Budget Review 2021–22 Index
The main employment services-related budget measure is the
introduction of the New
Employment Services Model (NESM) (Budget
Measures: Budget Paper No. 2: 2021–22, pp. 92–93), with several other budget
measures in line with, and providing support for, the new model. Details on the
NESM are drawn from fact
sheets on the Department of Education, Skills and Employment website.
In 2019 the Government began trialling the model in two
regions, with the findings of the trial yet to be released. Under this budget
measure the Government will begin rolling the NESM out nationally from 1 July 2022.
The New Employment Services Model
Digital Services and Enhanced
The new model provides two types of service:
Digital Services—job seekers receiving Digital Services will
self-service online. The most job-ready and digitally literate job seekers will
receive this service.
Enhanced Services—more disadvantaged job seekers will receive
Enhanced Services delivered by employment services providers.
Under the NESM, job-ready job seekers will self-service
online through Digital Services for 12 months, after which they will be
transitioned into Enhanced Services. If job seekers have neither gained
employment nor been sufficiently active in building their employment capacity
while using digital employment services, they may be transferred to an Enhanced
Services employment services provider. Job seekers will be reviewed
periodically while using Digital Services, have access to support from a
Digital Services Contact Centre, and be able to transfer to an employment
services provider at any time.
As its name implies, Enhanced Services is a more intensive form
of support provided to job seekers who are disadvantaged and face barriers to
gaining employment. It will focus on early intervention and individual case
management, with job seekers able to participate in a wider range of activities
than is currently the case, including approved non-vocational activities and
Mutual obligation and compliance
The NESM will employ a points-based approach to job seeker
compliance, with job seekers required to complete activities during each
reporting period to accumulate the requisite number of points. Job seekers will
have some flexibility in the activities they are able to undertake, with a
higher number of points being allocated for intensive activities. There is to
be a reduced emphasis on the number of jobs applied for, and greater focus on
the quality of job applications. This is intended to create a lower volume of
unsuitable job applications and reduce costs and red-tape for business.
While job seekers are to be granted more flexibility in
meeting their mutual obligations requirements, they will be required to
undertake more intensive activities, and to do so earlier. Job seekers in
Digital Services who are not working or studying after four months will be
required to complete Employability Skills Training. If they are in work or
study after four months, self-servicing job seekers will be required to participate
in online learning modules, intended to help them increase their likelihood of
gaining employment or working more hours.
Job seekers in Enhanced Services will be required to
participate in an intensive activity for two months following six months unemployment
(rather than 12 months as is currently the case), with Work for the Dole being
the default activity. Job seekers who transfer to Enhanced Services after 12
months in Digital Services will be required to participate in an intensive
activity within three months.
The payment structure for employment services providers has
been restructured under the NESM to account for the fact that providers will
have smaller caseloads and be delivering personalised and intensive services to
disadvantaged job seekers.
A new funding model for providers
Under jobactive, providers are paid six-monthly
administration fees for each job seeker, and outcome payments where job seekers
move off income support for 4, 12 and 26 weeks. Partial outcome payments are
also paid where a job seeker gains employment that reduces their income support
payment on average by 60%. The payments are higher for job seekers who are
assessed as having a greater level of disadvantage and who have been unemployed
for longer periods.
These payments are to be replaced by a one-off, up-front
engagement payment intended to support early intervention; in-service progress
payments for demonstrable improvements in job seeker employability; and outcome
payments that are significantly weighted towards rewarding employment outcomes
for especially disadvantaged job seekers. The payment structure also includes a
bonus for employment outcomes for very long-term unemployed job seekers
(unemployed for two years or more).
The main objective of the payment structure is to tackle the
‘creaming and parking’ problem. This is where providers prioritise the most
job-ready job seekers in order to maximise their outcome payments while
claiming administrative fees for disadvantaged job seekers, but putting
insufficient effort into securing employment outcomes for them. The creaming
and parking problem should be reduced under the NESM, given that the most
job-ready job seekers will be self-servicing and no longer able to be
‘creamed’. However, it is not clear that the problem will be, or can be, dealt
with entirely under a system that is built on rewards for outcomes.
In early 2018, in the lead-up to the expiry of the jobactive
deed in 2020 and in response to ongoing
and extensive criticism of the jobactive system, the Government
appointed an independent Expert Advisory Panel to help shape the future design
of employment services in Australia. The
Panel’s report was provided to the Government on 15 October 2018.
The report found that Australia’s employment system was not
meeting the needs of many job seekers and employers.
It determined that a substantial number of job seekers are
able to find work themselves, with limited or no employment service provider
assistance. Further, it was found that these job seekers are subject to
compliance requirements that in many cases do not help and may actively hinder
them in gaining employment. Other more disadvantaged job seekers were found to
be not receiving the intensive individualised support they need from providers
who have high caseloads (they are being ‘parked’ by providers).
At the same time, the report found that very few employers
are using the jobactive system, and many of those who do use the system
reported being inundated with inappropriate job applications as a result of the
job search requirements placed on job seekers.
The report recommended that the employment services system
be re-structured to focus on helping those job seekers who most need
To this end, it proposed that job seekers who are job-ready
and digitally literate should no longer use the employment services provider
network. Instead, these job seekers would self-service, using online employment
services. The resources saved and employment service providers freed up through
many job seekers self-servicing would then be dedicated to providing intensive,
face-to-face services and support to disadvantaged job seekers.
Before the 45th Parliament was prorogued, the Government
made a commitment to implement many of the Expert Advisory Panel’s
A trial of the NESM is being conducted in Adelaide’s
southern suburbs and on the New South Wales Mid-North Coast from 1 July 2019 to
30 June 2022, before the model is rolled out nationally from 1 July 2022. A
report of the evaluation of the trial has yet to be publicly released. As a
result, it is not clear how successful or otherwise the NESM is likely to prove
in terms of outcomes for job seekers and employers.
That said, the findings
of a trial of the online delivery of employment services that operated
between 1 July 2018 and 15 April 2020 suggest that job-ready job
seekers are unlikely to be disadvantaged under the NESM. Job seekers who used
online self-servicing arrangements were found to be as likely to exit income
support and employment services within six months of commencement (with exits
used as a proxy for employment) as a matched group of job seekers receiving
employment services provider-based services. These job seekers were also as
likely as job seekers in the comparison group to not return to income support
within six months following their exit date. The compliance of trial
participants was found to be broadly similar to that of job seekers receiving
support from employment service providers.
The possible implications of the NESM for disadvantaged job
seekers are less obvious. While employment service providers’ caseloads will be
reduced, much will depend on their ability to provide the quality intensive
assistance required by long-term unemployed job seekers or job seekers with
complex needs. The performance of providers will be regularly evaluated, with
poor performers not having their licences renewed.
Despite the Budget’s significant focus on skills training
(see the article in this Budget Review on skills training), the
financial incentives for providers to refer job seekers to training are
limited, with the focus of the NESM—like that of jobactive—being
Other employment measures
As a part of the Budget, the Government has provided additional
funding for programs that are directed at disadvantaged job seekers—most
notably the Transition to Work program ($481.2 million over four years from 2021–22,
No. 2, p. 92) and the Local Jobs Program ($213.5 million over four
years from 2021–22, Budget Paper
No. 2, p. 89).
Under the Transition
to Work program a network of community-based organisations is contracted to
provide intensive, pre-employment support to early school leavers aged 15 to 21
years to improve their work readiness and help them into work or education. The
program is intended to assist young people who are at high risk of long-term
unemployment and welfare dependency. An interim
evaluation of the program suggests that it has resulted in positive
employment and education outcomes.
Under the Local Jobs Program, Employment
Facilitators work with employers and other key local stakeholders (such as
employment services providers, higher education and training organisations) to
work collaboratively on developing employment and training opportunities. The
Budget measure expands the program from 25 regions particularly affected by the
COVID-19 pandemic or most experiencing ongoing disadvantage, to all 51
employment regions. The Local Jobs Program bears some resemblance to the Priority
Employment Initiative that was introduced in response to the global financial
crisis. This initiative drew on Local Employment Coordinators (whose role was
similar to that of Employment Facilitators) and involved Skills Expos. These
expos were the equivalent of the Jobs Fairs, for which $6.2 million has been
allocated over two years from 2020–21 as a part of the Budget (Budget Paper
No. 2, p. 90).
Funding of $15.6 million has also been provided in 2021–22 to
increase all wage subsidies
to $10,000 (some are currently up to $6,500) to align with the subsidies to be
introduced under the NESM (Budget Paper
No. 2, p. 89). In light of the substantially lower than anticipated
take-up of the JobMaker
Hiring Credit that was introduced as a part of last year’s Budget (as at 22
employees were being funded under the scheme), the Government indicated
in March that the design of the scheme would be looked at and tweaked in the
context of the Budget. No changes to the scheme were announced in the Budget.
Significant savings are being realised by the Government in
the employment services area, not only as a result of the low take-up of the
JobMaker Hiring Credit, but also due to efficiencies associated with the NESM.
The latter savings of $1.1 billion over the forward estimates are to be
redirected ‘to fund policy priorities’ (Budget Paper
No. 2, p. 93).