In terms of workforce participation young people are often the most vulnerable. Almost one quarter of Australia's young adults do not have a full-time job or study, according to a report of the Dusseldorp Skills forum titled "How Young People are Faring, 2003". Moreover, according to the same report the number of young adults in full-time jobs has dropped by 15.2% since 1995.
The disincentives for many young people to either seek full-time work or to study are overwhelming.
The changes to the Youth Allowance have placed increased burdens upon families with children in the age bracket of 17 to 21 in particular. Today almost one in three young people not living at home are living in poverty. The changes to the Youth Allowance should be reversed.
As a first step, the level of Youth Allowance payments should be increased so that there is greater parity with the Newstart payment, thus removing the disincentive to young people to seek further education and training. This would better equip young people to participate in the paid workforce.
For those in work the average earnings of young adults fell by 20% relative to mature workers between 1984 and 2000.
Low youth wages (especially for those aged 18 or over), accentuated by the prevalence of casual and part time work, often leaves young people dependant upon such income below the poverty line. In some cases young people are better off not being in paid work.
Junior rates of pay are discriminatory and illogical in a society which for all other purposes regards a person as an adult when they reach the age of eighteen years. Junior rates place many young people, especially if they live away from home, under severe economic pressure.
Junior wage rates should therefore be abolished, especially for those over the age of eighteen. This would encourage young people into the paid workforce.
The current impact of the Higher Education Contribution Scheme puts many low income students and families under pressure and operates as a disincentive for low income students to go to tertiary education. It also makes it very difficult for young people in the workforce.
When HECS was first introduced in 1989 debts were repayable at the rate of 1% on incomes greater than $22,000. In today's terms that would equate to approximately $32,000, given that in 1989 average weekly earnings were $524.50 and in 2000 were $761.50. Below that level, repayments were not required.
The Howard government cut the repayment threshold to $20,701 in 1997-98, thereafter adjusted for movements in the average wage. Moreover the rate of repayment is now higher and generally varies between 3% and 4.5%. This is simply a tax impost by another name.
The HECS scheme should be remodelled to establish equity and fairness for young people. The repayment burden should not be so heavy that young people beginning their working lives cannot also afford to save. The inability of many young people to repay debt and yet save makes it very difficult for them to purchase homes or begin families. This is not in Australia’s long term interest. It is false economy.
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