Dissenting Report

Mr Aaron Violi MP

Summary

The Coalition believes in a strong safety net for those most vulnerable in our society and the dignity and power of employment. This is why the Coalition has always taken measures while in Government to assist those most in need.

We take seriously our responsibility to ensure that every Australian who seeks employment is supported to find it.

Whilst some of the recommendations in this report are not opposed, in our view, it is counter-intuitive that instead of focussing on cost of living issues—an established priority for all Australians—the Albanese Labor Government instead chose to set up a Committee to review a system that was set up in 2022 and was still in its infancy stages.

It would have been far more productive to allow the program to settle in and be put to the test, and then decide whether or not to conduct a review.

The Albanese Government chose not to do this.

The Coalition has concerns about some of the key recommendations that have come out of this premature process that evidently seek to water down mutual obligation requirements, pass on key employment service functions from the private to the public sector, which end up increasing the size of the bureaucracy, inflating the cost to the taxpayer and simply risk creating more red tape.

This report highlights our key areas of concern in relation to the Government majority report.

Every measure proposed by the Government, must prioritise a careful balance between the benefits they provide and the value for taxpayer money.

Social welfare has consistently made up over a third of Australia’s annual budget over the past three decades.

The total social security and welfare expenditure was around $42.0 billion in 1993–94[1] and is estimated at $250.3 billion in 2023–24[2] (nominal dollars, not adjusted for inflation). This as a proportion of total government expenditure, made up around 34.4 per cent in 1993–94 and is estimated at 36.6 per cent in 2023–24.

Considering the enormous cost to the taxpayer, the efficiency and effectiveness of the recommendations must be measured against their ability to reduce unemployment, increase productivity, and boost economic growth.

The Coalition understands that the vast majority of those receiving unemployment benefits, no doubt, do the right thing. What the Coalition has always sought to ensure is that our welfare system is neither taken advantage of, nor ends up becoming a disincentive for those who genuinely wish to get back into the workforce.

The Coalition has long believed that the best form of welfare is a job. The underlying rationale is that those who are otherwise fit to work but receiving unemployment benefits should be doing something in return to continue receiving payments. If a recipient had to engage in an approved activity in exchange for unemployment benefits, that should leave the recipient with sufficient incentive to either search for more permanent career roles or be studying or training to gain the skills for such permanent roles.

The Organisation for Economic Co-operation and Development (OECD) too has encouraged its member states to implement activation strategies to assist the unemployed.[3]

For the most part, both sides of politics in Australia generally agree that mutual obligation requirements must continue to remain stipulated in social security law as well as included in Employment Pathway Plans, commonly known as a Job Plan.

Over the past three decades, successive Labor and Liberal governments have had some form of welfare programs in place that honoured mutual obligation requirements in their own ways. Income support recipients have had to participate in activities to improve employment prospects and to contribute to the community.

The debate is essentially about what those requirements should look like, what sorts of measures and mechanisms should have administrative and regulatory oversight over the welfare system and how to make the entire process more productive and cost-effective to implement and manage.

In January 2018, an independent Expert Advisory Panel was appointed to help shape the design of employment services in Australia. The panel’s report—I Want to Work[4]—was provided to the then Government on 15 October 2018.

The panel’s report highlighted numerous opportunities to enhance employment service delivery by simplification, harnessing the use of digital technology, and cutting red tape based on stakeholder feedback. The end result was refined based on extensive consultation, user‑focussed design research and many trials.

This report then formed the basis for the development of Workforce Australia which was only recently implemented in July 2022.

The transition from jobactive to Workforce Australia was consistent with the Coalition’s proven track record for getting people off welfare and into the workforce.

The Coalition spent considerable time, effort and resources into developing the Workforce Australia model. The replacement of jobactive with Workforce Australia was aimed at assisting the most disadvantaged jobseekers and enabling greater use of digital technology.

The new system involved a Points Based Activation System and a greater emphasis on training and skills.[5]

The fact that previous systems were effective can be gauged from the historical data on jobseeker compliance available on DEWR’s website.[6]

Mutual obligations

The Coalition believes that the best form of welfare is a job.

The Coalition firmly believes in maintaining a safety net while preventing a system that is vulnerable to exploitation and lacks adequate incentives for the long-term unemployed to seek permanent employment.

The ParentsNext program, which we support, is crucial in this context. It plays a significant role in connecting young parents, particularly single mothers, to the workforce, helping them develop skills, undergo training, and receive job preparation support.

Its abolition would not only serve to disconnect vulnerable parents from future participation in the workforce but also represent a departure from the principle of mutual obligation. The program’s contribution to preventing welfare dependency and supporting young single mothers in their workforce integration is invaluable.

The Coalition believes that a well-designed welfare system must motivate individuals to pursue employment while assisting those genuinely in need. It is precisely due to this vision that during our time in government, the Coalition was proud to see many jobseekers move from welfare into work.

We designed mutual obligation requirements to ensure jobseekers participate in activities and develop skills that help them into employment.

It remains of grave concern that this fundamental commitment is now eroding with the current Labor Government.

This is because time and time again, when given the chance, Labor undermines the concept of mutual obligations.

It is self-evident that many in Labor ranks do not support the concept of mutual obligation. This is the line of reasoning that has resulted in the announcement to abolish the ParentsNext program and to replace it with a voluntary program. This only helps undermine a potential connection to the workforce for some of Australia’s most vulnerable people.

The Coalition remains deeply concerned that some of the proposed changes will consign vulnerable Australians to long-term unemployment and a lifetime of welfare.

The longer a person spends out of the workforce, the harder it becomes to return to it. We all understand that individuals who contribute to society through work have an increased sense of purpose. It is therefore critical that governments recognise the long-term benefits that having a job provides.

Years of work have been dedicated to the development of Workforce Australia which replaced jobactive in July 2022. The system was designed to be universal and flexible to allow for local solutions. Having only been in place for a little over 12 months, Workforce Australia is still in its infancy, and providers and participants are still feeling the impact of the transition period. As outlined, it would have been prudent to allow sufficient time for the new model to settle before making significant changes.

Work for the Dole

In relation to the recommendation regarding Work for the Dole as a last resort activity for welfare recipients who fail to comply with their jobs plan, the Coalition is opposed to this.

We believe Work for the Dole is a far more useful tool for getting people off welfare and back into the workforce than it seems to be given credit for in this recommendation. This is why it has been retained as a key feature of previous mutual obligation-based programs under jobactive and was built into Workforce Australia.

The Coalition believes that Work for the Dole helps a job seeker develop skills and gain valuable work experience to be job ready at the next available opportunity.

It increases employability by helping jobseekers get into the discipline of a daily routine, the commute to and from their work environment, and the sense of responsibility that comes with it. These are vital parts of an individual’s personal development. It helps them gain vital social skills and maintain a connection to the community and the workforce.

Establishment of Employment Services Australia and the Employment Services QualityCommission

The Government report recommends the establishment of Employment Services Australia (ESA) and the Employment Services Quality Commission. This proposal raises concerns about increased bureaucracy, cost and red tape and the presupposition that government institutions are better placed to deliver these services than the private sector.

This appears to be ideologically driven.

It appears that this Labor Government only wants to increase the role of government in employment services delivery with the view to boost the capacity of the public sector. Once implemented, the proposed new Commonwealth Employment Services System would take agency away from the private sector which has proven to achieve results and innovation in the delivery of employment services.

Involving the Australian Capital Territory as the trial site for launching this transition from private to public sectors attests to where the Government wants to go in the future. Observers couldn’t be faulted for construing this to be a part of a wider effort to set the foundation in stone for the old Commonwealth Employment Service (CES) model.

The fact is that the existing private provider-based programs have performed well overall, and at a lower cost compared to their alternatives. jobactive had delivered around 50per cent of jobseekers in the workforce within three months of participation, in comparison to 42.5percent for the last three years of the earlier Job Services Australia model.[7]

The transition from jobactive to Workforce Australia had less to do with the inefficiency of jobactive, and more to do with the fact that there is always room for improvement. Over the jobactive contract period (July 2015 to June 2022) there were nearly 3.7 million commencements in jobactive services. Between 1 July 2015 and 30 June 2022, jobactive achieved more than 2,386,223 job placements and 779,701 employment outcomes lasting 26‑weeks or more.

Some submissions acknowledge that it is the current contract settings and program mix and structure that are the issues, rather than the entities that deliver the services.

This feedback is more reason to be apprehensive about any radical changes proposed to the system including a move towards services delivered by the public sector. To quote directly from the Government’s report—'rebuild a public core to the employment services sector’.

Take into consideration that the two main unemployment benefits (JobSeeker Payment and its predecessors, as well as Youth Allowance or equivalent payments) have consistently declined as a share of the working age population from roughly 7.6 per cent in 1993 to 5.2percent in 2022.[8]

There is no guarantee to the Australian taxpayer that a shift back to putting control into the hands of a costly bureaucracy would provide better employment outcomes and continue to build on the legacy of successive Coalition governments.

This helps us appreciate why there exists a division within the welfare community about increasing bureaucracy. This diversity of viewpoints should not be disregarded.

It must be taken into account that some welcome it, while others are sceptical, fearing a return to a CES-like system which may transfer responsibilities back to the public sector and potentially undermine the good work of private providers.

The proposed Employment Services Quality Commission, envisioned as an ombudsman-like body, only increases public sector involvement, suggesting a duplication of efforts, more bureaucracy, and potentially creating confusion for clients.

It seems, that what is being suggested in the report with the establishment of two concurrent bodies is too all-encompassing and a massive power grab for the public sector over an industry that has served well when outsourced to the free market.

Online delivery

In 2021, the Coalition Government significantly transformed employment services by shifting to online delivery, with services administered and managed by DEWR. This change was based on evidence that most online jobseekers would find work within six months, though some remained in the system longer.

The Coalition’s implementation of the Online Delivery model in employment services was designed to connect job ready participants with opportunities, minimising taxpayer burden.

The Coalition supports trials reducing the amount of time participants spend in the online delivery system before they receive intensive face-to-face support, from 12 months to three or to six months service period to evaluate its effectiveness.

Expansion of employment services to other participants

The proposal to extend employment services to those in unsatisfactory jobs, including permanent residents, the underemployed, those in insecure work, and gig economy workers, is an ambitious expansion proposal.

The practical implementation and funding of this initiative raise serious questions which the Albanese Labor Government need to answer.

Concerns about the net positive outcomes for both participants and taxpayers funding the service expansion need very careful consideration, including the importance of its effective implementation and its impact on long-term unemployed jobseekers as well as its impact on the federal Budget.

Social enterprises

The Government report recommends social enterprise plays a greater role in the employment services system.

The Coalition understands the significance of social enterprise in addressing disadvantage and providing meaningful pathways to employment.

While the Government report is unclear on a chosen funding model, it floats the idea of using the reverse auction grant model as used by Jobs Victoria, whereby funding would be provided at the national, state and territory or employment region level using a bidding-based grants system.

The Coalition is of the view that all social enterprises, large and small, should be part of the employment services sector. It is, therefore, vital that any future grant process is focused on reducing red tape, not increasing it. A burdensome grants process will only deter smaller-scale social enterprise from engaging with the sector. It is also imperative that any funding decisions reflect value for taxpayer money through quality social enterprises focused on equipping jobseekers with skills and leading to employment.

Mr Aaron Violi MP

Footnotes

[1]Commonwealth of Australia (1993), Budget Statement 1993–94: Budget Paper No.1, p. 3.87.

[2]Commonwealth of Australia (2023), Budget Overview: Stronger foundations for a better future, p. 67.

[3]See Institute of Labour Economics (2014), Activation and Active Labour Market Policies in OECD Countries: Stylized Facts and Evidence on their Effectiveness, pages 3, 26, www.iza.org/publications/pp/84/activation-and-active-labour-market-policies-in-oecd-countries-stylized-facts-and-evidence-on-their-effectiveness, viewed 26 November 2023.

[4]Employment Services Expert Advisory Panel (2018), I Want to Work Employment Services 2020 Report, www.dewr.gov.au/new-employment-services-model/resources/i-want-work, viewed 26 November 2023.

[5]See Department of Employment and Workplace Relations (DEWR), What are mutual obligation requirements?, www.workforceaustralia.gov.au/individuals/obligations/learn/requirements, viewed 28November 2023; DEWR, Explainer – Workforce Australia and Points Based Activation System (PBAS), www.dewr.gov.au/newsroom/articles/explainer-workforce-australia, viewed 28November 2023.

[6]DEWR, Job seeker compliance data, www.dewr.gov.au/employment-research/job-seeker-compliance-data, viewed 28November 2023.

[7]Senate Standing Committee on Education and Employment (2018), jobactive: failing those it is intended to serve, p. 185.

[8]Parliamentary Library estimates using DSS and ABS data.