Budget Resources
Matthew Thomas
Employment services are aimed at helping people in receipt
of income support payments to find and maintain paid employment. Since the
mid-1990s employment services in Australia have been delivered mainly through
contracts with private and non-profit community providers.
The Labor Government has made
a commitment to reform the mainstream employment services system, known as Workforce
Australia. The current
contract with providers is due to expire in 2028. Major reforms to the
system cannot be undertaken without significant variations being made to this
deed.
The 2024–25
Budget continues a process commenced in the October 2022–23 Budget of
ceasing Workforce Australia programs deemed to be underperforming, and using
the savings generated, along with reprioritised funding from existing programs,
to improve the system and ‘support future reform’ (p. 91).
The Government also intends to introduce a new disability employment
program by 1 July 2025, funding for which is provided in the Budget. The current
Disability Employment Services (DES) program was extended for 2 years as a part
of the October
2022–23 Budget to enable a phased replacement approach (p. 179).
Additionally, the Budget provides
$777.4 million in funding over 5 years towards the establishment of a new
Remote Jobs and Economic Development Program to replace the current Community
Development Program (pp. 162–163). Details are provided in the Indigenous
affairs Budget review 2024–25 article.
Workforce Australia
Background
Workforce
Australia was rolled out nationally in July 2022, following a trial of the service model in SA and
NSW.
In shifting from the previous system, jobactive, Workforce
Australia introduced online self-servicing for job-ready and digitally literate
job seekers. This was intended to free up resources to deliver intensive,
face-to-face services and support to disadvantaged job seekers.
In early August 2022, the Government
established a Committee on Workforce Australia Employment Services, with
its final
report tabled on 30 November 2023. The report was highly critical of
Workforce Australia and its predecessor systems, and aspects of the outsourcing
of employment services that were found to have contributed to these system’s
failings. Among other things, the report argued that Workforce Australia:
-
is not delivering adequate or optimal outcomes for job seekers
and is largely neglecting employers
-
has a heavy work-first focus which results in job seekers being
placed in inappropriate short-term jobs and churned through the system rather
than finding long-term sustainable work
-
does not provide sufficiently effective and tailored support to
disadvantaged job seekers due to many staff being unqualified and overloaded
with ‘red tape’ and complex and costly procurement processes that exclude
smaller organisations better placed to deal with the needs of these job seekers
-
has counterproductive mutual obligations settings that are often
not relevant to job seekers’ needs or aspirations, and penalties for
non-compliance that are harsh and ‘ineffective at supporting people into work’
(p. 30) and
-
is insufficiently supervised in the interests of quality service
by the Australian Public Service (APS) which has been turned into ‘contract
managers’ (p. 31).
Ultimately, the Committee determined 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 (p. 31).
The Coalition’s dissenting
report took issue with the Government’s decision to review the Workforce
Australia system, despite this system being ‘still in its infancy stages’ (p.
531). It also criticised the
Government’s decision to replace ParentsNext (an employment program
targeted at disadvantaged young parents) with a voluntary program, and what it
perceives to be a lack of support for the concept of mutual obligations among
many Government members (pp. 532–534).
The Government has yet to respond to the report, but Minister
for Employment and Workplace Relations Tony Burke has indicated
that the employment services principles outlined in the 2023 Employment White Paper
(p. 224), would guide its consideration of the inquiry’s recommendations.
Budget measures
The 2024–25
Budget provides funding for a response to some of the more pressing issues
highlighted by the inquiry. These are mostly related to support for
disadvantaged job seekers, and safeguards to ensure that penalties for failures
to comply with mutual obligation requirements are applied fairly. The main
measures include:
-
$68.6 million over 5 years from 2023–24 to increase resourcing
for the Digital Services Contact Centre, which supports job seekers accessing
online services
-
$32.1 million over 4 years from 2024–25 for the Real Jobs, Real
Wages pilot, which provides tapered wage reimbursements to employers of job
seekers at risk of long-term unemployment
-
$21.9 million over 5 years from 2023–24 for the WorkFoundations
initiative, which provides paid employment placements and tailored supports for
disadvantaged job seekers through social enterprises and suitable businesses
and
-
$10.9 million over 4 years from 2024–25 (and $0.8 million per
year ongoing) for improvements to the Workforce Australia IT system (pp.
91–92).
The Budget
provides further funding to support changes to the mutual obligation
requirements that apply to those on income support payments, such as JobSeeker.
These changes include:
-
from 1 October 2024, extending the period (from 2 to 5 business
days) for job seekers to re-engage with their employment services provider if
they have not met a mutual obligation requirement
-
from 1 January 2025, removing the 13-week time limit for
temporary medical incapacity exemptions from mutual obligation requirements.
Instead, the exemption timeframe will be based on advice from medical
practitioners
-
enabling certain job seekers greater opportunity to understand
their mutual obligation requirements before a payment suspension is applied,
and, from 1 March 2025:
- not
applying compliance measures the first time a job seeker fails to meet a mutual
obligation requirement, except for not agreeing to a job plan or attending an
initial interview
- not
suspending the payment of job seekers for failing to attend an appointment with
their employment services provider where they have been working 30 hours or
more per fortnight for at least 2 months and
- ensuring
that any application of financial penalties while a job seeker is in the
Targeted Compliance Framework ‘penalty zone’ will be investigated by a Services
Australia staff member before a penalty is applied.
While some of the mutual obligation-related changes have
been welcomed
by welfare sector groups, other stakeholders have argued that mutual
obligations should be further relaxed or removed
altogether.
The Government
has indicated that the above measures are not subject to the passage of
legislation.
Disability employment services
Background
While the employment rate gap between people with and
without disability in Australia has improved slightly over time, data from 2019
indicates that Australia is falling
below the OECD average (p. 39). As Figure 1 illustrates, progress has been
slow on this measure.
Figure 1 Employment rates of people by disability
status (left axis) and ratio of employment rates (right axis), 1998 to 2018
(a)People
who reported any type of disability, includes those with a non-specified
restriction or limitation.
Source: ABS, Disability, Ageing and Carers, Australia, various years (Canberra: ABS, various); Parliamentary
Library calculations.
The Department of
Social Services (DSS) is currently designing a new disability employment program
to replace the existing Disability Employment Services (DES) program. In doing
so, DSS has drawn on advice from the DES Reference Group and community consultation. DSS has also taken account of
findings from multiple reviews, including a mid-term review of the DES program conducted by the Boston Consulting Group in
2020.
This review
analysed the program’s efficacy and efficiency and assessed the results of earlier
reforms implemented in 2018. The resulting report identified multiple challenges
for the DES program, including limitations in service quality due to providers’
lack of disability expertise; the complexity of the system rules that inhibit
providers’ ability to be flexible and innovative or tailor their support to the
needs of individual job seekers; and a lack of integration with and clear
pathways between the National Disability Insurance Scheme (NDIS) and the DES
program, ‘despite their common program goals’ (p. 85).
The review
proposed several recommendations and options to improve DES program
performance. These include:
-
better targeting
program support to job seekers who need it the most and who are most likely to
benefit from work
-
realigning provider
incentives to prioritise employment (rather than education) outcomes
-
improving program
management ‘with informed decision making and oversight’
-
enabling providers to
more easily enter and exit the market
-
enabling and
encouraging providers to exercise flexibility and innovation in the delivery of
services
-
increasing the amount
of time providers are able to spend assisting job seekers by optimising
compliance and administrative requirements and
-
allaying employer
concerns about employing people with disability and better assisting them to do
so (pp. 7–9).
The new disability employment
program
There is currently limited detail regarding what the new disability
employment program will look like. DSS has published overview information in a fact
sheet, with related fact sheets for participants,
employers,
and providers.
A new Disability
Employment Centre of Excellence is expected to commence operations in March
2025, supporting the introduction of the new disability employment program.
Budget measures
The 2024–25
Budget provides funding of $253.6 million over 5 years from 2023–24 (and
$19.0 million per year ongoing) ‘to reform employment services and supports for
people with disability’ (p. 168). This is largely comprised of:
-
$227.6 million over 5 years from 2023–24 (and $11.4 million per
year ongoing) for a new specialist disability employment program to replace the
DES program by 1 July 2025 and
-
$23.3 million over 4 years from 2024–25 (and $7.6 million per
year ongoing) to establish a Disability Employment Centre of Excellence.
All online articles accessed May 2024
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