Rudd Government cuts another small business program

The Federal Government is dumping yet another highly successful small business program, confirming that the New Enterprise Incentive Scheme (NEIS) program will be scrapped in June next year. The cut comes on top of $1 billion of programs dumped in the federal budget, including the $700 million Commercial Ready scheme.

NEIS, which has been running for 23 years, helps eligible job seekers who have an idea for a new business establish the venture.

Participants get access to training in small business management, business administration assistance and a mentor. The program has been a big success for decades with 88% of people who go through NEIS still operating their businesses three months after completing the one year program.

A spokesperson for the Minister for Employment Participation Brendan O’Connor says that while there will no longer be a separate program, the same service will be offered to job seekers.

“One of the key themes that emerged from the review of the current Job Network was that program structures are complex, fragmented and cumbersome to administer,” he says.

The new single contract arrangements in place under the new system will provide opportunities for specialist providers to continue to play a very significant role in providing services to specialist groups, he says.

Currently there are 32 providers who assist nearly 7000 people a year go through the program.

The Government admitted there was no suggestion the program was not working.

So why then dismantle 23 years of branding and knowledge for a program that has been acknowledged by both political parties to be a success? One provider believes it is not just cost savings.

Peter Murray, manager of the NEIS program at Box Hill Institute, says the program has been widely acknowledged as having the highest rate of success of any job placement program.

But the Government sees it as expensive. The focus has moved to the longer term unemployed, those with drug/alcohol problems. “NEIS has got caught up in a review of the employment services,” he says.

The Government believes in this tight job market that people who go through NEIS might have got jobs anyway. However Murray points out there are flaws in this argument. “We help many mature-aged people. And if NEIS did not assist them in the early phase they could well turn into the long term unemployed.”

He says he sees many success stories of the unemployed creating successful businesses and jobs for others. For every two people assisted, they create one job, he says.

Murray says that providers of the service have built up valuable skills. The Government says it will keep some type of self employment option, but exactly how it will work is unclear. “We need to make sure we retain the features that have made it a success, including retaining the mentoring and training elements.”

Andrew Phillips, operations manager at RMIT’s NEIS program says he was “dismayed” to hear about the standalone program being discountinued. “We put out a directory every year of people who are now successfully running their own businesses. We are calling on people to lobby Federal parliamentarians as NEIS was very successful,” he says.

“Former participants are running restaurants, employing people, exporting… it is a very important program.” Phillips says he was talking to a small business owner last night: “He told me that he would still be unemployed without the NEIS program,” he says. “And he is now successful.”

The Government spokesperson says they are encouraging those specialist providers to tender. “Existing providers who don’t want to deliver the full range of services may wish to explore opportunities to subcontract or partner with other providers.”