though that all parties involved are committed to that common goal and right now I don’t see any safeguards in place that will keep Australian startups honest if they are to participate.

The percentage of startups already blatantly ignoring Fair Work laws is already a worrying trend.