The Morrison government's JobMaker hiring credit may be too low to create the hundreds of thousands of jobs promised under the scheme, a Senate inquiry has heard.
Businesses will be able to receive a hiring credit of up to $200 per week for each jobseeker aged 18 to 29 they take on, as part of the new scheme.
Those who hire people aged 30 to 35 out of the dole queue can receive a credit of $100 per week.
The scheme is forecast to create around 450,000 jobs, of which 45,000 are genuinely new.
However employer groups say the rate is too low to entice businesses to take on a new staff member.
Council of Small Business Organisations of Australia strategy manager, John Grace argued the rate should be at least 50 per cent higher.
"There was feedback from [our] members that the subsidy rates were not sufficient to attract employers to take the risks involved, what they might perceive as the risks involved, in economic times such as these to hire more people," Mr Grace said.
"One of our members said that at this subsidy rate, he regarded [there] being about a 5 per cent prospect of attracting employers at this level of subsidy."
The $100-per-week subsidy for workers aged 30 to 35 in particular was too low to motivate businesses to recruit new workers that they had not already planned to hire, Mr Grace said.
The rate is set at about half the amount that a worker on minimum wage earns for a 20-hour week.
However University of Melbourne professor Jeff Borland based on his analysis of 2019 employment data, the subsidy would only account for 20 per cent of the wage of 80 per cent of workers aged 15 to 24.
There are other logistical hurdles to using the scheme as well.
The Council of Small Business Organisations of Australia said the Single Touch Payroll software, upon which the scheme depends, will not be ready in time for the December 7 registration date.
The Master Builders Association's Jennifer Lawrence said the plan to pay the credit in arrears quarterly would make it difficult for small businesses to use the scheme.
"We believe that there could be scope to make those reimbursements monthly instead which could favor small business cash flow management, which during testing times like these is of absolute importance," Ms Lawrence said.
Senator Rex Patrick also asked whether job advertisements specifying that only people eligible for the JobMaker hiring credit can apply were discriminatory.
Dozens of job ads have gone up over the past month, saying applicants must be eligible for the scheme to be considered.
"Clearly if you are 36, you need not apply for this job," Senator Patrick said.
Chris Leggett from Treasury's JobKeeper division said the program fell under section 41.A in the Age Discrimination Act, which exempts government schemes designed to improve workforce participation in certain groups from being covered by anti-discrimination laws.
But Australian Council of Trade Unions president Michelle O'Neill said the scheme lacked protections for staff who'd lost work to make room for subsidised workers.
"The proposed scheme guidelines contain no provisions, which guarantee workers access to any form of redress, such as an arbitration process, should their employment be unjustly impacted by the scheme," Ms O'Neill said.
"There are somewhat categories of workers such as casuals who have either no or limited access to unfair dismissal processes, which would typically be the only recourse in these situations.
"Existing workers who see their hours and pay reduced to make way for subsidised workers have no way of challenging these decisions or seeking any redress."
However Treasury's JobKeeper division acting division head Philippa Brown said any attempt to reduce older workers' hours would not be tolerated.
"In a circumstance where an older worker loses their job, or has their hours cut that would not fit within those exemptions in the Age Discrimination Act," Ms Brown said.
The exposure draft of the legislation also contains "integrity" measures to stop businesses from artificially inflating their payroll or headcount to claim the credit.
Businesses must keep records to show their headcount and payroll has risen since claiming the credit.
However if upon review, the JobMaker commissioner finds hours have been stripped from another employee to claim the credit, the business would be forced to pay the full amount back, plus penalties.
Australian Chamber of Commerce and Industry policy director Jenny Lambert said the subsidy was not high enough for most employers to ditch their experienced staff.
"The idea that an employer would... cut back on their experienced workforce to take on somebody who's been unemployed and bring them into the business for the sake of $100 or $200 a week is highly unlikely," she said.
"We've got to remember that this is $200 a week or $100 a week, it will tip a balance, but it's not going to drive ... significant changes in employment in the workforce of a particular employer, because there is much more to having a productive workforce than just how much you're paying them."