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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