WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Reform of Employment Services Bill 1996
Date Introduced: 12 December 1996
House: Senate
Portfolio: Employment, Education, Training and
Youth Affairs
Commencement: 1 December 1997
To provide a structure for increased involvement of private
employment entities to provide employment assistance programs and
benefits to the unemployed.
Within the context of the August 1996 Budget, the Government
issued the Ministerial Statement Reforming Employment
Assistance - Helping Australians Into Real Jobs which outlined
its proposals to radically alter the delivery mechanisms and reduce
the coverage of publicly funded labour market assistance to
Australian jobseekers.Considerations guiding the proposed reforms
were the perceived need for improvements in the quality, and
tailoring of assistance measures to meet the needs of jobseekers
and employers in order to achieve sustainable employment outcomes;
the reduction of inefficiencies and perceived structural weaknesses
in the delivery mechanism; and the achievement of greater cost
effectiveness.The proposals which are targetted to deliver savings
of $1.7 billioni primarily as a result of more selective targeting,
were also influenced by the fiscal discipline of the Budget and the
Government's reassessment of the role of the public sector as both
the funder and the provider of the wide range and coverage of
existing services. These changes were presented within the broader
context of the Government's other employment and expenditure
policies and priorities.
The legislative package of 3 Bills establishes a new framework
for the delivery of labour market assistance including the
establishment of a competitive market for employment placement
services based on competitive neutrality (ie. public and private
providers being in the same position as regards such matters as
taxation and regulation).The Reform of Employment Services
Bill 1996 establishes the mechanisms to deliver employment
services and to establish a fully competitive market for employment
assistance; the Reform of Employment Services
(Consequential Provisions) Bill 1996 repeals the
Employment Services Act 1994 which established the current
case management system, including the Commonwealth Employment
Service (CES), Employment Assistance Australia and the Employment
Services Regulatory Authority; the Commonwealth Services
Delivery Agency Bill 1996 provides an administrative
framework for the integration of access to Commonwealth services
including some of the employment services and assistance which have
been provided by the CES, by establishing a single Agency within
the Social Security Portfolio.The introduction of this package of
legislation follows a process of public consultation.
What is the proposed new framework for labour market
assistance?ii
The aims of the proposed changes are to deliver quality,
streamlined and efficient services by providing greater flexibility
for tailoring assistance measures to the needs of individual
jobseekers, within an incentive structure focused on job placement
outcomes rather than training or programme outcomes.
The proposed framework supports the continuation of publicly
funded labour market assistance.However, of the full range of
labour market assistance services currently provided by the CES,
the Government has concluded that the public sector should continue
as the provider of - registration of jobseekers; assessment of
eligibility for employment assistance; referral to assistance in
the employment placement market; and administration of the activity
test and enforcement of compliance.These will be provided through
the Services Delivery Agency.In addition, for client convenience
the Agency will also provide access to vacancy information,
self-help facilities and on-the-spot referrals.
All other employment assistance services will be contracted out
to Employment Placement Enterprises (EPE) including the
corporatised public EPE, in a fully contestable market for
employment placement services.This expands the competitive and
market based approach introduced on a limited basis in 1994 in
relation to the delivery of case management services.The services
provided within this employment placement market will now include
labour exchange services and employment assistance.Access to these
publicly funded services however, will be more selective.
Publicly funded labour exchange services i.e. the matching of
jobseekers with vacancies, currently available to all jobseekers,
will, under the proposed changes, be limited to eligible jobseekers
i.e. recipients of unemployment allowances or other forms of income
support; young people aged 15-20 years not in receipt of income
support and Aboriginal and Torres Strait Islander participants in
Community Development Employment Projects (CDEP).
Similar to current arrangements for access to labour market
programmes and case management, intensive employment assistance
(IEA) will be targeted to jobseekers who have been unemployed for
12 months or more or are assessed as at high risk of becoming
long-term unemployed.However, under the proposed changes
eligibility for IEA will not guarantee access.A further process of
screening will target those jobseekers who are considered to be
most in need and who have the 'capacity to benefit'.The following
jobseekers will have lower priority for access to intensive
employment assistance - those who are assessed as more likely to
find employment without IEA; those who have already received
substantial case management assistance; and those who are unlikely
to get a job even with IEA.
Intensive employment assistance modelled on a case managed
approach involving individual 'activity agreements', which can
include training, job search assistance, wage subsidies and other
forms of assistance will be the responsibility of the EPEs.In a
move away from the existing broadly targeted training programmes
towards a delivery mechanism which is intended to result in
customised services, most existing labour market programmes will be
abolished.It will be the role of the EPEs to identify and provide
access to appropriate training programmes.
Public funding of the employment placement market will be
achieved through the 'cashing-out' of most current labour market
programmes and case management contracts.The fees and incentives
for the delivery of services will focus on employment outcomes
rather than on the employment assistance leading to these
outcomes.
What are the issues?
A number of issues have been raised during the course of the
public consultation process and the political debate which has
ensued.Though much of this focuses on the details of the proposed
arrangements and their implications, at the core of the debate is
the value placed on active labour market policies relative to other
employment policies, public versus private provision, and the
impact of competition and the market mechanism on the quality of
services.Against the background of this debate there are a number
of key issues.These are the reduction in the overall level of
assistance and the effects of targeting on special groups in
particular disadvantaged jobseekers; the maintenance of market
neutrality in meeting community service obligations in remote and
regional areas; and the nature and quality of services.
Targeting - Impact on Special Groups
The Government's discussion paper acknowledges the role of
active labour market assistance in providing the most disadvantaged
with the skills to make them more competitive in the labour
force.The reduction in the Government's financial commitment to
active labour market policies facilitated by more specific
targeting, reflects a change in the balance of priorities for
dealing with unemployment, in favour of economic stimulus through
deficit reduction.Concerns that reductions in funding would result
in 'not enough clients gaining access to intensive employment
assistance' were raised during the public consultations including
by some who were generally supportive of the changesiii.
Greater targeting is being achieved by limiting access to
publicly funded services to income support recipients and some
categories of jobseekers considered at risk.This has led to
concerns that the unemployed who have a partner in full-time
employment could be disadvantaged.Women were identified as the
group most likely to be affected by this.
One of the areas of greatest concern arises from the targeting
of IEA by application of the 'capacity to benefit' eligibility
criteria.While some commentators have accepted the need for a
screening mechanism, the principle considered to be based on
'exclusion' rather than 'inclusion' and the corresponding labelling
of clients which is suggestive of failure, is generally considered
to be unhelpful to those highly disadvantaged jobseekersiv.More
substantially however, there is concern that this may result in the
most disadvantaged and in need missing out on labour market
assistance altogether.It is argued that labour market programmes
have facilitated the 're-engagement' and integration of the highly
disadvantaged into the labour market and into society and that the
failure to involve them in associated activities in the future
could potentially leading to 'increased poverty, crime, health
problems and disengagement from mainstream society'v.
In response to these concerns, the Minister has announced the
provision of a special needs assessment to determine the
suitability of available employment assistance, and thereferral
from the Agency to a new Community Support Programme which will
provide services to address disadvantages that are acting as a
barrier to employmentvi.
Further targeting of services has also reinforced existing
concerns about early intervention for the short-term unemployed,
and has added concerns about the impact on those long-term
unemployed who are placed on waiting lists for IEA.
Community Service Obligations, Efficiency and Competitive
Neutrality
The debate over the public or private provision of services is
often couched in terms ofconcepts of efficiency, community service
obligations and safeguards to ensure client rights to services and
to privacy.
Scope for greater administrative efficiencies and an improvement
in outcomes under existing labour market programmes was identified
by the 1995 review of labour market programmes conducted by the CES
Advisory Committee.The administrative complexities associated with
the multiplicity of labour market programmes which had developed
during the last decade were assessed as an impediment to maximising
outcomes.Recommendations were made to streamline and improve the
flexibility and client focus of labour market programmes.Some of
these recommendations are being implemented in the transitionary
stage.
However, the Government having concluded that only a limited
number of employment services will continue to be provided by the
public sector, has made future efficiencies in the administration
of training programmes, wage subsidies and other assistance
measures the responsibility of the EPEs subject to the competitive
pressures of the market.It is expected that EPEs which could
include business and industry associations, private employment
agencies, community and voluntary organisations, education and
training institutions will compete on an equal basis with the
corporatised public EPE within the employment placement market.
Identifiable market weaknesses in remote and regional
communities resulting from poor employment opportunities which
could limit the scope for employment outcomes, raise the question
of how best to meet the Government's community service
obligations.Contingencies to deal with the potential failure or
withdrawal of service providers in these areas may need to be
considered.In order to address these problems the Minister for
Employment, Education, Training and Youth Affairs will have the
power to direct the public EPE to provide additional services in
such communities.In such cases fixed fees are being considered.This
issue of 'fixed-fee' provision of 'community service obligations'
has fuelled doubts about the viability of the 'competitive
neutrality' principle with concerns expressed that either the
public provider will receive a competive advantage or be
disadvantaged by this provisionvii.
Quality of service
With the introduction of private provision and market driven
incentives, concerns have arisen about potential for the 'creaming'
of clients.This issue which has been raised in the past in relation
to contracted case management, was raised in the public
consultations in relation to IEA.There is concern that EPEs may
concentrate assistance on clients for whom it is easier to achieve
outcomes, at the expense of clients in greater need.Clear and well
publicised standards of service are being promoted as a means of
addressing these concerns.
Further concerns arise about the nature of the assistance that
will be provided and the ability of the market to deliver
worthwhile training programmes.Unlike the Working Nation
strategies of the former Government and the existing delivery
mechanism where the public sector contracts the training providers
and training outcomes are rewarded, the new arrangements for
contracting services and providing incentives, focus the public
purchaser less on the nature and the quality of assistance and
training measures which contribute to employment outcomes.The
previous focus on training is based on the theory that active
labour market intervention is required to raise the efficiency of
the labour market by ensuring that the long-term unemployed are
trained and ready to take up employmentviii.In the new framework it
is expected that the market will provide the discipline to deliver
the most appropriate form of assistance.
While in the first instance there will be a fixed fee regime
until the market becomes established the proposed transition from
fixed fees to price competition has led to the expression of
concern that 'competition on the basis of price will not guarantee
quality of outcomes and will limit the ability of community
providers to partake in the broader activities which are beneficial
to the community and to jobseekers'ix. Critics of the market
approach suggest that EPEs in search of profits will be interested
in quick results and will therefore be reluctant to invest in
training programmesx.They suggest that public funds will contribute
to private profits rather than to improving the skills base of the
labour forcexi.The concerns of clients from non-English speaking
backgrounds is a good example of this.There is doubt that the
substantial investment in language training which is required to
reduce language barriers to employment will be delivered within the
proposed incentive structure of the new market.
Other Issues
Corporatisation of the public provider has led to staff concerns
about conditions of service, and transitionary arrangements.
There still remain a number of questions about the operational
details of the new system.The accessibility and integrity of the
national vacancy database, linkages with the Contracted Entry Level
Training Agencies which are part of the Modern Australian
Apprenticeship and Traineeship System, the effectiveness of the
screening instrument and competitive price tendering are just a
few.
Employment Assistance Agreements
Division 2 of Part 1 the Bill (clauses 9 to 14)
deals with employment services agreements. Clause
9 allows the Employment Secretary (the Secretary) to
engage an entity to provide employment services (ie unemployment
benefits) on the terms and conditions agreed between the parties.
The Secretary may also engage an entity to provide employment
assistance (ie. a service based on an assessment of the person's
circumstances and aimed at enabling the person to gain employment
or improving the person's prospects of gaining employment). The
Minister will have power to specify that certain services are or
are not employment assistance, and such a determination will be
disallowable by either House of Parliament (clause
10). The Minister may also determine the matters to be
taken into account in deciding if an entity is to be engaged as an
employment placement enterprise and the procedure to be used when
engaging such bodies. Such determinations will be disallowable by
either House of Parliament (clause 11).
Employment assistance agreements will be subject to the
conditions that the provider not demand or receive any
consideration from the participant and that the entity engaged
agrees to provide required information (clause
12). If a State or Territory law is prescribed for the
purposes of the Bill, it will not have any effect on the operation
of the Bill (clause 14).
Employment Assistance
Part 3 of the Bill deals with the provision of
employment assistance. The Minister may determine that members of a
class or classes of people will be an eligible person if they are
either registered with the Secretary or are in receipt of
employment services. Such a determination will be disallowable by
either House of Parliament. The Minister may also make a
determination that certain events will result in the person ceasing
to be an eligible person. The Secretary may determine that a
specified individual is an eligible person ifthat person is either
registered with the Secretary or in receipt of employment services
(clause 17). The Secretary may require an eligible
person, or a person that is, in the Secretary's opinion, reasonably
likely to become an eligible person, to attend an interview. If the
person is an eligible person and fails to attend the interview,
they will be taken to have breached the requirement in the
Social Security Act 1991 requiring attendance at a CES
office or the Department. This will result in the termination or
suspension of the person's benefits (clauses 20 to
22). If a person who is likely to become an eligible
person attends an interview, the Secretary may determine that they
do not become an eligible person, and so not liable to have their
benefits suspended, even though the person would otherwise be an
eligible person (clause 23).
Who may become participants in an employment assistance scheme
is dealt with in clause 27. If a person has taken
part in an interview; is an eligible person; and the Secretary
determines that the person could be referred to an employment
placement enterprise, the Secretary may determine that the person
is a participant. A person will cease to be a participant if the
Secretary so determines or if a condition determined by the
Minister occurs. The Minister is to make a determination listing
the conditions, and such a determination will be disallowable by
either House of Parliament (clauses 28 and 29). If
a person becomes a participant, they are to be given notice to this
effect and the notice is to provide a list of suitable employment
assistance enterprises. If the participant notifies the Secretary,
within 5 business days of the notice being given, of the enterprise
to which they desire to be referred, they are to be referred to
that enterprise. If the person fails to so notify the Secretary, or
notifies the Secretary that they do not intend to make such a
choice, the Secretary is to determine the enterprise to which the
person is to be referred. If there is only one suitable enterprise,
the person is to be referred to that enterprise (clauses 31
and 32). The Secretary may terminate a person's place with
an enterprise and if this occurs the above selection procedure is
to apply again to select a new enterprise (clause
33).
Employment Assistance Activity Agreements (EAAA)
EAAAs are dealt with in Part 4 of the Bill. If
a person is referred to an enterprise under Part 3, they must enter
an EAAA with the enterprise to which they have been referred. The
power to require a person to enter into an EAAA may be delegated to
the relevant enterprise (clause 40). EAAAs are to
require the participant to undertake activities that, in the
opinion of the Secretary, will enable the person to gain employment
or improve their chances of gaining employment. In particular, an
EAAA may deal with the person undertaking job search; training;
paid work experience (this may be subject to some modification if
the so-called work for the dole program is implemented); voluntary
work; or any measures designed to reduce any employment
disadvantage relating to the person. EAAAs may also require the
participant to attend at, or contact, the enterprise and to provide
the enterprise with relevant information (clause
41). EAAAs are to be approved by the Secretary, having
regard to a number of matters, including the condition of the local
employment market, although this power may be delegated to the
enterprise, which will remove central supervision of such
agreements (clause 42).
The proposed EAAAs are substantially the same in their
requirements as the current agreements that must be entered into by
recipients of the Newstart allowance and for certain recipients of
the Youth Training allowance. As a result, if a person would be
required to enter into an activity agreement under the Social
Security Act 1991 but has become a participant in an
employment assistance program, the requirement to enter into a EAAA
will remove their obligation to enter into a social security
activity agreement to remain eligible for benefits
(Division 3 of Part 4).As with the social security
activity agreements, a breach of the agreement will generally
suspend or terminate the person's eligibility for benefits
(clause 51).
Personal Information
The introduction of private employment enterprises will
necessitate the entities collecting information of participants in
their programs, and such information, unlike that collected by
Commonwealth bodies, will not be protected by the current privacy
rules.As a result, Part 5 of the Bill contains
rules relating to the privacy of information collected by
employment placement enterprises. Division 1 of Part
5 will apply to employment services records, which are
records that relate to the provision of employment services and
contain personal information (ie. information that relates to a
person who is identified in the information or whose identity can
reasonably be ascertained from the information). The Secretary will
be given power to make rules relating to the creation, retention,
handling, amendment and destruction of personal information. As
well, the Secretary mayimpose maximum penalties of $500 for the
breach of such rules (clauses 52 and 53).
Different rules will apply to sensitive personal information,
which is defined by clause 5 to be information that relates to a
person's racial or ethnic origin; religious or philosophical
beliefs; trade union membership; sexual orientation; health; or
criminal record. Such information is not to be provided by the
Secretary to an employment service provider unless:
- the person to whom the record relates consents; or
- the person was made aware when the information was collected
that it could be provided to an employment service provider and the
person has been consulted, to the extent practicable, about the
provision of the information.
A employment service provider is not to disclose sensitive
personal information unless the person to whom the information
relates has consented or the Secretary is satisfied that the
disclosure is justified without the person's consent. The Secretary
is to develop guidelines to 'assist in identifying circumstances in
which the provision of a record is justified' and must consult with
the privacy Commissioner in developing the guidelines. The
guidelines will be disallowable by either House of Parliament
(clause 54). The rules are not to be inconsistent
with the Archives Act 1983 or the Privacy Act
1988 (clause 55).
Section 70 of the Crimes Act 1914makes it an offence,
with a maximum penalty of 2 years imprisonment, for a Commonwealth
officer to disclose information gained in their employment if they
are under a duty not to disclose the information. Clause
56 has the object of extending this offence to employment
service providers, their officers and staff. Subject to the
exemptions discussed below, such entities are not to disclose
information concerning a person gained in the performance of
functions under this Bill unless the disclosure is to the person to
whom the information relates. The exemptions are:
- where the disclosure is for performing a person's functions
under the Bill;
- where the person to whom the information relates has consented
to the disclosure;
- the person is aware, or is reasonably likely to be aware, that
information of that kind is usually disclosed;
- the employment service provider reasonably believes that
disclosure is necessary to prevent or lessen a serious and imminent
threat to the life or health of a person;
- disclosure is authorised under law; or
- disclosure is reasonably necessary for the enforcement of a
criminal law, a law that imposes a pecuniary penalty or to protect
revenue.
Investigations
The Secretary will be given power to investigate the actions of
employment service providers where there has a complaint about a
matter or the Secretary considers it desirable to investigate a
matter (matter is defined in clause 58 to be the performance of
functions delegated by the Secretary, the provision of employment
services, a breach of an employment service agreement, a
contravention relating to records or a failure to comply with the
secrecy rules) (clause 60).
The Secretary will be able to refer complaints and
investigations to other bodies where the Secretary is satisfied
that it could be more conveniently dealt with by that body. The
bodies to whichmatters may be referred to are:
- the Commonwealth Services Delivery Agency;
- the Department of Social Security;
- the Commonwealth Ombudsman;
- the Australian Competition and Consumer Commission;
- the Privacy Commissioner; or
- the Auditor-General.
Review
The review of decisions relating to who is a participant in an
employment assistance scheme and when a person ceases to be a
participant will be subject to review. As with the current social
security review system, there will be various layers of review:
internal review, review by the Social Security Appeals Tribunal
(SSAT) and the Administrative Appeals Tribunal (AAT) (Part
10 of the Bill). The review procedure reflects current
practice.
Miscellaneous
Part 7 of the Bill provides that the Secretary
may appoint officers to monitor compliance with the Bill,
regulations and agreements. Officers will have normal, for
expenditure programs,powers to search premises and retain
documents.
In addition, Part 8 of the Bill will give the
Secretary power to gather certain information. The powers will
relate to information regarding people involved in 'designated
matters', which is defined to include breaches of agreements and
the monitoring of compliance with the provisions of the Bill.Of
most interest is the power to gather information relating to:
monitoring the characterises and attributes of persons
to whom employment services are provided (paragraph
77(4)(f).
However, the information gathering power will be restricted by
clause 78 which requires that personal information
(as defined, see above) must not be required to be produced if
there is a reasonably practicable alternative. If there is no such
alternative, the personal information may be required to be
produced if the person to whom the information relates has given
their consent or, before the information was required, the person
to whom the information relates was made aware that the information
would reasonably be likely to be required. In relation to the
information that may be requested under paragraph 77(4)(f), the
information must not be requested unless the person concerned has
been informed of the purposes for which the information is
required, has consented to the information being used for that
purpose, and it is reasonable to assume that the person has
understood the implications of giving or withholding consent. If a
person is given notice to supply the information required by clause
77 and fails to comply, other than on the grounds that the
information may incriminate them, they will be guilty of an offence
with a maximum penalty of 6 months imprisonment (clause
80).
Part 9 of the Bill provides for the
establishment of advisory committees, which are to advise the
Secretary on the provision of employment services under the Bill.
The Part provides for the creation of:
- a national committee whose members are to be appointed by the
Minister; and
- area committees whose members are to appointed under guidelines
established by the Secretary. Areas committees are to advise on
local employment and training opportunities, the responsiveness of
the Department to regional labour markets and the linking of
Departmental programs in the region.
- Department of Employment, Education, Training and Youth Affairs
Budget Initiatives: Budget 1996: 9
- Senator the Honourable Amanda Vanstone, Minister for
Employment, Education, Training and Youth Affairs Reforming
Employment Assistance: Helping Australians into real jobs, August
1996
- Department of Employment, Education, Training and Youth Affairs
(DEETYA) Reforming Employment Assistance: Helping Australians into
real jobs:Rreport on public consultations, 1996: 6
- Ibid: 60
- Ibid: 8
- Reform of Employment Services Bill 1996, Second Reading Speech:
8
- Op. Cit. DEETYA Report on public consultations, 1996: 37
- Gittins, Ross 'How the labour market works in the real world',
Sydney Morning Herald, 4 September 1996: 80
- Op Cit. ACTU in DEETYA Report on public consultations, 1996:
11
- Union warns of CES concerns, West Australian, 13 November 1996:
36
- Gittins, Ross 'Hard labour for our jobless', Sydney Morning
Herald, 28 August 1996: 13
Carol Kempner & Chris Field
27 February 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9031
Commonwealth of Australia 1996
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by Members
of the Australian Parliament in the course of their official
duties.
Published by the Department of the Parliamentary Library,
1997.
This page was prepared by the Parliamentary Library,
Commonwealth of Australia
Last updated: 8 April 1997
Back to top