Chapter 2 - Critique and analysis of the current Australian system

  1. Critique and analysis of the current Australian system

This chapter puts forward the broad analysis and critique of the employment services system, detailing key issues, capturing the views of policy experts and people with lived experience which underpin the case for reform. This foreshadows the ambitious blueprint for a rebuilt Commonwealth Employment Services System set out in Chapters4 to 15.

This is the only ‘first principles’ review of the employment services system conducted in several decades. The Committee has questioned all aspects of the system, including those which have not been examined in previous evaluations and reviews undertaken since marketisation. This has been supported by extensive domestic and international engagement and research. The Committee approached its task in an open minded and non-partisan manner led by the evidence, not ideology or outside interests or direction.

Australia’s employment services system has long been designed in a deficit paradigm, underpinned by two flawed theories. The first is that unemployment is an individual failing rather than a systemic concern, and that clients will make efforts to secure employment if only they are beaten hard enough. The second is that choice and competition in human services will inevitably result in better services and improved employment outcomes, especially for vulnerable and long-term unemployed (LTU) people.

Many staff are compassionate, caring people who deliver great outcomes in difficult circumstances, despite the numerous barriers. Yet overall, the employment services system is not delivering adequate or optimal outcomes for clients and appears to now largely neglect employers. There is little service tailoring, and many frontline staff do not possess the skills or qualifications to support an increasingly vulnerable and heterogenous client caseload. Moreover, the system is so choked with red tape that staff have little time to focus on supporting people.

The system is also driven by the pernicious myth of the ‘dole bludger’, reflected in a patently ridiculous level of compliance and reporting activities. Employers have made it clear that the system adds little value to their business, and that it repeatedly tries to force unsuitable jobseekers into vacancies without providing adequate incentives or support.

These issues are compounded by a highly fragmented employment and human services systems across the Commonwealth and between the Commonwealth and other jurisdictions. Excessive competition, fragmentation and duplication has led to unnecessary complexity for users of the system, who are often in situations of extreme vulnerability, and to duplication of effort by providers and multiple levels of government.

It should not be controversial to conclude that full marketisation has failed. Indeed, the failures of the current quasi-market system have been identified in earlier reviews and the previous Government brought a large share of the caseload back to the public sector in setting up Workforce Australia. Successive Governments have stood by while service quality, staff qualifications and working conditions, and client outcomes have declined, while seeking to avoid responsibility for service failures and harvesting increased fiscal savings while long-term unemployment stagnates or increases.

Despite assertions to the contrary, funding and performance management arrangements continue to drive a heavy ‘work first’ approach. This has led to clients being repeatedly placed into inappropriate short-term ‘survival’ jobs and churning repeatedly through the system rather than finding long-term, sustainable work. The system also fails to recognise that many people will have different pathways to employment, and that for some people employment is simply not a realistic short-term outcome and that other participation goals are required.

Effective, targeted support for jobseekers and employers is also limited by complex and costly procurement and accreditation processes that are barriers to entry for smaller and community-based organisations and the specialised organisations who may be best-placed to support clients with particular characteristics or barriers to participation. The Department of Employment and Workplace Relations (DEWR) also appears to have little trust in its own accreditation processes and requires providers to submit to significant additional assurance processes. This is not only administratively burdensome but damaging to relationships of trust between providers and government.

A hunger games style contracting model and regulatory culture drives very high turnover in providers during contract and licensing rounds—bafflingly 22 per cent of regions saw all providers removed in the last round—leading to service disruption and devastating impacts on relationships of trust which have been built up between jobseekers and providers, and with employers. There is no other human services system where this level of provider turnover would be considered desirable or acceptable and this informs the case for a more relational contracting model.

Participation requirements will continue to be part of any system however the nature and extent of the current mutual obligations settings are counterproductive. Policy settings and system design should leverage not diminish people’s intrinsic motivations to find work and increase their levels of social and economic participation. Mutual obligations are also ‘mutual’ in name only. Jobseekers are forced to complete a range of activities—often with little or no relevance to their needs or aspirations—with no reciprocal requirements on service providers. Consequences for non-compliance with mutual obligations are harsh, punitive, often disproportionate and simply ineffective at supporting people into work. Of significant concern is that providers hold the dual role of supporting clients and enforcing compliance. This is incompatible with the relationships of trust which are key to effective support.

The Australian Public Service (APS) is detached from the realities of service delivery with no view any more of what a quality service is or how much it costs. This is not the fault of individual officers, who are typically intelligent people with good values who want to make a difference and are doing the job they have been asked to do. However, two decades of largely outsourced service delivery has turned the APS into contract managers with little involvement in stewarding the system at a local and regional level or fostering learning and quality. The main arm of the APS which does engage in some form of service delivery—the Digital Services Contact Centre—does not think of itself as a provider and is not adequately resourced to perform this role.

The Committee is firmly of the view that the significant and numerous issues identified through its inquiry simply cannot be addressed through mere tweaks to policies and programs. They demand wholesale and large-scale reform in the coming months and years to change the culture and fundamentally rebuild Australia’s employment services system.

A fragmented service ecosystem

2.1A common theme in evidence was that human services—including the employment services system—are fragmented, disconnected, and hard to navigate.[1] Moreover, service delivery at the Commonwealth, state and territory, and local government levels is characterised by policy silos which limit coordination and collaboration.[2]

2.2The Committee’s attempts to map the employment services system at the national, state, and local levels also identified poor demarcation between different programs and services, as well as areas of potential duplication and overlap.

Employment services across the Commonwealth, States and Territories

2.3The Commonwealth administers a range of different—often separate—employment programs across several departments, including the Department of Employment and Workplace Relations (DEWR), Department of Social Services (DSS), and National Indigenous Australians Agency (NIAA). These programs cover preemployment support; generalist case management; specialist services for disadvantaged cohorts; and online services for jobseekers who can self-manage.

2.4Stakeholders expressed concern that the sheer number of programs across the employment and social services ecosystem presents a confusing landscape for users. Moreover, DEWR confirmed that connections between programs are not selfevident.[3]

2.5Concerns were also raised in relation to the artificial distinctions between programs managed by the Commonwealth.[4] Workskil Australia (Workskil) observed that Disability Employment Services (DES) and Workforce Australia are essentially the same service delivered by two separate departments, and one national service would reduce red tape and cost. Workskil also stated that the contracts for DES and Workforce Australia are complex, and that strong government expertise is required to ensure the programs are delivered effectively and efficiently.[5]

2.6Similar issues were raised in discussions with providers during the Committee’s program of site visits. One provider observed that they use the same delivery service approach for DES and Workforce Australia, while another noted that their success as a DES provider was the reason that they decided to enter the Workforce Australia provider market. The Committee observed at multiple sites that both DES and Workforce Australia—while notionally separate services—are actually delivered at the same sites, just with separate doors to the same office.

2.7State and territory governments have implemented their own employment service programs in response to perceived gaps or failures in Commonwealth supports.[6] This was reflected in conversations with state and territory government departments. Moreover, and notwithstanding that many of these programs were implemented in response to gaps in the Commonwealth system, several jurisdictions expressed support for a truly national employment services system, with some state and territory governments also noting that their programs have been designed to complement Commonwealth services.

2.8Stakeholders asserted that in areas where there are both Commonwealth and other-government employment services, effective collaboration is lacking due to funding arrangements for the employment services system.[7]

2.9A related concern was that many areas are subject to market saturation: that is, the number of providers and programs in a region is substantially higher than required to support jobseekers and employers, leading to complexity, confusion, and greater administrative burden.[8] The Brotherhood of St Laurence (BSL) gave the following example for one Local Government Area (LGA):

The City of Hume … [which] has a population of around 247,000…

[T]here are at least 82 organisations within the Hume Jobs and Skills ecosystem delivering a total of 118 employment programs or services. Government-contracted employment service providers (federal and state) account for 69 [per cent] of the total.[9]

2.10Providers and jobseekers also raised concern as to the level of service saturation in evidence to the Committee.[10] VERTO—a service provider with sites in regional and metropolitan areas—stated that service saturation limits the depth of partnerships that can be created with employers and industry groups.[11]

2.11CoAct similarly observed that the ‘one brand, many providers’ model which has been adopted in the employment services system creates confusion for employers and can dilute the overall effectiveness of supports.[12]

2.12Coordination and integration of services under a national system is considered in more detail in Chapter 4.

Gateway to the human service ecosystem

2.13Stakeholders expressed strong concern that employment services are not functioning effectively as a gateway to the human services ecosystem or to education and training opportunities. The Committee heard that addressing these concerns will be critical to ensuring that the employment services system enables access to both vocational and non-vocational supports and delivers tailored services to jobseekers based on their individual pathways to social and economic participation.[13]

2.14A key barrier to the effectiveness of employment services as a gateway to the human services ecosystem is a lack of coherent service mapping and coordination between across governments and between stakeholders.[14] For example, Per Capita stated:

Though the employment services system should incorporate other employment and training initiatives, there is very little mapping of all the federal, state, and local programs that offer information and advice about skills, training, work experience, jobs, and careers, along with social supports for jobseekers. Failure to map and publicise these programs wastes public resources and denies individuals opportunities to pursue better life chances.[15]

2.15Social Ventures Australia (SVA) observed that the efficacy of place-based initiatives such as the Jobs and Skills Centres operating in Victoria and Western Australia is limited because each initiative is only one of a range of human services and training organisations operating in the local area. The organisations also operate within a broader service ecosystem that could be aptly described as ‘spaghetti and confetti’: simultaneously overly complex and capable of only superficial responses to labour market challenges.[16]

2.16This ‘spaghetti and confetti’ metaphor was also used in research conducted by TheAustralian Centre for Social Innovation in 2017 in relation to employment support in Southern Melbourne. The organisation described services in that region as complex, fragmented, and hard to navigate, and insufficiently resourced to deliver holistic interventions. A key issue identified in the research was that providers had limited knowledge about available services and how to access them.[17] One provider who contributed to the research stated:

…when you look at how messy it is, and on my list of providers - it’s nine pages long for this region, and that’s just in the employment, educational reengagement map. Theres something like 180 organisations in this region that are working with youth. How do you navigate that?[18]

2.17These challenges are compounded by the fact that many social services are state-funded and are subject to funding and capacity constraints. There are also limits on services and assistance available in certain geographic locations.[19]

2.18Another barrier to employment services acting as an effective gateway to other supports is the tendency of the government to remove service providers from regions at the end of contracts (if not before). This practice disrupts established relationships between employment service providers and other human services and limits effective referral pathways for jobseekers.[20] Jobs Australia summarised this concern as follows:

The loss of the deep connections with their local communities and the ability to bring together various organisations and employers to address the employment needs of a particular community, creates more disadvantage.[21]

2.19Stakeholders noted that in the transition between jobactive and Workforce Australia, there was:

  • at least substantial turnover of providers in 80per cent of employment regions;[22] and
  • total (100 per cent) turnover of providers in 22 per cent of employment regions.[23]
    1. APM Employment Services (APM) noted that all five providers in Geelong lost their contract in the transition from jobactive to Workforce Australia. This disrupted established relationships with local communities, employers, and other human services.[24] A similar situation occurred in Cairns, where contracts for all providers in the region were cancelled in the transition to Workforce Australia. While the providers were granted contracts in other regions, community connections and relationships with other human services were lost.
    2. This tendency to remove providers from the system—along with other concerns—also contributes to high staff turnover.[25] As discussed in Chapter 6, high staff turnover further limits the ability of the employment system to act as an effective gateway to other services as staff with established relationships with other human services and employers—or the skills to build those relationships—are lost from the system.[26]
    3. In their submission to the Productivity Commission’s 2017 inquiry into user choice and contestability in human services, the BSL emphasised the importance of the substantial social capacity invested in human relationships and networks between community-based providers, clients, and the local community. The BSL noted reform processes that disrupt these relationships risks the ‘store’ of social capital and comes with significant social and economic costs.[27] The Productivity Commission itself made similar findings in the context of government stewardship of human services, stating:

Overly ambitious reforms and rollout schedules lead to issues in implementation, particularly of large and complex reforms. Transitioning between providers can also be disruptive as users find new providers and build a relationship of trust with them. Information and clarity about changes in advance can help.[28]

Service delivery and outcomes for jobseekers

2.23Despite 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. This concern was not limited to employment services but extended to the broader service ecosystem. For example, the Business Council of Australia (BCA) stated:

Our employment and training system is not supporting large cohorts of people to participate in the labour market, nor is it providing the requisite skills and tooling for people and, importantly, also the reskilling that is now needed. For those who are marginalised and face complex barriers, it is entrenching disadvantage and locking them into long-term poverty.[29]

2.24The BCA also expressed concern that over half a million people have been in the system for over 12 months, with more than 50,000 in the system for over 10 years. Certain cohorts who have been unemployed for up to two years—including First Nations peoples, people from culturally and linguistically diverse (CALD) backgrounds, and young people—are also exiting the employment system altogether. The BCA stated that this further entrenches disadvantage and exclusion for these cohorts.[30]

2.25Evidence from current and former participants in employment services described a system which is not adapted to jobseekers’ needs, nor conducive to sustainable employment. Some stakeholders questioned whether the savings realised via the implementation of Workforce Australia Online had been reinvested in improving provider-led services, noting that providers often take a transactional, ‘tick box’ approach to service delivery which can be demotivating and psychologically harmful to participants.[31]

2.26Participants also indicated that their provider had engaged in antagonistic or bullying behaviour—including using financial penalties as threats and refusing to believe valid reasons for failing to engage with services.[32] For example, one participant stated:

On 14 February 2023, I received a phone call from the Employment Provider Area Manager, the call lasted for 13 minutes. I was verbally abused, called a liar, told I was cheating Centrelink, threatened to place a demerit point against me, threatened to have my Centrelink payments put on hold or cut. He was very aggressive.[33]

2.27Another key concern was the lack of flexible options for engagement with services.[34] Mx Eve Geyer recounted being forced to attend in-person appointments 30 minutes from their home every two weeks, despite working 28 hours per week and having no job search obligations. They asserted that at no point did the provider recommend moving to Workforce Australia Online or allow less frequent or remote appointments. They also observed that the provider stated on several occasions that a minimum number of in-person appointments was required under the contract with DEWR.[35]

2.28A lack of remote service delivery is a particular challenge for jobseekers in regional areas and thin markets. North Burnett Community Services (NBCS) observed that there are no providers in the North Burnett area, and jobseekers are often required to travel 100km to attend appointments and access services. NBCS stated that despite isolation and lack of transport, jobseekers are not provided with flexible options for engagement and providers are unresponsive when contacted.[36]

2.29A lack of privacy during appointments was also raised in evidence, with participants noting that they had to share personal information in open office settings.[37] For example, a participant noted that discussions between jobseeker and consultant could often be overheard discussing private medical issues, due to the office layout.[38]

2.30The Committee heard that providers fail to communicate appointments and, in some cases, fail to record jobseekers’ attendance. The impacts of these failures are felt acutely by jobseekers.[39] One participant—Melissa Fisher—stated:

I attended an appointment on a Friday [and] on the Saturday I got a text to say my payments had been cut. There was nothing I could do until the Monday and the anxiety of not being able to pay my rent sent me into a spiral…The job network had marked me down as missing the appointment I did in fact attend. It's a scary feeling that one…mistake can get your payments suspended.[40]

2.31Other concerns identified by individuals—which related to both Workforce Australia and to previous iterations of the employment services system—included:

  • high turnover of frontline staff, meaning that participants are obliged to continually tell their story to often unfamiliar caseworkers;[41]
  • limited assistance with activities to improve job prospects—such as developing résumés and cover letters—and a failure to identify and refer jobseekers to appropriate jobs;[42]
  • denial of access to assistance, including support from the Employment Fund (EF) and access to training;[43] and
  • significant and often disproportionate compliance action.[44]
    1. Some submitters contended that the quality and utility of services depends heavily on the individual provider.[45] This was reflected in testimony from participants with whom the Committee engaged during site visits. Several participants praised their current provider, noting that their caseworker had engaged them on a personal level, listened to their concerns, and enabled them to progress towards employment. Participants also indicated that their caseworker had made themselves available outside usual working hours. However, many participants also indicated that their former providers had not responded to their needs, had done little to prepare them for work, and in some cases were bullying or antagonistic.
    2. Providers told the Committee that they make all efforts to deliver a person-centred service, to build relationships with jobseekers, and to progress jobseekers towards employment—recognising that employment may not always be the most appropriate outcome for the jobseeker in the immediate future.[46] However, providers and other stakeholders also stated that many aspects of the system architecture—particularly funding and performance metrics—incentivise a transactional approach to service delivery focused on moving jobseekers into work as quickly as possible. This is not always in the best interests of the jobseeker.[47] For example, Dr Michael McGann stated:

[T]here are dynamics in the welfare-to-work market model itself that basically orientate providers towards an emphasis on job search support and perpetual job search motion, with some activities around job search training, CVs and so forth. That's not to say all providers want to do that approach; they're just responding to incentive structures in their environment around the risk that has been shifted onto them—the fact that they have to achieve outcomes in the immediate future or their contract is potentially not going to be renewed in the next period or they're going to be subject to business reallocation. So there are a whole series of mechanisms established in the design, in the technical instruments of the market model, that aggravate this emphasis on work first as the approach. It's an approach that doesn't work with the very long term unemployed.[48]

2.34During site visits, several providers told the Committee that they made all reasonable efforts to invest in building jobseekers’ capacity but were hamstrung by funding arrangements which forced them to move jobseekers into any job as quickly as possible to remain financially viable. These funding measures also limited the extent to which the providers could trial new and innovative approaches to service delivery.

2.35A new framework for delivering support to jobseekers is discussed in Chapter 5, with funding and performance metrics discussed in Chapter 15.

Service delivery and outcomes for employers

2.36Employer engagement with government-funded employment services has historically been low, and it remains low under Workforce Australia.

2.37Evaluations of jobactive identified that just four per cent of employers made use of employment services to meet their recruitment and staffing needs, due to perceptions that providers were unable to assist with recruitment or with workforce planning, to negative perceptions of participants, and to lack of awareness as to the services and supports available.[49] More recent employer surveys show that employers see Workforce Australia—and particularly service offerings for larger businesses—as difficult to use (for example to post vacancies and review candidates) and prefer to use commercial marketplaces to meet their recruitment needs.[50]

2.38Associate Professor Jo Ingold (Dr Ingold) and Mr Tony Carr highlighted a range of factors which impact employer engagement with the system, including:

  • too many programs offering niche ‘products’ that do not match business needs, have high transaction costs, and are difficult to access;
  • complexity and variation in programs rules and vacancy management processes;
  • lack of awareness of programs and providers;
  • multiple providers and programs competing in the same labour market;
  • limited provider caseloads;
  • program eligibility rules that constrain ability to meet employers’ needs; and
  • variance in skill levels in provider staff in engaging employers.[51]
    1. Other key factors identified by stakeholders included:
  • candidates put forward by the system lacking skills and work readiness;[52]
  • jobseeker applications made solely for the purpose of meeting mutual obligation requirements;[53]
  • a focus among providers on chasing employment outcomes, leading to a transactional approach to placing jobseekers in vacancies;[54] and
  • limitations on access to wage subsidies and other incentives.[55]
    1. Stakeholders indicated that the needs of employers are not seen as a priority of the employment services system. Per Capita observed that—relative to programs and activities designed to support or police jobseekers—little is invested in employer support.[56]
    2. While noting that there is an expectation that service providers will support employers with recruitment needs,[57] DEWR acknowledged that the system is largely focused on conditioning jobseekers for employment.[58] DEWR also acknowledged that:
  • early insights suggest that greater investment in online services is required to support connections between businesses and individuals;[59] and
  • additional research and evaluation work is required to understand the networked value of the employer-related activities in the employment services system, and how these contribute to employment and labour market outcomes.[60]
    1. During the Committee’s European delegation, several stakeholders emphasised that employment services systems must not neglect the needs of employers. For example, in Denmark the Committee heard that measures focused on activating jobseekers will inevitability reach a point of diminishing returns. Demand-side measures focused on providing recruitment and HR support and matching jobseekers to vacancies are also required within an effective employment services system.
    2. Support for employers is considered further in Chapters 4, 5 and 12.

System design

A competitive, market-based delivery model

2.44In the 1996–97 Budget, the Australian Government announced major changes to arrangements for active labour market assistance in Australia, including establishing the Job Network as the Commonwealth’s headline employment service program—replacing the Commonwealth Employment Service. In establishing the Job Network, the Australian Government adopted what was then considered by the Organisation for Economic Co-operation and Development (OECD) to be one of the most radical experiments in employment services: the creation of an integrated quasi-market for employment services linking the purchaser (government) with a network of for-profit and not-for-profit agencies operating in (then) thousands of sites across Australia.[61]

2.45The Job Network saw a significant increase in contracting out of employment services, leading to full outsourcing under the third Job Network contract.[62] However, the move to the partial contracting out of services commenced under Working Nation in 1994, with around half of jobseekers assisted through case management services helped by contracted organisations and the other half by the public sector provider—Employment Assistance Australia.[63]

2.46The decision to adopt a quasi-market model involving competition between contracted providers was premised on a belief that this model would address the structural weaknesses of government service provision, and in doing so improve the quality of services, enable better targeting of assistance, drive innovation, and give jobseekers more choice in the services they receive.[64] The decision was informed by changes in public management thinking—New Public Management—which assumed that public services had failed to innovate due to the absence of market forces. Reforms informed by New Public Management sought to correct this by importing private sector practices and the introduction of quasi-markets.[65]

2.47Findings of recent research by the OECD are broadly consistent with some of the assumptions which underpinned the adoption of the quasi market-model, with the research indicating that this model can—if implemented effectively—enable greater flexibility; increase the cost-effectiveness of service delivery; support greater service specialisation; and greater choice for jobseekers. However, the adoption of quasi-market models can also create significant risks that must be carefully managed. These include increased transaction costs associated with the administration and regulation of the market and sector participants, and the potential for the market to become dominated by larger multi-national entities.[66]

2.48Further, the OECD noted Randomised Control Trials (RCTs) conducted in several European countries found that contracting out employment services was unlikely to have reduced the cost of employment service provision (based on RCTs conducted in Denmark, France, Germany and Sweden), and that while contracted service provision may lead to slightly faster job placements, the jobs were less likely to be sustained and were often lower paid (based on RCTs conducted in Switzerland).[67]

2.49These challenges identified by the OECD are consistent with a growing body of evidence about the limitations of New Public Management and of quasi-market models. The findings of the Institute for Public Policy Research are summarised in Table 2.1 below, while other research highlighted the following issues:

  • The theory assumes that staff and users of public services require extrinsic motivations, such as rewards and punishments, to drive behaviour. However, there is growing understanding that unlocking intrinsic motivations such as the desire for autonomy and interpersonal relationships is more effective in driving behavioural change.[68]
  • Governments expect providers to collaborate at the local level to address complex social issues experienced by disadvantaged cohorts. This is often stymied by a siloed approach to procurement and the use of rigid KPIs.[69]
  • Commissioning models in quasi-market systems often adopt outcome-based funding models under which the provision of support is financed by borrowing based on market expectations of future returns. A consequence of this is that government expenditure on employment services is redirected by market actors to service debts and pay dividends to shareholders rather than invested in clients.[70]

Table 2.1Summary of evidence on New Public Management levers





Can drive improvement in the measured metrics but often at the expense of wider outcomes. Can lead to gaming. When combined with top-down control can demotivate staff. Not conducive to complex problems which need local knowledge and flexibility

Focussing resource and attention on specific measurables drives improvement on those measures, but at the expense of wider system performance.

Choice and competition

Limited evidence of improvement of outcomes (access, quality) but evidence of increased inequality as a result of choice, due to worse outcomes for those from lower socioeconomic backgrounds. Outsourcing can reduce costs but sometimes at the expense of quality. Evidence that ability of the state to write complete contracts and actively commission is a key determinant of success.

Limited-service user take up of choice and unwillingness of the state to allow providers to fail means incentives created by choice are weak. Providers compete by reducing their costs but cut quality enhancing inputs (e.g., staff).


Some evidence that it can drive providers from poor to good - but limited evidence it can drive excellence. When combined with top-down control can demotivate staff or drive perverse incentives

Can help identify service failures and target accountability and support on these providers. But often reinforces top-down control and disempowers providers and staff

Source: Institute for Public Policy Research (2023), The smarter state: Between the ‘magic money tree’ and the ‘reform fairy’, p. 15.

2.50These and other issues were similarly identified in academic and policy research relating to the quasi-market model adopted in the Job Network, and to the continued use of this model under subsequent iterations of employment services.

2.51One key issue was that the Job Network was a monopsony, with a single purchaser (the government) and a range of contracted providers. This arrangement constrained genuine competition in the delivery of services as market share was determined by a central agency on the basis of service ‘quality’. Providers were typically only assessed as delivering a high-quality service if they had previously engaged with the system and with the clients it served. Over time, this resulted in a substantial reduction of providers within the system and limits on new entrants. One case manager cited in the research stated:

The essential problem is that the Job Network is NOT A NETWORK, but rather a large number of separate organisations who regard one another as competitors, and therefore, have no incentive to work as a network. The end result of this is not that competition encourages good performance, but rather, encourages cynical shortcuts of the System which does nothing to encourage the maintenance of a strong NETWORK that both employers and job seekers can identify with let alone have confidence in.[71]

2.52The transaction costs in the Job Network were high for both the purchaser and the provider. As detailed in Chapter 6, up to a third of the staff employed in the sector are employed for the purpose of administration. These costs accrued through engaging in the tendering process, implementing the program, and monitoring compliance. Later in the Job Network, the (then) Department of Education, Employment, and Workplace Relations also escalated its administrative oversight of jobseekers and providers, leading to additional transaction costs.[72]

2.53The Job Network also adopted an outcomes-based payment structure which was intended to increase cost-effectiveness and promote the provision of assistance to high-needs clients. Instead, it resulted in providers focusing on moving those jobseekers who were closer to the labour market into work as quickly as possible (‘creaming’), while neglecting those who needed additional support (‘parking’). Attempts to address these practices through increased monitoring and regulation increased transaction costs. Moreover, increased oversight also had limited success in addressing the identified issues, at least in part because ‘creaming’ and ‘parking’ were almost unavoidable in a quasi-market system.[73]

2.54Another challenge with an outcomes-based payment structure is the determination of the price to pay. As Professor Jeff Borland observed, there is an inherent difficulty in determining the appropriate price as different jobseekers have very different amounts of assistance they need to get into employment, and each would require different levels of investment over varying periods of time.[74] This was reinforced in the Committee’s discussions with the OECD where it was identified that at any point in the cycle, government would invariably be under or over-paying for outcomes.

2.55Access to relevant information under the Job Network was limited, with many clients lacking sufficient information to make choices about the provider they wished to join. This was known technically as ‘quasi-market failure by preference error’.[75] In evidence to the current inquiry, Professor Borland similarly explained that:

Jobseekers have limited scope to learn about the attributes and performance of any service provider before choosing (or being assigned to) a provider; and instead learn most from the experience of being managed by a provider.[76]

2.56Provider knowledge about the market was also constrained by organisational behaviour that promoted secretiveness—particularly in contract negotiations. This was compounded by commercial-in-confidence provisions built into the system.[77]

2.57Trust and mutual understanding are essential features of a functioning quasi-market. However, evidence from academic and policy experts indicates that the Job Network was characterised by government mistrust of providers. This led to the imposition of significant over-regulation and onerous and costly accountability requirements. This further decreased levels of trust within the system and led to providers and frontline staff being forced to focus on administration and compliance over supporting clients into sustainable employment.[78] In a survey of case managers conducted in 2005, one respondent stated:

We need to take the emphasis off the demanding administrative expectations so that the Job Network can focus on the client and finding sustainable employment, rather than percentages, statistics, referrals and so forth … The priority should be our clients, not whether we are doing enough to work a difficult-to-interpret system just to keep our jobs.[79]

2.58The quasi-market model in the Job Network also led to a limitation on client’s ability to challenge decisions and to access meaningful legal remedies. This was seen as significantly limiting clients’ ‘voice’ in the system. One academic observed that within the Job Network:

Unemployed citizens [were] … forced to be active consumers of marketised services, not clients of bureau-professionals based in a state agency. It is a form of service delivery which fails in terms of elementary elements of justice. Irrespective of the particular political ideology driving the establishment of the Job Network, this situation is a function of the quasi-market.[80]

2.59Research published in 2011 comparing the employment services system in 2008 to that which existed in 1998 similarly identified a marked increase in levels of routinisation and standardisation of service delivery. The research stated that over time and with increased outsourcing, service providers had adopted increasingly conservative practices in response to more detailed external regulation and more exacting internal business models. Key issues identified in the research, and which reflect the evidence provided to the current inquiry, included:

  • a marked increase in administrative burden for providers and frontline staff, driven by increased accountability requirements imposed by government;
  • a significant decline in flexibility to deliver innovative and tailored services;
  • a significant decrease in the extent to which frontline staff felt they were able to trust their own judgment; and
  • a marked increase in the extent to which IT systems dictated how frontline staff performed their functions on a day-to-day basis.[81]
    1. The research summarised the experience of a quasi-market model within the public employment services system as follows:

What this natural experiment in radical system change has shown is that the contracting out of social services does not produce a new industry of service innovators with new approaches to working with clients, but a ‘herd’ of profit maximisers who are highly responsive to threats to their viability and who embrace standardisation of services as a way to minimise risks.[82]

2.61The Job Network was replaced by Job Services Australia in 2009. The new model included a greater focus on disadvantaged jobseekers and on providing services to jobseekers based on their distance from the labour market.[83] However, the core principles of the Job Network—including the quasi-market and the outcome-based funding system—were retained.[84] Job Services Australia was then replaced by jobactive in 2015. The new program purported to increase workforce participation among people of working age, and to help more jobseekers move from welfare to work. However, the core features—including a competitive, quasi-market model—were retained once again. jobactive also included a greater focus on outcome-based payments.[85] Submissions to the review of employment services (noted below) once again identified critical issues associated with the delivery of employment services under a quasi-market model, including:

  • significant levels of service standardisation driven by increased performance monitoring and regulation, leading to reduced flexibility and innovation and a loss of provider diversity;
  • an associated de-professionalisation of the workforce, as the nature of frontline work becomes more routine and involves less emphasis on tailoring services to the needs of jobseekers; and
  • growing staff caseloads, which leave staff with less time to focus on supporting individual jobseekers.[86]
    1. Workforce Australia was introduced following a review of jobactive by the Employment Services Expert Advisory Panel in 2018. The discussion paper which formed the basis for the review was framed around the proposition that employment services had been contracted out for over 20years and that those arrangements ‘have performed well, and are considered by the OECD to be best practice’.[87] A guiding question in the discussion paper was ‘What level of contestability, competition and government intervention in the market is desirable?’[88] This reflected a continuing assumption that a quasi-market was the most appropriate model for employment services, and that the issue to be considered was not whether such a model should continue to be used but merely whether levels of contestability and competition should be adjusted.
    2. Recommendations in the I Want to Work report also reflected the assumption that a market-based structure remained appropriate, with the report recommending greater competition and diversity between providers. The report did however state that there should be a greater focus on upfront payments to enable more investment in jobseekers, and measures to increase collaboration between providers.[89]
    3. Stakeholders who provided evidence to the current inquiry expressed concern that the core elements of employment services have remained unchanged over time and have not been addressed through policy reviews. This is notwithstanding clear indications that those elements have driven poor outcomes for jobseekers, employers, and other stakeholders.[90] The National Employment Services Association (NESA) stated:

There have been numerous reviews and inquiries in relation to Australian employment services since the commencement of the quasi-market in 1998. The sector’s experience is that recommendations have rarely been adopted in full. Where programs have been the subject of review or Inquiry, it has generally been in the mid to late stage of the program period …

Despite good intent and reform of the overarching program design, stated objectives have not been achieved. A review of past reviews and inquiries will demonstrate recurring themes. It is the view of the sector that the substantive impediment to employment services realising its full potential has been the impacts of various micro-policy settings, contractual and institutional arrangements, retained from model to model.[91]

2.65NESA’s concerns were echoed in academic and policy research. In the conclusion to their 2022 book on the design of social service markets, Dr Adam Stebbing and Professor Gabrille Meagher highlight the work of Dr Janine O’Flynn, who challenges researchers to move beyond questions about how social service markets work to ask whether it is right or wrong for governments to delegate the provision of human services to private actors:

States now govern us through a ‘worst of both worlds’ hybrid of the dehumanising tendency of the bureaucratic machine and the commodifying tendency of the market. The ‘accumulation of many smaller decisions’ has resulted in complex, opaque arrangements under which private interests take public money to profit from human misery, misfortune, and vulnerability.[92]

2.66Other stakeholders similarly asserted that the quasi-market model as it existed under previous iterations of employment services and as it exists under Workforce Australia has not enabled high quality or more tailored services and has done little to improve employment outcomes.[93] For example, Per Capita stated:

The contribution of employment services to the job placements that people get is uncertain—I would say marginal at best. Employment services are not rated highly by unemployed people and they are not used by employers.[94]

2.67The Australian Council of Social Service (ACOSS) similarly asserted that the competitive model for employment services has failed to deliver on its promise due to the following key factors:

  • The competitive model encourages providers to focus services on jobseekers who are considered easiest to support (‘creaming’) and does not promote innovation or personalisation of support.
  • There has been a loss of provider diversity, with two-thirds of funding going to for-profit providers.
  • Successive governments have reduced investment in employment services, with public spending on employment services in Australia now significantly lower than the OECD average. This leads to under-qualified staff, high caseloads, and under-investment in interventions such as wage subsidies and vocational training.[95]
    1. BSL echoed these views, stating that the current model:
  • incentivises standardised approaches and shorter-term outcomes;
  • inhibits collaboration and integration of effort, worsening system fragmentation;
  • results in market consolidation, favouring large providers and disadvantaging smaller providers who are more likely to be embedded in their communities;
  • inhibits adaptation and innovation by disincentivising providers from sharing best practice and learnings that could deliver improved services for jobseekers;
  • disrupts community networks through competitive re-tendering, jeopardising the store of social capital as providers enter and exit the market;
  • involves heavy transaction costs for jobseekers, providers, and employers; and
  • diminishes the role of government and reduces public sector capability.[96]
    1. The lack of collaboration between providers in a competitive, market-based service model was identified as a particular concern by academics, advocates, providers, and state governments.[97] CoAct summarised this concern as follows:

Each Employment Region currently has multiple Providers operating under the single Workforce Australia brand. However, the reality of a competitive market and risk-based outcome payment structure means that Providers in the same region are actively disincentivised to work collaboratively. This typically results in multiple Workforce Australia Providers approaching the same employers in a Region and competing for access for the same jobs for their jobseekers.[98]

2.70DEWR, as the agency primarily responsible for the employment services system, acknowledged that a competitive model inhibits the collaboration that is often critical to effective service delivery for jobseekers and employers.[99]

2.71Evidence also suggested that a cautious approach to competition should be taken when designing human service markets (that is, broader than employment services). For example, the BSL’s submission to the Productivity Commission’s inquiry into user choice and contestability in human services asserted that where human needs are complex and multi-faceted, and where positive outcomes require the expertise of multiple providers, a system based on competition is likely to be counterproductive.[100] These views were broadly reflected in the findings of the Productivity Commission, itself, which stated that competition and contestability are only means to an end and should only be pursued where they improve the effectiveness of service provision.[101]

A focus on rapid job placement

2.72Historically, the employment services system has been characterised by a ‘work first’ philosophy: a focus on rapid placement in work at the expense of capacity-building and longer-term investments in employability.[102] As outlined above, this philosophy has driven poor experiences and negative outcomes for jobseekers and employers.

2.73The I Want to Work report noted that the former jobactive program was geared towards moving jobseekers into work as quickly as possible, emphasising that ‘work first’ approach needed to change. The report also asserted that consultants needed to spend more time assisting jobseekers and on building connections with support services. In addition, the report stated that more funding should be available upfront to support immediate investment in building jobseekers’ capacity.[103] Recommendations from the I Want to Work report were tested and refined through the New Employment Services Trial (NEST) and informed the design and implementation of Workforce Australia.[104]

2.74DEWR expressly stated that Workforce Australia is designed to shift away from the ‘work first’ approach taken in previous employment service models to focus on building the capacity of jobseekers and supporting disadvantaged cohorts.[105] DEWR indicated that this change in philosophy is exemplified by:

  • the introduction of online services for the ‘most job ready’ participants, allowing service providers to invest more time and effort in disadvantaged cohorts;
  • a payment model that includes both upfront payments and progress payments;
  • the introduction of a progress payment of $750 to recognise efforts made by service providers to support jobseekers to improve employability, including addressing both vocational and non-vocational barriers; and
  • a performance framework that included measures of quality service delivery as well as employment and progress to employment outcomes.[106]
    1. Stakeholders indicated that notwithstanding this nominally greater focus on building jobseekers’ capacity under Workforce Australia, the employment services system, driven by funding and performance management arrangements, continues to push jobseekers into work as fast as possible.[107] MAX Solutions (MAX) explained that the majority of provider payments are conditional on time in employment, and provider performance is judged on the time taken to place a jobseeker in work.[108]
    2. Dr David O’Halloran similarly indicated that the ‘work first’ approach remains part of the system, and that the current funding model incentivises providers to focus on jobseekers who are the easiest to help and to neglect those who may need additional or longer-term support:

In pay-by-outcome, marketized employment services… providers respond to the financial pressures and incentives of a system by calculating which unemployed workers offer the best return on investment and thus favour those likely to be placed into work quickly and inexpensively while neglecting those with more complex and thus more time consuming and expensive needs.[109]

2.77This ‘work first’ approach leads to jobseekers being forced to accept lower-paid, lower-skilled positions, with stakeholders noting that this can be antithetical to a jobseeker’s career progression and can trap jobseekers in persistent cycles of poverty and disadvantage.[110] For example, the BSL observed that short-term jobs that are not part of a tailored pathway plan towards a secure job may have a scarring effect by failing to advance the jobseeker towards secure employment and delaying career progression.[111]

2.78SVA expressed concern that just over half of people who participate in employment services are placed in casual or temporary work, stating that this is more often the case for those facing high levels of disadvantage. Precarious employment is negatively associated with wellbeing and contributes to poor mental health, which in turn reduces capacity to work. SVA, did however, go on to acknowledge that depending on the circumstances of the individual it may mean finding the type of job that can act as a ‘stepping-stone’ into better quality jobs.[112]

2.79The Multicultural Professional Network Inc (MPN) indicated that the impacts of this focus on any job at any cost are exacerbated by disincentives to work within the income support system, resulting in people remaining in low-paying or unstable jobs rather than seeking out more suitable, sustainable employment opportunities.[113]

2.80This view was reflected in evidence from individual jobseekers.[114] For example, oneindividual stated:

I’d rather end up in a job that uses my abilities than spend my time in a low-level job for which I’m unfit and which I’m in effect taking away from some other job seeker who has the right mindset for it and who perhaps is uninterested higher education. I have done entry-level, unskilled work – more than once – but it doesn’t mean it’s a splendid idea.[115]

2.81This focus on rapid job placement is exacerbated by a mutual obligation and compliance framework which requires jobseekers to activity seek, and be willing to accept, any offer of paid employment, as well as rigorous enforcement of mutual obligation requirements by providers.[116] For example, Ms Aeryn Brown stated:

I had been hassled for months by my case manager to accept work in an outbound call centre, and I had refused every time they had asked me – outbound call centre work is … wholly unsuitable work on the basis of my medical conditions. At the beginning of May 2017 they called me at home, asking me if I would be interested, and once again I said no. My case manager basically flipped out at me and threatened to report me to Centrelink for non-compliance – they saw me continually turning down this particular job as refusing a suitable offer of work. I had a panic attack in my own backyard as a result of that one phone call.[117]

2.82Stakeholders emphasised that while employment services should help jobseekers into jobs, the system must move away from a focus on jobseekers securing any job as fast as possible to supporting jobseekers into jobs that align with their capabilities and aspirations and allows them to fulfil their human and economic potential.[118]

2.83There was also recognition that some jobseekers may benefit from placement into shorter-term positions as part of a career planning framework, and that many people are more likely to accept part-time, casual, or even ‘gig’-type work in sectors in which they do not aspire to work if this is part of a journey towards employment or to greater social or economic participation and they could keep accessing support to progress.[119] Professor Leila Green et al stated:

[E]mployment services should redefine ‘employment’ to more centrally address supporting people to contribute in ways that recognise their individual circumstances. Sometimes that will mean providing a secure income and allowing the welfare recipient to plan their own lives with support services available upon the service user’s request. This approach is more likely to engender experiences of competence and self-efficacy that will support better longer-term outcomes.[120]

2.84Professor Borland observed that the binary between ‘work first’ and human capital has ‘always been misplaced’, stating that there will always be jobseekers for whom there will be benefit in moving into employment as quickly as possible, and others for whom the development of job readiness and/or vocational skills will be required for work to be sustainable. In addition, Professor Borland emphasised that employment is not a realistic outcome for some jobseekers, noting that for these jobseekers the focus of assistance should be on non-vocational barriers such as homelessness or mental health. According to Professor Borland, the current employment services system does not accommodate the needs of this cohort, nor does it recognise that a heterogenous employment services caseload will require a variety of service delivery approaches.[121]

2.85Other stakeholders similarly indicated that there will be some people in employment services who are unlikely to gain employment or engage in education or training in the foreseeable future. Members of this cohort face significant non-vocational barriers to employment, including long-term health concerns. For these people, the requirement to seek work in the short term may be harmful and in any event is unrealistic.[122]

2.86These observations strongly accord with international experience. In every country the Committee considered there is a not insignificant percentage of unemployed people for whom social participation is the only or a far more realistic goal, at least at that point in time (around 10 to 30 per cent of very-long-term unemployed (LTU) people (very-LTU are those unemployed for two years or more), depending on how you assess and categorise). Yet no evidence was received to indicate that Australia’s system acknowledges these people and appropriately tailors goals and support for them. Evidence indicated that Australia persists with a fiction that doing the same thing over and over again will somehow deliver different outcomes.

2.87More generally, stakeholders called for employment services to be recalibrated to better recognise social participation as well as employment.[123] Services must understand the jobseeker’s strengths, values, and aspirations,[124] and enable participation in community activities. The system should also support engagement in programs to address challenges associated with mental health and housing insecurity.[125]

A focus on cost reduction over service quality

2.88Some stakeholders observed that an ongoing objective of Australia’s outsourced employment services is to cut the costs of service delivery with little or no relationship to service quality.[126] SVA stated:

[T]he current system… it is overly focused on … rapid connection. In fact, it's not even rapid connection to work. It is rapid disconnection from income support.[127]

2.89This was reflected in evidence from DEWR, who stated that moving people off income support and into work remained ‘at the heart’ of the system design.[128]

2.90Australia spends materially less than the OECD average on employment services overall, as reflected in Figure 2.1 below. The OECD figures include both the administered costs and department costs (or as the OECD defines the categories, costs for institutions that manage labour market programmes). Disaggregating this headline figure shows that Australia spends slightly more than the OECD average on case management, job placements, and benefit administration; however, it invests significantly less in direct job creation, start-up incentives, and training.[129]

2.91The analysis in Figure 2.1 has averaged out expenditure data for the period 2004–2019 to smooth out any potential one-off effects. In the Australian context, this also covers expenditure under three different iterations of employment services. As detailed in the Parliamentary Budget Office analysis, when looking at active programs, including employment maintenance initiatives, Australia’s expenditure is around half the OECD average; at around 0.25percent of GDP as opposed to around 0.5percent, for the pre-COVID years.[130]

2.92In addition, of the $3.9 billion in gross savings over the life of jobactive, less than half (around $1.77) billion was re-invested in employment supports.[131]

Figure 2.1: Australia expenditure of employment versus comparison to OECD average

Source:Committee analysis of Parliamentary Budget Office, Expenditure on Employment Services, Advice provided by the Parliamentary Budget Office to the Select Committee on Workforce Australia Employment Services, 2 November 2022, p.14.

2.93Further analysis identified that countries which spend more on public employment services as a percentage of GDP tend to have higher employment rates, which is reflected in Figure 2.2. This positive correlation does not necessarily infer causation, as there will be other factors that would contribute to employment rate outcomes achieved in each individual country.

Figure 2.2:Expenditure on public employment services vs employment-to-population ratio for selected OECD nations, 2010–2020

A graph with blue dots and white text

Description automatically generated

Source: Committee analysis of Parliamentary Budget Office, Expenditure on Employment Services, Advice provided by the Parliamentary Budget Office to the Select Committee on Workforce Australia Employment Services, 2 November 2022, p.14 and relevant OECD publications.

2.94In comparing Australia’s slightly above average spending on case management, job placements, and benefit administration it is important to be aware of the significant costs inherent in running a quasi-market. These significant costs and overheads, which are justified by the assumption (ideological belief) that contracted providers will be more efficient and innovative and deliver better outcomes than public provision, include:

  • periodic costs of competitive procurement, including tendering, probity management, contract negotiation and execution, dissolution of business where contracts are lost and business establishment where contracts are won;
  • large numbers of public servants to manage procurement, contract performance and payments;
  • large numbers of staff in contracted providers to manage the contract and ensure compliance, liaise with government agencies, and manage voluminous administrative requirements; and
  • profit (for private providers) or surplus (for not-for-profit providers).[132]
    1. No compelling evidence was received by the Committee that suggests the fully marketised system has delivered more efficient or better outcomes. In fact, to the contrary, Professor Borland’s earlier work suggested long-term unemployment is structurally higher than would be expected under a public system.[133]
    2. International evidence is also contested, with evidence in relation to France and Germany finding that public sector provision achieves better outcomes than private sector provision. By contrast, in the UK better employment outcomes were being achieved by private programs than from comparable public programs.[134] Evidence from the UK, international discussions in Europe, research and observations of the Australian system also point to a consistent pattern of contracted providers seeking to drive down wages and qualifications in marketised systems to reduce costs and maximise profits or surpluses.

A system which stifles innovation

2.97Another key concern associated with the design of the employment services system is that increasingly prescriptive contracts and guidelines have stifled innovation and limited providers’ ability to put in place supports that align with jobseekers’ needs.[135]

2.98Campbell Page argued that innovation is stifled by requirements for providers to use DEWR’s IT system.[136] NESA went further, suggesting that the entire program is driven by IT system requirements:

[W]e have the IT tail wagging the program dog … Unless you've got at least a tripartite process, where you've got the policy owners, the IT owners and the sector, the provider expertise, all working together in co-design, you're going to consistently have this issue where the IT system drives everything.[137]

2.99Economic Justice Australia (EJA) similarly noted that employment services are increasingly digitised and automated, with IT systems dictating elements of the jobseeker assessment process; employment planning; administration of mutual obligations; and the application of sanctions.[138] According to the Getting Welfare to Work Research Team, around two-thirds of frontline staff have also indicated that the IT system strongly dictates how they do their job.[139]

2.100Another area where program rules have created significant frustration is in relation to the EF. For example, APM observed that the level of flexibility in how EF may be used has reduced under the current contract, as have the range of services, and supports which may be funded.[140] CoAct indicated that this issue, combined with fear that DEWR will attempt to claw back payments due to minor administrative errors, has resulted in providers being less willing to use the EF to support jobseekers on their caseloads.[141]

2.101Stakeholders also indicated that greater flexibility for providers would enable place-based solutions that respond to the needs of local employers and communities,[142] as well as the development of the wrap-around supports which are often necessary to effectively support jobseekers facing disadvantage.[143]

2.102DEWR’s provider performance data indicates that in terms of performance the significant majority of providers cluster around the median, seemingly doing largely the same things or achieving largely the same outcomes rather than innovating to any discernible degree. In the performance data for June 2023, just three out of 178 licenses were awarded an overall performance rating of ‘High’, in relation to the services they delivered in discrete regions. While some licenses were assessed as ‘High’ performing against individual modules, overall performance was in the majority of cases assessed as ‘Moderate’, with a substantial number of ‘Low’ ratings given.[144]

2.103Many stakeholders have argued for less regulation and less prescription in order to allow providers to innovate.[145] International evidence and prior Australian experience suggest, however, that there is an inherent conundrum with the practical experience of quasi-markets. While in theory a focus on outcomes and competition may allow providers to innovate, in practice jurisdictions that experiment with quasi-markets or significant outsourcing quickly or eventually stop, or if they persist then must implement more prescription and regulation in response to unacceptable behaviour and profiteering.[146] This appears to be an inherent feature of quasi-markets in employment services.

A system choked by administration and compliance burden

2.104A critical issue for several stakeholders was that the employment services system is subject to significant cost and administrative burden.

2.105Stakeholders noted that providers must achieve accreditation against DEWR’s Quality Assurance Framework (QAF), as well as against Right Fit For Risk (RFFR) standards that aim to ensure security in IT systems. Moreover, despite being required to undergo an expensive accreditation process, providers are still required to provide additional evidence of compliance.[147]

2.106MAX asserted that contract management should be premised on the philosophy of ‘trust but verify’ and argued that employment services do not take this approach. Rather, providers are treated as if they are seeking to exploit the system for financial gain.[148] NESA similarly described the relationship between DEWR and providers as one of low trust,[149] while Workskil described it as punitive.[150]

2.107While heavy administrative burden appears to some degree to be an inherent and unfortunately necessary feature of quasi-markets in employment services, evidence also suggested a particular problem with market culture in Australia and that there is room for improvement.[151] Issues relating to the purchaser-provider relationship, including the impacts of excessive administration, are discussed in Chapter 7.

Commissioning arrangements which present barriers to entry

2.108Over time, the number of providers in the employment services system has substantially reduced from over 300 providers under the Job Network to 40 providers in Workforce Australia.[152] This has been driven by policy decisions to issue larger contracts, and by the increasing costs of service delivery.[153]

2.109Stakeholders raised concern that the existing procurement process is complex and expensive, with providers expected to operate at a loss for the first two years of the contract.[154] This is despite modelling by KPMG showing that the Workforce Australia payment model would be viable for organisations delivering the service.[155]

2.110The Committee heard that the current procurement approach has resulted in many smaller, community-based organisations with strong local networks and relationships, being unable to participate in Workforce Australia, given the substantial capital and infrastructure requirements and risk-based nature of the contract.[156] This concern is compounded by substantial administrative burden.[157] Further concerns were raised in relation to the extent of disruption associated with the most recent Workforce Australia procurement, which saw:

  • a turnover of existing providers in 80per cent of the 51employment regions;[158] and
  • 22 per cent of employment regions having 100 per cent turnover of providers.[159]
    1. Commissioning, procurement, and funding are discussed in Chapter 15.

Limited government involvement

2.112Government has taken an increasingly ‘hands off’ approach to employment services and has restricted itself to ‘set and forget’ cycles of contract management.[160] Several stakeholders called on government to take a more active role in the system, including through greater stewardship and ensuring the identification and sharing of best practice.[161] As the Centre for Policy Development (CPD) observed:

The government’s role in ensuring integrated, flexible, and holistic human services is more important than ever. But the capabilities it needs to do so are absent—a challenge exacerbated by delivery models that push government agencies into narrow contract-management roles. For policymakers, disconnection from service delivery and limited evidence makes the hard cases even harder to reach. The pendulum has swung too far.

… But the disconnection between government and the experience, expertise and capabilities needed to develop better alternatives makes engaging with and breaking down [the interconnected economic and social challenges associated with poorer labour market outcomes, particularly for the most disadvantaged] even more difficult.

…Blurred responsibility for service outcomes has led to the emergence of grand alibis where no one organisation is held accountable for service problems or entrenched failures.[162]

2.113DEWR acknowledged that unlike other human services such as health or education, government does not have a view on what a ‘good’ employment services delivery model looks like.[163] The lack of knowledge within government as to what constitutes a ‘good’ service was also raised as a concern by other stakeholders.[164]

2.114Stakeholders asserted that the government’s lack of involvement in the delivery of employment services has led to lack of understanding of the operational challenges of service delivery.[165] This is reflective of a broader hollowing out of service delivery capacity in the Australian Public Service (APS). Per Capita stated:

The public service is dealing with shortcomings that surface with any established paradigm as the world changes. A narrow focus on immediate delivery and short-term responsiveness compromises deep expertise and the ability to meet long-term challenges strategically. A focus on efficiency can miss other factors that are necessary to listen to Australians, work with communities and deliver effective outcomes.[166]

2.115Many stakeholders called for government to take a greater role in the employment services system, including via service delivery and as an active steward and ‘co-producer’ of services. The Committee heard that this should include supporting communities of practice and identifying and sharing lessons and examples of good practice.[167] The Employment White Paper flagged that one of the principles for reform of employment services should be ensuring there is strong APS stewardship in the system,[168] though little detail has been provided as yet about how this may occur, noting this Committee’s work will inform the Australian Government’s deliberations and reform agenda.

2.116Even after marketisation, government used to have a far more active role in former employment services systems. For example, the former Employment Services Regulatory Authority (ESRA) delivered a Practice Improvement Programme that involved identification and sharing of best practice, including through workshops for frontline staff.[169]

2.117In the past, government also took active steps to identify and share good practice in the delivery of employment services, including via the establishment of Communities of Practice. Stakeholders indicated that government is no longer actively involved this effort and called for the re-establishment of network systems to share learnings and insights.[170] For, example, NESA stated:

[An] inherent weaknesses in our system which has not been addressed … is, the absence of imbedded and robust structures to build knowledge about what works, for whom and under what circumstances, to facilitate evidence-based program, policy, and practice development.[171]

2.118The role of government in the employment services system is explored in more detail in Chapter 4.

Welfare conditionality and activation

2.119An enduring criticism by many stakeholders of the employment services system is the application of welfare conditionality: participation is a condition of receiving income support. This is premised on the belief that ‘activating’ jobseekers via mandatory activities is a necessary and effective way to encourage them to find and keep employment.[172] This is notwithstanding that many jobseekers already want to find work and require no extrinsic motivation.[173] The Antipoverty Centre summarised this as follows:

People want to work, they don’t need to be beaten into work.[174]

2.120Anglicare WA observed that its100 Families project (a research project focused on the experiences of families living in entrenched disadvantaged) found that there is a profound willingness to work among the unemployed, and that unemployed people recognise the benefits of work as contributing to greater stability and security.[175] This was echoed by Sarino Russo Job Access (SRJA), who stated that employment provides essential social and community linkages, helps to build self-worth, and enables financial independence.[176] One participant, Ms Karen Zaskolny, emphasised that she ‘want[ed] to work … want[ed] to be of service, [and wanted] to be paid for [her] contribution to society’.[177]

2.121Dr Katherine Curchin similarly noted that contrary to widely held beliefs, unemployed and employed people do not have significantly different views on the value of work. Unemployed people typically see the benefits of work but are prevented from finding employment due to practical and systemic barriers.[178]

2.122BSL highlighted that removing mutual obligations requirements during the COVID-19 pandemic did not negatively impact clients’ connection to the labour market.[179]

2.123Academic and policy research identified that users of public services such as employment services respond to incentives and other external motivators. However, they are also driven by desires to increase their competence, to exercise autonomy, and to build relationships. A work environment can satisfy these desires. However, the use of extrinsic motivators such as contingent rewards can ‘crowd out’ intrinsic motivators. Programs underpinned by the philosophy of New Public Management—such as public employment services—fail to understand the interaction between intrinsic and extrinsic motivators, often resulting in the imposition of measures which aim to lift employment outcomes but in fact result in further disengagement.[180]

2.124Research conducted on behalf of government between 2005–2009 similarly found that while it is assumed that external incentives (positive and negative) will result in better outcomes, this is not always the case. The research indicated that the principal reason for this finding is that intrinsic motivations ‘crowd out’ intrinsic motivations. In the context of employment services, the researchers stated:

Where individuals are required to undertake specific forms of job search, they may substitute formal job search for informal forms. In many studies, it seems the short-term effects of programs are very often larger than the longer-term ones they provide.[181]

2.125These findings were broadly reflected in evidence provided by stakeholders, who asserted that conditionality does little besides creating adversarial relationships between jobseekers, providers, and government. Stakeholders asserted that welfare conditionality does not support jobseekers to overcome barriers to employment and adds to anxiety already experienced by disadvantaged cohorts.[182] For example, the Centre for Excellence in Child and Family Welfare (CECFW) stated:

[T]here is emerging research to suggest that welfare compliance obligations result in increased stress, have negative impacts on wellbeing and do not help individuals achieve their work and study aspirations. Payment suspension and the mandatory nature of mutual obligation requirements are inconsistent with the Universal Declaration of Human Rights ... Additionally, in 2019 the Australian Human Rights Commission found that areas of Australia’s employment services system do not align with human rights obligations, in particular, the right to equity and to social security and the rights of children.[183]

2.126The approach to conditionality in the employment services system also reflects widespread bias towards unemployed people and income support recipients and perpetuates the myth of the ‘dole bludger’—framing unemployment as a personal choice rather than a systemic issue. Stakeholders asserted that Workforce Australia is designed to identify and punish a very small number of individuals exploiting the system at the expense of the larger number of jobseekers who are genuinely seeking to improve their prospects.[184]

2.127Similar findings were made in the recent report from the Robodebt Royal Commission. The Robodebt Royal Commission found that income support recipients frequently experience shame, oppression, and isolation when accessing services, and recommended that government design policies and programs with service users in mind and avoid using language and conduct that would reinforce feelings of stigma and shame associated with claiming income support.[185]

2.128Notwithstanding the critique of welfare conditionality, almost all international systems have some form of participation requirements that social security recipients assessed as capable of working must meet. Policy rationales generally include mitigating the risk of long-term unemployment, encouraging people to access services and supports, reducing social exclusion, addressing issues associated with working cash jobs while also receiving income support (some activities are in effect a test of the recipient’s availability to take up employment on the open market). There are also community expectations that people receiving income support will engage in some kind of activity in return.

Mutual obligations

2.129Within the employment services system, welfare conditionality is operationalised via mutual obligations. These require the jobseeker to complete certain activities such as entering into a Job Plan, accruing points under the Points Based Activation System (PBAS), and actively searching for work in order to receive income support.[186]

2.130A significant number of stakeholders asserted that mutual obligations are onerous, do not substantially increase engagement with employment services, and are not effective in helping jobseekers overcome vocational and non-vocational barriers to employment. In some cases, stakeholders provided evidence that mutual obligations actually decrease the jobseeker’s overall employability and (intrinsic) motivation to work and take time away from meaningful efforts to prepare and search for work and to participate in education and training.[187]

2.131For example, SVA highlighted a study of the impacts of mutual obligation on 6,000 unemployed people, in which jobseekers subject to mutual obligation took longer to find employment than those who were not. The study also found that even where mutual obligations did help jobseekers find work, the jobs were typically lower paid or lower skilled.[188]

2.132Stakeholders asserted that mutual obligations are not adapted to jobseekers’ needs, aspirations, or circumstances, and there is little flexibility for jobseekers to negotiate obligations with providers (or the DSCC).[189] Per Capita stated that obligations are not adapted to the circumstances of longer-term unemployed people in particular:

If you're looking at people that have been long-term unemployed—and we know the number of people unemployed for more than five years and for more than 10years has doubled in the last decade—if you are required to perform some obligation but you're not getting anything in return and you're not getting a job, then those obligations are failing. So we need to radically look at how we treat people and ensure that any obligations imposed on recipients of income support are not to impose behavioural standards but to help them find work, to help them overcome barriers to work, and to understand what those barriers might be and how they're different for different people.[190]

2.133Another common theme was that mutual obligations are not genuinely ‘mutual’. Stakeholders observed that while participants are required to complete a range of burdensome activities to qualify for income support, providers, employers, and government are not subject to corresponding obligations.[191] Dr Shelley Bielefeld observed that while mutual obligations are often described as enforcing a social contract, the terms of the contract are unfair as jobseekers must participate in onerous—often meaningless—activities to access income support. Moreover, as jobseekers are under threat of having their income support suspended, reduced, or cancelled, the contract is entered under duress.[192]

2.134Stakeholders indicated that a truly ‘mutual’ arrangement requires that:

  • providers genuinely support jobseekers to increase their work readiness and obtain sustainable employment, with jobseekers enabled to hold providers to account for their action or inaction;[193]
  • employers make efforts to recruit and support vulnerable jobseekers—while still responding to their own recruitment needs;[194] and
  • government provides an adequate level of income support, enables job creation, ensures providers deliver high quality services, and ensures that workplaces are physically and psychologically safe.[195]
    1. Feedback from stakeholders also indicated that while the introduction of the PBAS has increased flexibility as to how a jobseeker can meet mutual obligations, the new system is overly complex and may exclude activities which improve the jobseeker’s employment prospects. This was a particular challenge for more vulnerable cohorts, who already face challenges understanding, completing, and reporting on activities. Providers are often obliged to assist participants to understand the PBAS, which takes time away from delivering support.[196]
    2. WISE Employment stated that according to an internal review of its own services, despite understanding the change from jobactive to Workforce Australia, more than 25 per cent of jobseekers did not understand their mutual obligation requirements, and only half understood the PBAS.[197] The Nirrumbuk Aboriginal Corporation (NAC) similarly observed that the points-based system has been extremely difficult for jobseekers to comprehend. Moreover, while the Workforce Australia website caters for multiple language groups, there is no information in First Nations languages.[198]
    3. The Committee also heard that mandatory job search requirements (distinct from the requirement to obtain 100 points per month under PBAS) have little impact on job readiness or success finding a job and contribute to the ‘tick box’ culture within the employment services system.[199] For example, one jobseeker stated:

Some applications are viable and worthwhile; some are not and waste businesses’ time simply so I can fulfil quotas. I experience a cringing sense of self whilst doing the latter, because I loathe inefficacious action and wasting people’s time.[200]

2.138Job applications comprise the majority of activities completed to meet mutual obligation requirements (82.3 per cent of all activities for participants in online services, and 72.6 per cent of all activities for participants in provider-led services).[201] Stakeholders indicated that the sheer number of job applications can lead to employers being overwhelmed by applications which are of poor quality, leading to negative perceptions of jobseekers.[202]

2.139Poor quality applications—often completed solely to satisfy mutual obligation requirements—are often rejected, leading to negative mental health impacts.[203] Forexample, one jobseeker stated:

The required number of applications means I don’t have time or energy to make every application carefully researched and tailored to the needs of the employer, even though I know that’s what it takes to succeed. I am pushed to put quantity over quality. That reduces my motivation and at one point sent me to a doctor, seeking support for depression which I knew was the result of being forced to continue to apply for jobs and rejected.[204]

Mandatory activation

2.140In addition to satisfying mutual obligation requirements, jobseekers are required to complete a specified amount of work or training by defined ‘activation points’ during their time in employment services. If a jobseeker fails to do so, they will be required to participate in a ‘default’ mandatory activity. For jobseekers in online services, this will be Employability Skills Training (EST), while for jobseekers in provider-led services, it will be Work for the Dole (WfD).[205]

2.141Mandatory activation has been a part of the employment services system since 2009 and is based on the idea that periodic activation enables and encourages jobseekers to develop skills and improve employment prospects. Activation is also intended to discourage jobseekers from remaining on income support for long periods of time and serves as an ‘availability test’ to help identify those people who are working cash jobs undeclared.[206] DEWR advised that recent experience in Workforce Australia Online is that there continues to be a discernible impact at the mandatory activation point of people reporting previously undeclared work or earnings.[207]

2.142Stakeholders expressed concern that activation activities are ineffective in moving jobseekers toward employment and that the existing approach to activation is inflexible, creates significant resource and administrative burden, and disrupts relationships between jobseekers and providers. The Committee also heard that activation is based on the outdated belief that any form of activity is preferable to no activity at all, and that little regard is given to the appropriateness, relevance, or quality of activities.[208]

2.143The current WfD program also attracted very heavy criticism, with stakeholders asserting that it is demeaning (including in name),[209] inappropriate and unsafe,[210] offers little benefit to jobseekers,[211] and is cumbersome to administer.[212] ACOSS summarised these concerns as follows:

There is no evidence to indicate that participation in [WfD] significantly increases people's employment prospects. Its only known employment impacts are so-called referral or threat effects, whereby people search harder for jobs in order to avoid the program, as my colleague just indicated. Those impacts are small. The jobs often don't last because they are survival jobs, not the right job for the person.[213]

2.144Evidence was also received contrasting the current WfD program with previous iterations of the program, which had a greater focus on community work, skills acquisition, and group training and activities.[214]

2.145There was also (caveated) support for retaining the current mandatory activation policies among some stakeholders, on the basis that flexibility within the activation framework be increased and jobseekers be offered a greater range of activities which accord with their circumstances, needs, and aspirations.[215] atWork Australia (atWork) stated:

Activation activities outside of Work for the Dole, that are … suitable to a person’s goals and skills, do play an important role in preparing people for work. These include upskilling and ‘work-like’ activities. We disagree that ‘default’ activation activities are helpful. Activities must have an element of client choice … to be successful.[216]

2.146Professor Green et al similarly called for much greater flexibility in the activation framework, stating that activation activities should only be offered when they are requested by service users. Professor Green et al asserted that voluntary engagement with so-called activation activities should be accompanied by support (not censure or punishment).[217]

2.147Many participants and stakeholders similarly made suggestions during site visits and related conversations that if mandatory activation points are to be retained then there must be more flexibility in the timing and the type of activities that should be available. It was suggested that a redesigned system could retain periodic activation requirements that continue to serve as an availability test, while being much better tailored to an individual’s circumstances and agreed plan with greater discretion regarding timing of mandatory activation activities being available to the client and case manager.

2.148Activation is discussed in more detail in Chapter 14. This includes a discussion of whether activation policy should be retained and proposals for the types of activities in which jobseekers should be encouraged to participate.

Compliance and enforcement

2.149Jobseekers who fail to meet their mutual obligations in Workforce Australia are subject to compliance action under the Targeted Compliance Framework (TCF), which was introduced in July 2018. The TCF enables the imposition of a range of sanctions, including suspension of income support payments (pending reengagement) for individual breaches, as well as the reduction and payment cancellation for serious or persistent noncompliance.[218]

2.150Several stakeholders informed the Committee that the application of the TCF has resulted in various harmful impacts on jobseekers’ physical and mental health, including jobseekers being unable to meet their basic needs.[219] Another key theme was that the TCF does little to support engagement with services. In many cases it has opposite effect: demotivating jobseekers and leaving them mentally and physically incapable of effective participation.[220]

2.151There was also almost universal support for removing responsibility for compliance and enforcement from providers and returning it to government, with stakeholders asserting that compliance and enforcement functions are incompatible with delivery of effective employment support. Trust between a client and case manager was repeatedly identified as the most important criteria for success, yet trust is undermined or destroyed if a case manager is also the person seen as responsible for compliance and enforcement.[221] This is consistent with the overwhelming experience and approach internationally in nearly every country with which the Committee engaged during its inquiry. Automation of compliance functions was also a key concern, with stakeholders calling for greater oversight in decision-making processes by a human decision-maker.[222]

2.152In the first 15 months of Workforce Australia (July 2022 to September 2023), 70.4percent of participants in Workforce Australia Services, and 39.5 per cent of those in Workforce Australia Online, were subject to payment suspension (see Table2.2 below).[223] This is despite participants being provided with a two-month grace period from the start of the new program during which no compliance activity was taken.[224]

Table 2.2Income support suspensions July 2022-September 2023




Workforce Australia Services



Workforce Australia Online



Source: Senate Education and Employment Legislation Committee, Committee Hansard, 25 October 2023, p. 74.

2.153The data for the period October 2022 to June 2023 shows there were over 16,000 payment cancellations for participants in Workforce Australia Online and 43,000 for those in Workforce Australia Services. The vast majority of cancellations resulted from a participant not re-engaging with services for 28 days after their payments had been suspended, rather than for persistent or very significant mutual obligation failures.[225]

2.154Mutual obligation, compliance, and enforcement are considered in more detail in Chapter 14.

Committee comment

2.155This inquiry commenced just months after the commencement of Workforce Australia and has covered the first 17 months of the program. Although this is a relatively short period of time, evidence before the Committee has indicated critical and fundamental issues in the design and delivery of Workforce Australia.

2.156Australia’s employment services system has long been designed in a deficit paradigm, around the small minority of people in society who do not want to work and seek to exploit the income support system and the small minority of providers who do not act in accordance with their Deed and guidelines. Plainly put, the system is designed around the worst people in society, and everyone else is lumped into that paradigm.

2.157Many of these issues are not new, nor unique to Workforce Australia. They have persisted over multiple iterations of employment services. It is concerning to the Committee that Workforce Australia has not adequately responded to the issues identified in previous policy and program reviews—in particular those set out in the 2018 Employment Services Expert Advisory Panel’s I Want to Work report.

2.158In addition to examining Workforce Australia, the Committee has undertaken extensive domestic and international engagement and research. Consistent with a ‘first principles review’—the first such review in Australia for over two decades—the Committee has questioned all aspects of the system, including those which have not been examined in the previous evaluations and reviews undertaken since marketisation. The Committee has approached its task in an open minded and non-partisan manner led by the evidence, not ideology or outside interests or direction.

2.159The Committee is firmly of the view that the significant and numerous issues identified through the inquiry simply cannot be addressed through mere tweaks to policies and programs. They demand wholesale and large-scale reform in the coming months and years to fundamentally rebuild the Australian system. In Chapters 4 to 15 of this report, the Committee has set out an ambitious blueprint to fundamentally redesign employment services in Australia which, if adopted, will require a reform roadmap to be developed by the Government.

2.160It is clear that system reform can free up significant resources to be redirected to frontline services to support jobseekers and employers, including through cutting red tape, adopting a more tailored and realistic approach to service delivery, and redirecting funding from pointless programs and activities. The Committee is not naïve however and recognises that targeted investments in Active Labour Market Programs (ALMPs) will be required if the nation is to see materially different outcomes. Just doing the same thing while expecting different results is a common definition of insanity.

2.161While the current labour market is the hottest for decades, long-term unemployment remains stubbornly high and is not materially improving. This is also the case in many jurisdictions with comparable Public Employment Services. The Committee considers this issue is in part due to fundamental flaws in the design of the system including a public sector that is way too detached from frontline service delivery and from brokering outcomes in regions and communities; in part due to underinvestment in ALMPs that give case managers the tools they need; and in part due to society’s unrealistic expectations regarding the (at least short-term) employment potential of a not insignificant minority of citizens who are LTU.

2.162Australia spends slightly more than the OECD average on the delivery of core employment services, but only around half the OECD average on employment services in total including ALMPs. Ultimately you get what you pay for, and if we underinvest to this degree then we will inevitably underperform.

2.163Nevertheless, even with significant reform it is implausible that the ambitious reforms proposed in this report can be achieved without additional investment, especially if a tangible reduction in long-term unemployment is to be achieved along with morally necessary changes like bringing compliance back into the public sector.

2.164Flawed theories have unduly influenced and driven policy and system design for the last 20 years. These theories, which will be considered further throughout the report, include:

  • a belief that unemployment is always an individual failing, which fails to recognise the structural and serious individual barriers facing clients and the fact that most people want to work. This has driven an excessive focus on conditioning supply (making unemployed people do things) at the expense of a balanced focus on demand (job creation and working with employers to get people into work); and
  • a belief that high levels of competition in service provision are necessary in every place and will always deliver better outcomes for vulnerable people. That is not to say that contestability does not have a role, or that choice and agency are not desirable. However, the application of competition in this sector is flawed and has gone too far, and ‘New Public Management’ theories have exhausted their utility. In addition, insufficient consideration has been given to the inherent costs of over-sighting and operating an overly competitive quasi-market system and the importance of nurturing the intrinsic motivations of clients and those who work to support them has been foregone.
    1. The current system is highly and needlessly fragmented across the Commonwealth; between the Commonwealth and other jurisdictions; and within the service system itself—often by deliberate design. There is little coordination or integration across the various Commonwealth and state employment services, and limited connection between employment services and the broader human services ecosystem which is systemically unmapped and unknown to the employment services system, absent a public sector spine to perform these core enabling functions. This fragmentation has led to unnecessary complexity for users (unemployed people and businesses), and to duplication of effort by providers and by multiple levels of government.
    2. The manifest failure to coordinate across programs at the Commonwealth, state and territory, and local government levels—exacerbated by the current overly competitive commissioning arrangements—has also led to significant market saturation in many regions. The Committee observed a high level of service saturation during its visits to several regional towns and disadvantaged suburbs. In some areas it was to the point of utter almost comical absurdity with a service provider operating a site on almost every block in regional towns or disadvantaged suburban town centres. Performance data shows little difference in the outcomes achieved by most competing services, and ultimately the taxpayer pays one way or another for fragmentation and duplication.
    3. Employment services should be as streamlined and as accessible as possible, programs across jurisdictions should complement and link to the Commonwealth service offering, and employment services should act as a gateway to the broader human services ecosystem.
    4. In addition, the employment services system is not delivering optimal outcomes for clients and appears to have largely neglected employers entirely save for random competing initiatives by individual providers, and one Employment Facilitator in each region. The Committee was concerned to hear that—among other matters—the following were evident under Workforce Australia:
  • Despite the rhetoric, there is limited practical demonstration of service tailoring that recognises that disadvantaged jobseekers require different supports based on their circumstances and will progress toward employment at different speeds and via diverse pathways. As discussed later in the report, the so called ‘Jobs Plan’ is in fact just a cut and paste list of mutual obligations that jobseekers are forced to sign up to in return for social security support. It is not in any way a genuine roadmap to preparing for and finding work. Even within PBAS, providers have largely not varied the number of points required and it is perplexing that the system assumes the same number of points (100) by default for those who are closest and those who are furthest from the labour market.
  • The system is overly driven by the pervasive and pernicious myth of the ‘dole-bludger’ with insufficient systemic or societal recognition that most people want to work (as the previous review also confirmed), but also that employment in the private sector labour market may never be a realistic outcome for some participants furthest from the labour market, at least in the short- to medium-term and for a small minority probably ever. It is unclear to the Committee why this latter group of people are required to continue to be serviced by contracted providers despite years of failure as opposed to other participation and support options.
  • Providers generally take a transactional, and sometimes dismissive, approach to service delivery, rather than the person-centred strengths-based approach which just about everyone acknowledges as essential to effective support and outcomes. This is driven by funding arrangements which place a premium on moving jobseekers into any work as quickly as possible, rigid contractual requirements and the all-powerful performance framework. The sector also lacks the stable and skilled workforce necessary to build relationships of trust and deliver appropriate, effective support.
  • Mutual obligations as currently designed are excessive, tying the system up in redtape, driving employers away and having limited, if any benefit in terms of improving LTU jobseekers’ capacity for social and economic participation or securing work. In too many cases, mutual obligations are actually making people less employable.
  • The volume of sanctions for non-compliance with mutual obligations is simply out of control. Jobseekers are frequently subject to significant and disproportionate compliance action which can be damaging to physical and mental health and discourages engagement with or trust in the system intended to help them. Very concerningly, the Committee heard that 70.4percent of all compellable participants who have moved through Workforce Australia Services have been subject to a suspension of payments.
  • Employers see employment services as difficult to use. They consider that the system adds little value to their business, and repeatedly tries to foist unsuitable jobseekers on them without adequate incentives or support.
    1. The Committee acknowledges that these systemic conclusions don’t reconcile with the many genuinely positive individual experiences conveyed to the Committee during its program of site visits. Staff with whom the Committee engaged were dedicated and compassionate, and frequently performed small miracles under very trying conditions. Many participants also told the Committee that engagement with employment services had changed their lives for the better.
    2. The Committee understands that providers were hardly likely to serve up their worst or most inexperienced staff or present clients who gain no benefit, and equally accepts that for many people the system is not nearly as bad as critics or the most dissatisfied make out. Ultimately, and despite these caveats, the Committee is convinced that that the national employment services system is not working adequately, especially for long term unemployed people, and that the majority of the issues are the result of poor system design based on flawed beliefs as well as underinvestment in ALMPs to help the most disadvantaged.
    3. It should not be controversial to conclude that full marketisation has failed. The previous government implicitly acknowledged this when creating Workforce Australia by bringing those closest to the labour market into digital services delivered by the public sector on the basis that it was more efficient and cheaper to allow this cohort to self-manage their job search and other obligations. An inherent feature of a quasi-market with a fixed price is that over the term of a contract the taxpayer will almost certainly be overpaying or underpaying for outcomes at any given point of time given the variations in labour markets and economic conditions.
    4. A key issue which the Committee will consider throughout this report is the best mix of services within a national system. This will draw on what the Committee has learned from the Australian experience and that of other countries. An important conclusion is that an ideal mix of services to this is not static. A rebuilt system must be driven by a new culture of partnerships, continuous learning, and evaluation.
    5. The highly competitive quasi-market approach which has underpinned successive employment services contracts was intended to support innovation, improve service quality, and enable greater choice by participants. Evidence indicates these goals have not been achieved and instead successive governments have stood by while service quality, staff qualifications (and wages) and outcomes have declined all the while managing to avoid responsibility for individual service failures (‘it’s not the government, it’s the contractor’) and harvesting increasing savings with no consequence, while long term unemployment stagnates or increases.
    6. Stakeholders have painted a sobering picture of a system based on fear, excessive competition, and compliance. Fear amongst participants that they may do something wrong and have their income suspended or cancelled. Fear amongst providers that DEWR will give them a black mark in the performance framework and not renew or cancel their contract. Excessive competition between providers is ultimately to the detriment of employers and vulnerable jobseekers. Previous reviews have identified this but only proposed ‘band-aids and sticky tape workarounds’ to overcome fundamental flaws in the theory and market design which have been sacred cows, too holy to question or reconsider.
    7. Notwithstanding the stated intentions of Workforce Australia, it is also clear that current funding and performance management arrangements continue to drive a ‘work first’ approach—that is, a focus on placing jobseekers into any job as fast as possible, irrespective of whether the job is appropriate to the jobseekers’ circumstances, meets their needs, aligns with their aspirations or is likely to be sustainable. Concerningly, this has led to many jobseekers being repeatedly placed into inappropriate ‘survival’ jobs and churning through the system rather than finding long-term, meaningful work. Indeed, the most profitable jobseeker is one that sticks in a job for six months and one day before returning to the system. This is not compatible with a system which aims to achieve sustainable employment or economic security for those it supports.
    8. Effective, targeted support is also limited by complex and costly procurement and accreditation processes that are barriers to entry for smaller and community-based organisations, as well as to more specialised organisations who have local networks and social capital to leverage and who may be best-placed to support clients with particular characteristics or barriers to participation. There is little support within the current system for social enterprise or for small local organisations or bespoke programs for particular cohorts. Instead, these organisations and programs work alongside and outside the system, and often duplicate effort or do the intensive work to support disadvantaged people back into the labour market. However, it is providers contracted by the Commonwealth who are rewarded through outcome payments when one of these vulnerable people finds employment.
    9. Another key concern is the tendency to remove or replace a significant proportion of providers within a region during contract and licensing rounds, leading to substantial disruption to services and very significant negative impacts on established relationships between jobseekers and providers. The Committee was very concerned to hear that, in some regions, all providers lost their contracts despite a record of high performance, and that contracts were awarded to organisations without any pre-existing local connections. While the Auditor-General’s performance audit will examine the previous procurement round, the Committee observes that this level of disruption is ridiculous and self-defeating and cannot identify another human service system where this would be seen as desirable or acceptable.
    10. Also concerning is that DEWR appears to have little trust in its own accreditation processes and requires providers to submit to additional assurance processes. This is not only administratively burdensome but damaging to the relationship between providers and government. By contrast, other service systems take a ‘trust but verify’ approach to compliance yet this culture has not been adopted in the employment services system. These additional assurance processes are also emblematic of a system choked by administration and compliance burden which permits little innovation. Notwithstanding some excellent individuals and collective good intentions, the system overall is routinely and aptly described as transactional, numbers-based, and too ‘one-size-fits-all’.
    11. Adding to these concerns is that jobseekers continue to be subject to excessive—often very punitive—compliance and enforcement arrangements, which have little or no positive impact on their capacity for social and economic participation. It is clear to the Committee that jobseekers’ obligations are ‘mutual’ in name only: jobseekers must complete a range of activities in exchange for income support, yet other parties such as providers are not subject to any corresponding requirements.
    12. The overwhelming weight of evidence received is that the current approach is tying the system up in red tape and pointlessly harming productivity in providers, driving large and small businesses away from the system, and actually making many people less employable, pointing to the need for serious reform. Key questions for the Committee relate to the nature and extent of requirements in Australia to increase the prospects that people who are capable of working secure sustainable work, while acknowledging that social participation for others may be a realistic interim goal.
    13. The Committee considers that while participation requirements must continue to be a part of the system the current approach is excessive and self-defeating. This report outlines an approach to reforming mutual obligations to reduce the red tape burden, stop driving away employers and support people rather than harm them or make them less employable. Instead, people should be accountable for the commitments they have made in a reformed ‘Participation and Jobs Plan’, tailored therefore to individual circumstances, needs, and aspirations and where a person is on their journey towards employment. For a not insignificant minority of unemployed people, realistic participation requirements might not include job search in the short term and instead may relate to agreed social participation (‘life first’) or human capital goals to prepare them for future employment. This should be accompanied by a system of genuine reciprocity which sets clear expectations and commitments for providers, employers, and government.
    14. The consequences for failing to comply with obligations are often disproportionate to the non-compliance. For example, the Committee considers it disproportionate that a jobseeker could have their entire payment suspended or cancelled and risk not being able to meet their basic needs for a mere failure to attend an appointment as a result of a mandated or automated decision. In addition, the Committee is concerned that service providers in Australia have the dual role of supporting participants and monitoring and enforcing compliance. This is incompatible with building relationships of trust which are critical to effective, person-centred services.
    15. Sitting atop of the system, the APS is detached and seemingly disinterested in or unaware of what actually happens at the frontline or in brokering place-based solutions, sharing best practice or encouraging innovation, instead being largely focused on procurement, contract management and KPIs. Periodic program evaluation and incremental change is not a substitute for system level analysis and that capacity appears to have been lost. After 25 years of largely outsourced service delivery the public sector no longer understands or has an informed view on what constitutes good practice or a good service model in employment services—this has to change. The public servants in charge are good, intelligent people and they need to be encouraged and re-empowered to drive serious reform and provide frank and fearless policy advice to Government informed by a more hands-on understanding of service delivery and evidence of what works in practice.
    16. It is also perplexing that DEWR is now responsible for overseeing the largest number of jobseekers (in digital services) yet does not think of itself as a provider and is not remotely adequately resourced to properly perform this role.
    17. This chapter has set out a sharp critique of Workforce Australia to set the scene for changes the Committee proposes to underpin a rebuilt Commonwealth Employment Services System. Despite this critique, the Committee’s proposed reforms seek to retain the best elements of the current system, including a role for contestability and choice and a diversity of service partners in local communities. Key to this will be rebuilding a public sector core to the system, including government assuming a far more active role as regulator and steward, as well as providing enabling services and directly delivering services in some places not as a competitor but as a benchmark. This is a significant shift as government will move from standing on the sidelines with no substantive views or capability as to best practice to be much more active.
    18. In Chapters 4 and 5 the Committee lays out core principles for the design of a reformed employment services system that will better support clients, employers, and other stakeholders, as well as a framework for core service offerings. Detail on key elements of this system is provided in Chapters 6 to 15, with proposed arrangements for implementation covered in Chapter 16.


[1]See, for example, Ms Annabel Brown, Deputy CEO, Centre for Policy Development (CPD), Committee Hansard, 14March2023, p.18; Professor Shelley Mallett, Director—Social Policy and Research Centre, Brotherhood of St Laurence (BSL), Committee Hansard, 14March2023, pages25, 26.

[2]See, for example, Getting Welfare to Work Research Team, Submission 191, pages 5, 16; Per Capita, Submission 252, p. [21]; National Employment Services Association (NESA), Submission 260, p. 37.

[3]Ms Natalie James, Secretary, Department of Employment and Workplace Relations (DEWR), Committee Hansard, 3November2022, p. 13.

[4]See, for example, Workskil Australia (Workskil), Submission 196, p. 5; BSL, Submission 249, p.45.

[5]Workskil, Submission 196, p. 5.

[6]Queensland Government: Department of Employment, Small Business and Training (DESBT), Submission243, p. 11; Tasmanian Government, Submission 174, p. [6]; Government of Victoria, Submission278, p.4.

[7]See, for example, CVGT Employment (CVGT), Submission 106, p. 11; Tasmanian Government, Submission174, p.[11].

[8]See, for example, CVGT, Submission 106, p. 11; MAX Solutions (MAX), Submission 146, p. 7.

[9]BSL, Submission 249, p.26.

[10]See, for example, Name Withheld, Submission 115, p. [1]; Name Withheld, Submission 160, p. 13.

[11]VERTO, Submission 202, p. [14].

[12]CoAct, Submission 151, p.9.

[13]See, for example, CVGT, Submission106, pages 4-5; Sarina Russo Job Access (SRJA), Submission 145, p.6; SSI, Submission 193, p.7; The Salvation Army Employment Plus (SAEP), Submission 199, p. 7; Associate Professor Jo Ingold and Mr Tony Carr (DrIngold and Mr Carr), Submission 216, pages 3-4; Navitas, Submission 262, p.3.

[14]See, for example, Mr Colin Williams, Submission 64, p. [4]; MAX, Submission 146, p. 16; Tasmanian Government, Submission 174 , pages [4–5]; SSI, Submission 193, p.7; Workskil, Submission 196, pages 7–8; Mr Con Kittos, Executive Chairman, Asuria People Services (Asuria), Committee Hansard, 26May2023, p.20; Mr Matthew Clarke, CEO, Yilabara Solutions, Committee Hansard, 26May2023, p.38.

[15]Per Capita, Submission 252, p. [21]. A map of the services an individual may need to access at the Commonwealth and State levels depending on their circumstances is outlined on p. [71] of the submission.

[16]Social Ventures Australia (SVA), Submission 232, p. 12.

[17]The Australian Centre for Social Innovation and Regional Development Australia (RDA) Southern Melbourne (2017), Addressing Disadvantage in Southern Melbourne: Towards Outcomes, pages 26, 28,, viewed 20 November2023.

[18]The Australian Centre for Social Innovation and RDA Southern Melbourne (2017), Addressing Disadvantage in Southern Melbourne: Towards Outcomes, p. 27.

[19]See, for example, CoAct, Submission 151, p. 8; SAEP, Submission 199, p. 40.

[20]See, for example, CVGT, Submission 106, p. 12; MAX, Submission 146, p. 21; WISE Employment, Submission 169, pages 10, 26, 28-29; Mission Australia, Submission 190, pages 9–10; SYC Ltd (SYC), Submission 189, pages 4, 7; NESA, Submission 260, p.22; Professor Jeff Borland, private capacity, Committee Hansard, 14March2023, p.2.

[21]Jobs Australia, Submission 185, p. 10.

[22]Ms Sally Sinclair, CEO, NESA, quoted by D Marin-Guzman, ‘Job services industry stunned after wave of contract terminations’, Australian Financial Review, 29 March 2022.

[23]Workways Australia Ltd (Workways), Submission 239.1, p. 3.

[24]Mrs Karen Rainbow, CEO, APM Employment Services (APM), Committee Hansard, 14 March 2023, p. 57.

[25]NESA, Submission 260 (Attachment 1), p. 11.

[26]See, for example, National Youth Commission Australia (NYCA), Submission 166, p. [9]; Mission Australia, Submission 190, pages 9-10; Australian Services Union (ASU), Submission 205, p. [7]; Navitas, Submission262, p. 3.

[27]BSL (2017), Reforms to human services: response to the Productivity Commission, p. 8,, viewed 20 November 2023.

[28]Productivity Commission (2017), Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services, Inquiry Report No. 85, p. 79,, viewed 20 November 2023.

[29]Ms Wendy Black, Head of Policy, Business Council of Australia (BCA), Committee Hansard, 11 August 2023, p. 16.

[30]Ms Black, BCA, Committee Hansard, 11 August 2023, p. 16.

[31]See, for example, Name Withheld, Submission 109, p. [2]; Name Withheld, Submission 116, p. 3; National Foundation for Australian Women (NFAW), Submission 135, p. [5]; Name Withheld, Submission 137, p. [2]; Mr Anders Ross, Submission 159, p. 3; Refugee Council of Australia (RCOA), Submission 226, p. 4; South East Community Links (SECL), Submission 38, p. 8; NYCA, Submission 166, p. [4]; Australian Unemployed Workers’ Union (AUWU), Submission 253, p.[9]; Ms Brown, CPD, Committee Hansard, 14March2023, p.29.

[32]See, for example, Name Withheld, Submission 187, p. [2]; Name Withheld, Submission 229, p. [3]; NameWithheld, Submission 293, p. [1].

[33]Ms Kaye Demetriou, Submission 267, p. 4.

[34]See, for example, Mr Dan Ehlers, Submission 90, p. 1; Name Withheld, Submission 109, p. [1]; MrAndersRoss, Submission 158, pages 3–4; Name Withheld, Submission 160, p. 10; Name Withheld, Submission 161, pages 3-4; Mx Eve Geyer, Submission 220, p.[1].

[35]Mx Geyer, Submission 220, p. [1].

[36]North Burnett Community Services (NBCS), Submission 268, pages [1–2]. NBCS also noted that there have been cases of participants having payments suspended or terminated for failures to attend appointments due to prohibitive travel requirements, and that DEWR has been unsympathetic to these concerns.

[37]See, for example, Mr Paul Upcroft, Submission 86, p. [2]; Name Withheld, Submission 115, p. [1]; NameWithheld, Submission 142, pages [1–2].

[38]Name Withheld, Submission 161, pages 2–3.

[39]Ms Demetriou, Submission 267, pages 1–2.

[40]Melisa Fisher, Submission 235, p. [1].

[41]See, for example, Ms Aeryn Brown, Submission 114, p. [1]; Name Withheld, Submission 115, p. [1]; Name Withheld, Submission 116, p. 2; Name Withheld, Submission 161, p.3; Name Withheld, Submission 184, p.[1]; Name Withheld, Submission 230, p. [2]. This issue is discussed in more detail in Chapter 6.

[42]See, for example, Mx Geyer, Submission 220, p. [2]; Name Withheld, Submission 221, p. [1]; Name Withheld, Submission 223, p. [1]; Name Withheld, Submission 224, p. [1].

[43]See, for example, Name Withheld, Submission 118, pages [1-2]; Name Withheld, Submission 142, p. [1]; MFisher, Submission 235, p. [1]; Name Withheld, Submission 265, p. [1]. These matters are discussed in more detail in Chapter 11.

[44]See, for example, Name Withheld, Submission 123, p. [1]; Ms Alex Night, Submission 128, pages [1, 2]; Name Withheld, Submission 187, p. [2]. This issue is discussed in more detail in Chapter 14.

[45]See, for example, Mr Upcroft, Submission 86, pages [1–3]; Name Withheld, Submission 229, p. [1]; MrJayConnan, Co-coordinator—Research and Policy, Antipoverty Centre, Committee Hansard, 19September 2023, p. 13.

[46]See, for example, Bamara, Submission 214, p. 3; Asuria, Submission 246, p. 12; Mrs Rainbow, APM, Committee Hansard, 14 March 2023, p. 13.

[47]See, for example, Generation Australia, Submission 154, p. 3; MAX, Submission 146, pages 7–8; CoAct, Submission 151, p. 7; Associate Professor Siobhan O’Sullivan, private capacity, Committee Hansard, 14March 2023, p.13; Ms Annette Gill, Principal Advisor, NESA, Committee Hansard, 14 March 2023, p. 38.

[48]Dr Michael McGann, private capacity, Committee Hansard, 14 March 2023, p. 3.

[49]DEWR (2022), The Evaluation of jobactive Final Report, pages 201, 203,, viewed 20 November 2023.

[50]SEEK, Submission 242, p. 3.

[51]Dr Ingold and Mr Carr, Submission 216, pages 1–2.

[52]Australian Chamber of Commerce and Industry (ACCI), Submission 236, p. 3.

[53]Mrs Kathleen Newcombe, Group CEO, SRJA, Committee Hansard, 6June2023, p.14.

[54]Dr Lisa Fowkes, Director—Employment, SVA, Committee Hansard, 17May2023, p.32.

[55]See, for example, EROS Association, Submission 132 (Attachment 1), pages3, 4, 6-7; Workways, Submission 239, p. 11.

[56]Per Capita, Submission 252, pages [27, 51].

[57]DEWR, Submission 254, p. 7.

[58]Ms James, DEWR, Committee Hansard, 3November2022, p. 12.

[59]DEWR, Submission 254.5, p. 43.

[60]DEWR, Submission 254, p. 90.

[61]See Organisation for Economic Co-operation and Development (OECD) (2001), Innovations in Labour Market Policies: The Australian Way, p. 15,, viewed 20 November 2023; C McDonald and G Marston (2008), ‘Revisiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, 30(2), p.104.

[62]See DEWR (2002), Job Network Evaluation: Stage Three, p. 173,, viewed 20 November 2023; Productivity Commission (2002), Independent review of the Job Network, Inquiry Report No. 21, pages 4.10-4.11, 13.1-13.4, inquiries/completed/job-network, viewed 20 November 2023.

[63]Employment Services Regulatory Authority (ESRA), Annual Report 1997–98, p. 20.

[64]Commonwealth of Australia (1996), Reforming Employment Assistance: Helping Australians into Real Jobs– Ministerial Statement by Senator the Hon Senator Amanda Vanstone, Minister for Employment, Education, Training and Youth Affairs, p.18. See also Productivity Commission (2002), Independent review of the Job Network, pages3.21–3.23; McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Jobs Network’, Asia Pacific Journal of Public Administration, pages 105–106.

[65]See Institute for Public Policy Research (2023), The smarter state: Between the ‘magic money tree’ and the ‘reform fairy’, p. 5,, viewed 20 November2023. See also Dr Victor Quirk, Submission 209, pages 4–5.

[66]See OECD (2022), Paying for results: Contracting out employment services through outcome-based payment schemes in OECD countries, Social, Employment and Migration Working Papers No. 267, pages 4, 7, 9–11, 44–46,, viewed 20 November 2023.

[67]OECD (2022), Paying for results: Contracting out employment services through outcome-based payment schemes in OECD countries, p. 44.

[68]Institute for Public Policy Research (2023), The smarter state: Between the ‘magic money tree’ and the ‘reform fairy’, p. 5.

[69]S Olney (2016), ‘False economy: New public management and the welfare-to-work market in Australia’, PhDThesis—University of Melbourne (UniMelb), p. 55,, viewed 20November2023.

[70]The Policy Lab (2018), Improving outcomes for disadvantaged jobseekers – The next generation of employment services: response to discussion paper, p. 4, submissions/university-melbourne, viewed 20 November2023.

[71]McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, pages 106, 110–111.

[72]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, p. 106; Catholic Social Services Australia (2006), AJob Network for Job Seekers: A report on the appropriateness of current services, provider incentives and government administration of Job Network, p. 20,, viewed 20 November 2023.

[73]See Parliamentary Library (2007), A review of developments in the Job Network, parlInfo/search/display/display.w3p;query%3DId%3A%22library%2Fprspub%2FX2JP6%22, viewed 20 November 2023. ‘Creaming’ and ‘parking’ were also identified as key issues within quasi-market labour market programs in other jurisdictions. See, for example, E Carter and A Whitworth (2014), ‘Creaming and Parking in Quasi-Marketised Welfare-to-Work Schemes: Designed Out Of or Designed In to the UK Work Programme’, Journal of Social Policy, 44(2), p. 277.

[74]Professor Borland, Committee Hansard, 14March2023, p. 8.

[75]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, p. 107; D Lowery (1998), ‘Consumer Sovereignty and Quasi-Market Failure’, Journal of Public Administration Research and Theory, 8(2), pages 137–138.

[76]Professor Borland, Submission 171, p. 6.

[77]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, p. 107.

[78]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, pages 108–109; Productivity Commission (2002), Independent review of the Job Network, pages 14.9–14.10.

[79]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, p. 110.

[80]See McDonald and Marston (2008), ‘Re-visiting the Quasi-Market in Employment Services: Australia’s Job Network’, Asia Pacific Journal of Public Administration, pages 113–114.

[81]M Considine, J Lewis, and S O’Sullivan (2011), ‘Quasi-Markets and Service Delivery Flexibility Following a Decade of Employment Assistance Reform in Australia’, Journal of Social Policy, 40(4), pages 816–824.

[82]Considine, Lewis, and O’Sullivan (2011), ‘Quasi-Markets and Service Delivery Flexibility Following a Decade of Employment Assistance Reform in Australia’, Journal of Social Policy, p. 826.

[83]Workways, Submission 239, p. 3. See also D Finn (2011), Sub-contracting in Public Employment Services: Review of research findings and literature on recent trends and business models, European Commission, p.36.

[84]Finn (2011), Sub-contracting in Public Employment Services: Review of research findings and literature on recent trends and business models, p. 36.

[85]P Davidson (2022), ‘Is this the end of the Job Network model? The evolution and future of performance-based contracting of employment services in Australia’, Australian Journal of Social Issues, 57(3), pages 488–498.

[86]The Policy Lab (2018), Improving outcomes for disadvantaged jobseekers – The next generation of employment services: response to discussion paper, pages 4–10.

[87]Australian Government (2018), The next generation of employment services discussion paper, p. 64,, viewed 20 November 2023. The referenced OECD paper was OECD (2015), Employment Outlook 2015,, viewed 20 November2023.

[88]Australian Government (2018), The next generation of employment services discussion paper, p. 70.

[89]Employment Services Expert Advisory Panel (2018), I Want to Work Employment Services 2020 Report, p.53,, viewed 20 November 2023.

[90]See, for example, Per Capita, Submission 252, p. [23]; BSL, CPD and UniMelb, Submission 256, p. 9.

[91]NESA, Submission 260, p. 7.

[92]A Stebbing and G Meagher (2022), ‘Conclusion: The present and future of social service marketisation’, in GMeagher, A Stebbing and D Perche (eds), Designing Social Service Markets: Risk, Regulation and RentSeeking, ANU Press, p. 399.

[93]See, for example, Professor Borland, Submission 171, p. 11; Getting Welfare to Work Research Team, Submission 191, p. [7]; Australian Council of Social Service (ACOSS), Submission 203, p. 3; Per Capita, Submission 252, p. [7]; BSL, CPD and UniMelb, Submission 256, pages 15–16.

[94]Ms Emma Dawson, Executive Director, Per Capita, Committee Hansard, 14March2023, p.29.

[95]ACOSS, Submission 203, pages 3–4.

[96]BSL, Submission 249, pages 17–18.

[97]See, for example, CVGT, Submission 106, p. 28; NFAW, Submission 135, p. [7]; Dr Ann Nevile, Submission136, p. 8; Campbell Page, Submission 150, p. [7]; Professor Borland, Submission 171, p. 15; Tasmanian Government, Submission 174, pages 4, 11; RCOA, Submission 226, p. 8; SVA, Submission 232, p. 20; MsKaren Ho, Director General, Western Australian Government: Department of Training and Workforce Development (DTWD), Committee Hansard, 1May2023, p.28.

[98]CoAct, Submission 151, p. 9.

[99]DEWR, Submission 254, p.19.

[100]BSL (2017), Reforms to human services: response to the Productivity Commission, p. 9.

[101]Productivity Commission (2017), Introducing Competition and Informed User Choice into Human Services: Reforms to Human Services, p. 2.

[102]M Thomas (2019), Reforming employment services, in Parliamentary Library, Parliamentary Library Briefing Book: Key issues for the 46th Parliament, Parliament of Australia, pages 144–145.

[103]Employment Services Expert Advisory Panel (2018), I Want to Work Employment Services 2020 Report, pages28, 70-71.

[104]DEWR, Submission 254, p. 6. See also Ms Melissa Ryan, First Assistant Secretary—Workforce Australia for Individuals, DEWR, Committee Hansard, 3 November 2022, p. 4.

[105]MsJames, DEWR, Committee Hansard, 3November2022, p. 4. See also MrNathanSmyth, Deputy Secretary—Employment and Workforce, DEWR, Committee Hansard, 3November2022, p. 9.

[106]DEWR, Submission 254, pages 32, 37, 40

[107]See, for example, AMES Australia (AMES), Submission 148, p. 4; CoAct, Submission 151, p. 3; RCOA, Submission 226, p. 8; Yilabara Solutions, Submission 231, p. 5; MatchWorks, Submission 263, p. 13.

[108]MAX, Submission 146, pages 7-8.

[109]Dr David O'Halloran, Submission 108, p. [4].

[110]See, for example, NFAW, Submission 135, p. [7]; WISE Employment, Submission 169, p. 18; HOST International (HOST), Submission 188, p. 2; SYC, Submission189, p. 13; Centre for Policy Futures—University of Queensland (CPF–UQ), Submission 217, p. 5; Yilabara Solutions, Submission 231, p. 6; PaulRamsey Foundation (PRF), Submission 304, p. 2.

[111]BSL, Submission 249, p. 53.

[112]SVA, Submission 232, pages 3, 13. See also, WISE Employment, Submission 169, p. 16; SAEP, Submission199, p. 44.

[113]The Multicultural Professional Network Inc (MPN), Submission 99, p. 6.

[114]See, for example, Ms Brown, Submission 114, p. [2]; Name Withheld, Submission 137, pages [1, 2].

[115]Name Withheld, Submission 93, p. 5.

[116]See, for example, The Angus Knight Group (AKG), Submission 208, p. [3]; Community and Public Sector Union (CPSU), Submission 255, p. [5].

[117]Ms Brown, Submission 114, p. [2].

[118]See, for example, [1]; Enterprise and Training Company (ETC), Submission 133, p. 5; Name Withheld, Submission 137, p. [2]; Dr Ingold and MrCarr, Submission 216, p. 1; Name Withheld, Submission 223, p.[1]; SVA, Submission 232, p. 4; M Fisher, Submission 235, p. [1]; CPSU, Submission 255, p. [5]; MsDemetriou, Submission 267, p. 2; MrAdam Johnston, Submission 275, p. [2].

[119]See, for example, WISE Employment, Submission 169, p. 16; SAEP, Submission 199, p. 46; NESA, Submission 260, p.59; MatchWorks, Submission 263, p. 30.

[120]Professor Leila Green, Dr Kylie Stevenson, Dr Kelly Jaunzems, Ms Claire Hanlon and Mr Arthur Hanlon (Professor Green et al), Submission 120, p. [3].

[121]Professor Borland, Submission 171, pages. 2, 13.

[122]See, for example, Australian Centre for Career Education (ACCE), Submission 149, pages 8-9; AMES, Submission 148, p. 2; CoAct, Submission 151, pages 10-11 AKG, Submission 208, p. [3]; APM, Submission 213, p. 12.

[123]AMES, Submission 148, p.4.

[124]ACCE, Submission 149, pages 8–9.

[125]See, for example, AMES, Submission 148, p.4; MrsCastley, Multicultural Australia, Committee Hansard, 6June2023, pages 10–11.

[126]Per Capita, Submission 252, p. [23].

[127]Dr Fowkes, SVA, Committee Hansard, 17May2023, p. 33.

[128]Ms James, DEWR, Committee Hansard, 3November2022, p.15.

[129]Parliamentary Budget Office, Expenditure on Employment Services, Advice provided by the Parliamentary Budget Office to the Select Committee on Workforce Australia Employment Services, 2 November 2022, pages14-15.

[130]Parliamentary Budget Office, Expenditure on Employment Services, Advice provided by the Parliamentary Budget Office to the Select Committee on Workforce Australia Employment Services, 2 November 2022, p.14.

[131]DEWR, Submission 254, p.18.

[132]See OECD (2022), Paying for results: Contracting out employment services through outcome-based payment schemes in OECD countries, pages 8–18. These costs are discussed throughout this report, and particularly in Chapter 14, which focuses on procurement and funding.

[133]See, for example, J Borland (2014), ‘Dealing with unemployment: What should be the role of labour market programs’, ANZSOG Evidence Base, Issue 4, p. 10; J Borland (2019), What we missed while we looked away: The growth of longterm unemployment in Australia, LabourmarketsnapshotJune 2019;, viewed 20November2023.

[134]Borland (2014), Dealing with unemployment: What should be the role of labour market programs, p. 10.

[135]See, for example, Youth Projects, Submission 141, p. 1; Nirrumbuk Aboriginal Corporation (NAC), Submission 188, p. 1; Workskil, Submission 196, pages 4, 8, 19; Yilabara Solutions, Submission 231, p. 5; Ms Dawson, Per Capita, Committee Hansard, 14March2023, p.29; Mrs Newcombe, SRJA, Committee Hansard, 6June2023, p.13.

[136]Campbell Page, Submission 150, p. [6].

[137]Ms Sinclair, NESA, Committee Hansard, 14March2023, p.37.

[138]Economic Justice Australia (EJA), Submission 153, p. [2].

[139]Getting Welfare to Work Research Team, Submission 191, p. 13.

[140]APM, Submission 213, p. 14.

[141]CoAct, Submission 151, p.13.

[142]MAX, Submission 146, p. 21.

[143]CoAct, Submission 151, p. 8.

[144]DEWR (2023), Workforce Australia Services Provider Performance Ratings, June 2023, workforce-australia/resources/provider-performance-ratings-june-2023, viewed 20 November 2023. Ratingsare given for performance in a specific region.

[145]See, for example, WISE Employment, Submission 169, p. 10; BSL, Submission 249, pages 12, 26, 76-77; The BUSY Group Ltd (BUSY), Submission 227, p. 2; Per Capita, Submission 252, p. 62; MatchWorks, Submission 263, p. 23.

[146]See, for example, F Larsen and T Bredgaard (2007), ‘Quasi-markets in employment policy in Australia, the Netherlands and Denmark: do they deliver on promises?’, Social Policy and Society, 7(3), pages 13, 22-23; P Lewis (2017), Quasi-markets:An overview and analysis, King’s College London, pages 13-14; OECD(2022), Paying for results: Contracting out employment services through outcome-based payment schemes in OECD countries, p. 7; R van Berkel (2015), ‘Quasi-Markets and the Delivery of Activation—A Frontline Perspective’, in MConsidine and S O’Sullivan (eds), Contracting-Out Welfare Services, Broadening Perspectives in Social Policy Series, p.78.

[147]SYC, Submission 189, pages 18–19.

[148]MAX, Submission 146, p. 42.

[149]Ms Sinclair, NESA, Committee Hansard, 14March2023, p. 35.

[150]Workskil, Submission 196, p. 31. Ms Felicite Black, CEO, Women’s Health and Family Services (WHFS) used the same adjective in describing the contract at a hearing, Committee Hearing, 1February2023, p. 9.

[151]Professor Borland, private capacity, Committee Hansard, 14 March 2023, pages 2–3, 10–11.

[152]See, for example, NFAW, Submission 135, p. [6]; SRJA, Submission 145, pages 6, 19; Workskil, Submission196, pages 7-8; CPSU, Submission255, p. [6].

[153]Ms Gill, NESA, Committee Hansard, 14March2023, p.44.

[154]See, for example, MAX, Submission 146, p. 7; Professor Mark Considine, private capacity, Committee Hansard, 14March2023, p.14; Ms Gill, NESA, Committee Hansard, 14March2023, p.44.

[155]DEWR, Submission 254, p.37.

[156]See, for example, CoAct, Submission 151, p. 8; Ms Sandra Elhelw Wright, CEO, Settlement Council of Australia (SCoA), Committee Hansard, 17May2023, p.27.

[157]Workskil, Submission 196, pages 8, 9.

[158]Ms Sinclair, NESA, quoted by Marin-Guzman, ‘Job services industry stunned after wave of contract terminations’, Australian Financial Review, 29 March 2022.

[159]Workways, Submission 239.1, p. 3.

[160]See, for example, Professor Borland, Submission 171, p. 13; Professor Considine, Committee Hansard, 14March2023, p. 8; Mr Cliff Eberly, Program Director—Resilient People and Places, CPD, Committee Hansard, 14March2023, p. 21; Dr Travers McLeod, Executive Director, BSL, Committee Hansard, 14March2023, p. 24.

[161]See, for example, Dr Nevile, Submission 136, pages 4-5; Campbell Page, Submission 150, p. [7]; Joblink Plus, Submission 157, p. 7; WISE Employment, Submission 169, p. 10; Training Alliance Group (TAG), Submission 195, p. [2]; Yilabara Solutions, Submission 231, p. 26; SVA, Submission 232, p. 20; Asuria, Submission 246, p. 26; BSL, Submission 249, p. 77; Victorian Chamber of Commerce and Industry (VCCI), Submission 259, p. 6.

[162]CPD (2015), Grand Alibis: How Declining Public Sector Capability Affects Services for the Disadvantaged, p.6,, viewed 20November2023.

[163]Ms Robyn Shannon, First Assistant Secretary—Workforce Australia for Providers, DEWR, Committee Hansard, 3 November 2022, p. 19.

[164]See, for example, Professor Considine, private capacity, Committee Hansard, 14 March, p. 14; Dr McGann, private capacity, Committee Hansard, 14 March 2023, p. 15.

[165]See, for example, CoAct, Submission 151, p. 6; Professor Borland, Submission 171, pages 14-15; BSL, Submission 249, p. 18; AUWU, Submission253, p. [8]; CPSU, Submission 255, pages[9–10].

[166]Per Capita, Submission 252, p.[24]; quoting, Independent Panel of the APS Review (2019), Our Public Service Our Future: Independent review of the Australian Public Service, p. 41, default/files/resource/download/independent-review-aps.pdf, viewed 20November2023.

[167]See, for example, BSL, Submission 249, p. 28; Professor Gaby Ramia, private capacity, Committee Hansard, 14March2023, p. 5; Dr McGann, UniMelb, Committee Hansard, 14March2023, p. 22; MsDawson, Per Capita, Committee Hansard, 14March2023, pages 29–30.

[168]Commonwealth of Australia (2023), Working Future: The Australian Government's White Paper on Jobs and Opportunities, p. 224.

[169]ESRA (1996), 1995–96 Annual Report, pages 50–51.

[170]See, for example, Greater South East Melbourne (GSEM), Submission 155, p. [7]; TAG, Submission 195, p.[2]; Yilabara Solutions, Submission 231, p. 26; Asuria, Submission 246, p. 26; PerCapita, Submission 252, p. 12.

[171]Ms Sinclair, NESA, Committee Hansard, 14 March 2023, p. 35.

[172]See, for example, DEWR, Submission 254, pages 98, 104; NESA, Submission 260, pages 73–74.

[173]See, for example, Name Withheld, Submission 142, p. [1]; Tasmanian Government, Submission 174, p. [6]; Mission Australia, Submission 190, p. 4; SCoA, Submission 211, p. 17; Name Withheld, Submission 221, p.[5]; AUWU, Submission 253, p.[21]; Antipoverty Centre, Submission276, p. [10]; Lysander, private capacity, Committee Hansard, 20September 2023, p. 28.

[174]Antipoverty Centre, Submission 276, p. [10].

[175]Anglicare WA, Submission 127, p. [4].

[176]SRJA, Submission 145, p. 4.

[177]Ms Karen Zaskolny, Submission 131, p. [2].

[178]Dr Katherine Curchin, Submission 197, pages 1-2.

[179]BSL, Submission 249, p. 69.

[180]Institute for Public Policy Research (2023), The smarter state: Between the ‘magic money tree’ and the ‘reform fairy’, pages 15-16. The analysis referenced was E Deci, R Koestner and R Ryan (1999) ‘A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation’, Psychological Bulletin, 125(6), p. 692.

[181]Department of Families, Housing, Community Services and Indigenous Affairs (2010), Incentives, rewards, motivation and the receipt of income support, Occasional Paper No.32,p. 39, =1699450, viewed 20 November 2023.

[182]See, for example, Ms Juliet Vrakas, Submission 91, pages [4–5]; Name Withheld, Submission 107, p. [1]; Professor Green et al, Submission 120, p. [10]; Mr Murray Pitts, Submission 121, p. [1]; AMES, Submission 148, p. 1; SSI, Submission 193, p. 4; Western Australian Association for Mental Health (WAAMH), Submission 248, pages 18–19; GetUp!, Submission 251, p. 3.

[183]Centre for Excellence in Child and Family Welfare (CECFW), Submission 200, p. 8.

[184]See, for example, Name Withheld, Submission 125, p. [2]; Dr Colin Harrison, Submission 152, pages 1, 3; WISE Employment, Submission 169, p. 20; Workskil, Submission 196, p. 30; AUWU, Submission 253, pages[2, 6].

[185]Robodebt Royal Commission, Report of the Royal Commission into the Robodebt Scheme, pages 330, 342.

[186]DEWR, Submission 254, p. 98.

[187]See, for example, Name Withheld, Submission 2, p. [2]; SECL, Submission 64, p. 8; Name Withheld, Submission 93, pages [2–4]; MTC Australia (MTC), Submission164, p. 4; Dr Ingold and Mr Carr, Submission216, p. 1; Mr Nick Costello, Submission 250, pages 15, 17; Ms Brown, CPD, Committee Hansard, 14 March 2023, p. 23.

[188]SVA, Submission 232, p. 5.

[189]See, for example, CVGT, Submission 105, p. 21; ETC, Submission 133, p. 7; MAX, Submission 146, p. 40; AMES, Submission 148, p. 4; Campbell Page, Submission 150, p. [8]; MTC, Submission 164, p. 5; National Association for the Visual Arts Ltd (NAVA), Submission 165, p. 2; WISE Employment, Submission 169, p. 20; Multicultural Australia, Submission 182, p. 7; SSI, Submission 193, p. 14; Dr Curchin, Submission 197, p. 3; SAEP, Submission 199, p. 59; MatchWorks, Submission 263, p. 36; NBCS, Submission 268, p. [2].

[190]Ms Dawson, Per Capita, Committee Hansard, 14 March 2023, p. 31. See also ACOSS, Submission 203, p.41.

[191]See, for example, Ms Karen Black, Submission 94, p. [3]; Tasmanian Government, Submission 174, p. [10]; ACOSS, Submission 203, p. 42; Name Withheld, Submission 230, p. [1].

[192]Dr Shelley Bielefeld, Submission 204, pages 3–4.

[193]See, for example, Name Withheld, Submission 93, p. [3]; Name Withheld, Submission 160, pages 11–13; MxGeyer, Submission 220, p. [3].

[194]Name Withheld, Submission 160, p. 11.

[195]See, for example, Mr Matthew Ford, Submission 7, p. [2]; Ms Vrakas, Submission 91, p. 6; Name Withheld, Submission 92, p. 2; Name Withheld, Submission 93, p. [3]; Name Withheld, Submission 187, p.[2]; Name Withheld, Submission 221, p. [1].

[196]See, for example, Name Withheld, Submission 160, p. 18; MTC, Submission 164, pages 4–5; WISE Employment, Submission 169, p. 12; CPF–UQ, Submission 217, p. 4; Jobs Statewide, Submission 272, p. 7.

[197]WISE Employment, Submission 169, p. 13.

[198]NAC, Submission 180, p. [3]. Seel also CPF–UQ, Submission 217, p. 4; Jobs Statewide, Submission 272, p.7.

[199]See, for example, Name Withheld, Submission 2, p. [1]; Ms Brown, Submission 114, p. [3].

[200]Name Withheld, Submission 93, p. 2.

[201]DEWR, Submission 254.5, p. 22.

[202]See, for example, Name Withheld, Submission 137, p. [2]; Dr Ingold and Mr Carr, Submission 216, p. 1; AYAC, Submission 238, p. 4; CPSU, Submission 255, p. [5].

[203]See, for example, Name Withheld, Submission 2, p. 2; Name Withheld, Submission 93, p. 2; ProfessorGreen et al, Submission 120, p. [10].

[204]Name Withheld, Submission 137, p. [1].

[205]DEWR, Submission 254, p.104.

[206]See, DEWR (2002), Job Network Evaluation: Stage Three, p.54 for a description of its application towards Active Labour Market Programs (ALMPs).

[207]DEWR, Submission 254.5, pages 23–24.

[208]See, for example, Professor Green et al, Submission 120, p. [10]; MAX, Submission 146, pages 8, 41; CoAct, Submission 151, p. 19; SYC, Submission 189, p. 17; Workskil, Submission 196, p. 26; SAEP, Submission 199, p. 59.

[209]See, for example, Name Withheld, Submission 123, p. [1]; Name Withheld, Submission 160, p. 3.

[210]See, for example, Name Withheld, Submission 115, p. [1]; Name Withheld, Submission 123, p. [1]; NameWithheld, Submission 142, p. [2].

[211]See, for example, Name Withheld, Submission 162, p. [3]; atWork Australia (atWork), Submission 210, p. 6.

[212]See, for example, MAX, Submission 146, p. 41; WISE Employment, Submission 169, p. 20; St Vincent de Paul Society, Submission 170, pages 1–4.

[213]Dr Peter Davidson, ACOSS, Committee Hansard, 19 September 2023, p. 28.

[214]See, for example, Professor Green et al, Submission 120, p. [11]; MatchWorks, Submission 263, p. 25.

[215]See, for example, CoAct, Submission 151, p. 19; SAEP, Submission 199, p. 59.

[216]atWork, Submission 210, p. 12.

[217]Professor Green et al, Submission 120, p. [11].

[218]DEWR, Submission 254, pages 109–111.

[219]See, for example NFAW, Submission 135, p. [2]; DrHarrison, Submission 152, p. 4; Dr Bielefeld, Submission204, pages 2–3.

[220]This is exacerbated by the provider having the dual role of supporting jobseekers and monitoring and enforcing compliance with their obligations.

[221]See, for example, Mr Ford Submission 7, p. [1]; Name Withheld, Submission 93, pages 5–6; AMES, Submission 148, p. 3; Campbell Page, Submission 150, [pages 5, 8]; Dr Quirk, Submission 209, p. 7; AUWU, Submission 253, p. [7]; CPSU, Submission 255, p. [12].

[222]Ms Sarah Sacher, Law Reform Officer, EJA, Committee Hansard, 17May2023, p.6.

[223]Dr Louise O'Rance, Assistant Secretary—Evidence and Assurance, DEWR, Senate Education and Employment Legislation Committee, Committee Hansard, 25 October 2023, p. 74.

[224]DEWR, Job seeker compliance data,, viewed 20 November 2023.

[225]DEWR (2023), TCF Public Data, various, Table 7,, viewed 20 November 2023.