Bills Digest 111 1996-97 Reform of Employment Services Bill 1996

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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.


Passage History

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.

Main Provisions

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.


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.


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.


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.


  1. Department of Employment, Education, Training and Youth Affairs Budget Initiatives: Budget 1996: 9
  2. Senator the Honourable Amanda Vanstone, Minister for Employment, Education, Training and Youth Affairs Reforming Employment Assistance: Helping Australians into real jobs, August 1996
  3. Department of Employment, Education, Training and Youth Affairs (DEETYA) Reforming Employment Assistance: Helping Australians into real jobs:Rreport on public consultations, 1996: 6
  4. Ibid: 60
  5. Ibid: 8
  6. Reform of Employment Services Bill 1996, Second Reading Speech: 8
  7. Op. Cit. DEETYA Report on public consultations, 1996: 37
  8. Gittins, Ross 'How the labour market works in the real world', Sydney Morning Herald, 4 September 1996: 80
  9. Op Cit. ACTU in DEETYA Report on public consultations, 1996: 11
  10. Union warns of CES concerns, West Australian, 13 November 1996: 36
  11. Gittins, Ross 'Hard labour for our jobless', Sydney Morning Herald, 28 August 1996: 13

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27 February 1997
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ISSN 1323-9031
Commonwealth of Australia 1996

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