Australia’s broken employment services system needs public provider, parliamentary review finds

<span>Photograph: Stefan Postles/AAP</span>
Photograph: Stefan Postles/AAP

The decades-long full privatisation of Australia’s employment services system has failed, according to a parliamentary review ordered by the Albanese government that has urged Labor to re-establish a commonwealth job agency and overhaul the mutual obligations regime.

A damning review of the Workforce Australia system also called for the government to create a watchdog – as exists in disability and aged care – to monitor the mammoth job services system and recommended the axing of a costly privatised training program.

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The inquiry, chaired by Labor MP Julian Hill and established by the employment minister, Tony Burke, declared the system was frequently ineffective but was still set to cost over $9.5bn over the next four years.

“Despite generally good intentions, the employment services system has largely failed to improve employment outcomes for jobseekers, or more broadly to boost their capacity for social and economic participation,” Hill wrote in his foreword to the report.

However, the committee shied away from abolishing mutual obligations, the policy which forced jobseekers to complete tasks such as to apply for jobs or attend training or job coaching otherwise have their payments stopped, and said the controversial Work for the Dole scheme should remain as a last resort for some jobseekers. Welfare advocates have argued mutual obligations are ineffective and should be abolished, but the committee has said they need to be overhauled instead.

The 75 recommendations included a call to establish a large government-run provider, to be named Employment Services Australia, within the Department of Employment and Workplace Relations that would work with “jobseekers with fewer barriers to work” and “for people who are furthest from the labour market or persistently non-compliant with their obligations”.

The report does not suggest that private employment services providers be abolished from the system, though the review recommends the government consult with stakeholders about how a modern public system might be designed.

The inquiry also recommended a watchdog responsible for regulating “workforce standards and professional development; research, continuous learning and improvement activities”, advising on funding issues and handling complaints.

The committee recommended the “broadening and tailoring” of mutual obligations, including developing individual job plans for jobseekers, returning the power to suspend payments to a public servant at Services Australia.

Welfare advocates have long criticised what they consider the “punitive” nature of the current system. In the first 15 months of Workforce Australia (July 2022 to September 2023), 70.4% of participants had their payments suspended.

Welfare advocates have had a mixed reaction, with some welcoming the suggested changes and others calling for an immediate pause to payment suspensions and mutual obligations.

The Greens, the Antipoverty Centre, and the Australian Unemployed Workers’ Union are calling on Burke to end mutual obligations entirely.

Antipoverty Centre spokesperson and jobseeker recipient Jay Coonan said as long as mutual obligations were in place, the system would continue to be ineffective.

“The Workforce Australia inquiry has shown again that ‘mutual’ obligations are being incorrectly applied and causing mass harm to those of us who are battling to survive on half the poverty line,” Coonan said. “Every payment suspension wreaks havoc for people trying to navigate the system.”

Under the proposed remodelled compliance regime, frontline staff would be able to “counsel clients a few times a year” before moving into compliance, which also be softened.

The commission said the controversial Work for the Dole program should be kept, but rebuilt to include more activities and “seen as a last resort for that small minority of people who fail to meaningfully engage”.

“Numerous experts have told us that the biggest obstacle to system reform is likely to be resistance by the Australian public service,” the report says, “given a decades-long belief in full outsourcing, a lack of experience in delivery and the sheer convenience of being able to blame and punish contractors for systemic failures”.

The employment services system was fully privatised in the late 1990s under the Howard government and has since faced criticism it is wasteful and ineffective. Supporters of the system maintain it is more cost-effective.

The report also recommended reinstating a sickness allowance for people unable to work and reviewing access to the disability support pension for people who have been unemployed for over five years.

Other recommendations include a base level of qualification and skills for job consultants working for providers and abolishing the employability skills training program, which has included jobseekers being advised on how to wash properly and told to use ChatGPT to apply for work.

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Greens senator Janet Rice said the inquiry was “an important step forward”.

“There is no evidence that mutual obligations work, they do not need to be scaled back or tailored, they need to be abolished,” Rice said.

“We need to respect people’s autonomy. The solution, if someone is disengaging from these services, is not to coerce them into it, but to engage with their life circumstances and what they genuinely need. Income support should be a fundamental right, granted to anyone that needs help.”

The Australian Council of Social Service acting chief executive, Edwina MacDonald, urged the government to implement reforms that would shift it from a “system that punishes people towards one that opens up real employment opportunities”.

“We are long overdue for transformational reform to the 30-year-old employment services system in which private providers compete for the ‘business’ of helping people secure employment,” she said. “This competitive model has not worked.”

MacDonald said Work For the Dole should be replaced by a large-scale investment in wage subsidies and income support payments to be raised to the age pension rate of $78 a day.