14. Mutual obligation, activation, compliance and enforcement

Mutual obligations

14.1Welfare conditionality—the policy that a person must engage in activities designed to support progress to employment tin order to receive income support—has remained a core component of employment services for several decades.

14.2Professor Evelyn Brodkin’s foreword to a very significant piece of research covering multiple iterations of the Australian employment services system, Buying and Selling the Poor, frames and locates Australia’s debates and dilemmas about welfare conditionality in first principles and history. Professor Brodkin states that: ‘[w]elfare and labour market policies are boundary-setters; straddling the line between two large structuring institutions: state and market ... Policies that shift the balance between welfare and work … may assume outsized political significance.’[1]

14.3Welfare conditionality and the relatively recent ‘workfare’ policies are not new ideas. In the forward to Buying and Selling the Poor, Professor Brodkin quotes a 1927 study of 600 years of the British Poor Law experience, which highlights‘the continuously shifting and perpetually developing legal relations between the rich and the poor, between the ‘haves’ and the ‘Have-nots’ … [Yet] the story ends as it begins with the (as yet unsolved) problem presented by the Unemployed, whom our grandfathers called the Able-bodied’. She goes on to recall the notorious British workhouses of the 16th century, where gruelling work was required in return for meagre rations. Professor Brodkin observes the British workhouse—in her view a rough prototype for workfare strategies—was however in fact a reform:“a reaction against the severity of[earlier]Poor Laws which provided for the enslavement and harsh physical punishment of unemployed ‘vagrants’.[2]

14.4Under Workforce Australia (online and provider-led services), welfare conditionality is operationalised through mutual obligation requirements, which require income support recipients to:

• agree to a Job Plan;
• search for a minimum number of jobs (currently four per month);
• meet points requirements under the Points Based Activation System (PBAS);
• attend regular appointments; and
• be willing to look for and accept suitable work.[3]
  5. Where a jobseeker fails to comply with their mutual obligation requirements, their income support payments may be suspended, reduced, or cancelled.[4]
  6. Some stakeholders called for mutual obligations to be abandoned, asserting that mutual obligations are onerous; increase anxiety for jobseekers; do not increase engagement with employment services; and are ineffective in addressing barriers to employment.[5] These concerns were reflected in academic and policy research. For example, according to Drs Boland and Griffin, international research suggests that while prescriptive behavioural conditionality and sanctioning of welfare recipients is associated with short-term reductions in benefit use and an increase in the exits from benefits; it is also associated with unfavourable consequences over the longer term, including lower long-term earnings, lower job quality and undesirable spill-over effects on vulnerable groups, especially lone-parents, children and people with disability. Strengthening conditionality and sanctions also contributes to the growth in lower-paid, part-time, temporary contract employment.[6]
  7. Other stakeholders supported retaining mutual obligations, arguing that individuals who would benefit from participation in employment services may not engage with the system unless compelled to do so.[7] Of those stakeholders, some argued for more less prescriptive requirements, including reducing or suspending obligations for an initial grace period to allow jobseekers to build a relationship with their provider and establish parameters for their journey towards employment.[8]
  8. In addition, stakeholders indicated that reforming mutual obligations is not—at least over the longer term—a simple matter of adjusting certain policy settings (such as a jobseeker’s points target). Measures must also be implemented to address the root causes of lower participation and engagement.[9]
  9. Evidence also suggested that the relationship between mutual obligations, activities, compliance arrangements, and employment outcomes is contested, notwithstanding that mutual obligation has been a part of the employment services system for decades. For example, the Australian Council for Social Service (ACOSS) called for independent research on the causal relationships between these factors.[10]

Impact on engagement with services

14.10While not a universally held view, a key theme in the evidence provided by many submitters was that mutual obligations have little impact on levels of engagement with employment services.

14.11The Brotherhood of St Laurence (BSL) noted that when mutual obligations were suspended during the COVID-19 pandemic, limited if any negative impacts on engagement or labour market participation were observed. The BSL asserted that this was because people were able to spend additional time participating in capacity-building activities and applying for jobs aligned with their aspirations.[11]

14.12IntoWork indicated that suspension of mutual obligations during COVID-19 had a positive impact on providers’ relationships with jobseekers, stating:

[The removal of mutual obligation] saw the ability for better rapport building, better connection and probably a level of higher engagement. That was because there wasn't the cloud over the top around the [mutual obligations] … It was more relationship building and utilising the services in that space.[12]

14.13ACOSS stated that mutual obligations may have little impact on engagement, noting that over the last 20 years attendance at appointments has increased by just 10 percentage points. ACOSS also noted evidence indicating that increasing the frequency or the intensity of obligations—at least beyond a certain point—has little impact on employment outcomes.[13]

14.14The Angus Knight Group (AKG) noted that during the start-up phase of Workforce Australia, Jobfind (part of AKG), engaged with over 7,000 jobseekers without relying on mutual obligations. Most jobseekers were willing to engage with services on the basis of a genuine desire for assistance and a belief that the provider would deliver the supports they needed.[14]

14.15SSI stated that mutual obligations are ineffective in encouraging engagement with services for the majority of jobseekers, in that:

• highly motivated jobseekers with relevant skills and/or qualifications are likely to find work without additional encouragement. Mutual obligations are therefore unnecessary for this cohort; and
• mutual obligations may have negative impacts on vulnerable jobseekers with higher barriers to employment and can undermine vital relationships of trust.[15]
  16. Other stakeholders asserted that some form of mutual obligation requirements have benefit in terms of encouraging engagement with the system and ensuring that there is a level of accountability for participants. For example, Jobs Australia contended that jobseeker attendance and engagement drops significantly when mutual obligations are suspended, and that there must be some form if accountability and compliance to ensure that jobseekers engage.[16]
  17. Per Capita argued for the retention of mutual obligation—albeit arguing that mutual obligations should be adjusted to increase accountability for providers and for government and to adapt requirements to jobseekers who have ongoing and long-term personal development and foundation skills needs.[17] Multicultural Australia similarly indicated that mutual obligations should be retained, with adjustments to how they are implemented:

[C]orrectly framed, mutual obligations can ensure participation by the most vulnerable participants, who may lack the knowledge, confidence, and support to voluntarily engage but stand to benefit significantly from participation. Without the creation of embedded program referral pathways and means to ensure disadvantaged jobseekers have the opportunity to experience the benefits of the program, we are concerned that many of the most vulnerable participants can fall through the cracks. We also note the broader positive impacts of participation in employment services programs, creating positive pathways, reducing welfare dependence, and ultimately increasing choice and autonomy for participants.[18]

14.18This broadly reflected the views of participants and providers with which the Committee engaged during site visits. Many of these stakeholders expressed the view that mutual obligations can be of benefit in terms of encouraging engagement with the system—particularly in the initial stage of the journey to employment—and in enabling people in situations of coercive control to seek help. One provider with which the Committee engaged noted that when obligations were lifted, participants simply stopped engagement. The provider argued for the retention of some level of mutual obligation, albeit with less prescriptive requirements.

14.19Several providers also supported some form of mutual obligation, noting that many jobseekers—and particularly those experiencing vulnerability or disadvantage—will disengage with the system if there is not some form of obligation in place.[19] However, similarly to other stakeholders, providers typically expressed the view that current mutual obligation requirements should be adjusted so as to ensure they are not unduly punitive and so that there is inbuilt flexibility to adapt to the needs and circumstances of people on the employment services caseload.[20] For example, Campbell Page stated:

It is right that those in receipt of welfare payments have certain responsibilities. But it might benefit customers for mutual obligations to be more flexible in its approach and to be based around customers individual circumstances, rather than a blanket approach that suits only those customers who are line of best fit.[21]

Usefulness of activities and impact on securing employment

14.20Stakeholders argued that the employment services system has increasingly focused on compliance and enforcement, with the effect that jobseekers are required to undertake a high volume of activities that are largely irrelevant to progress toward employment. In some cases, mutual obligations will actually decrease the jobseeker’s employability and motivation to work and take time away from meaningful job search efforts and participation in training.[22] For example, the Australian Unemployed Workers Union (AUWU) observed that mutual obligations are not designed so as to enable participation in other government programs such as Jobs Victoria:

The interesting problem I ran into with Jobs Victoria was that it jutted against my obligations with my Workforce Australia provider in the case where I couldn't register my engagement with Jobs Victoria as a mutual obligation activity, which made it difficult to attend those sessions because now I have multiple providers to attend.[23]

14.21Social Ventures Australia (SVA) and the Antipoverty Centre highlighted a study of impacts of mutual obligation on 6,000 unemployed people using the Household, Income and Labour Dynamics in Australia (HILDA) Survey data. The HILDA data showed jobseekers who were subject to mutual obligation took longer to find employment than those who were not. The study also found that when mutual obligations did help jobseekers find work, the jobs were typically lower paid or lower skilled.[24]

14.22Anglicare Australia similarly noted that in a survey of 618 income support recipients, many respondents did not consider the activities they were obliged to undertake useful in helping them find work. This is reflected in Table 14.1 below.

Source: Anglicare Australia, Submission 215, p. 6.

14.23Stakeholders also indicated that current mutual obligations remain closely linked to the ‘work first’ philosophy that has historically underpinned employment services, and results in jobseekers being forced into ‘survival’ jobs.[25] Dr Shelley Bielefeld stated:

[T]he jobs usually envisaged by workfare proponents have low productivity, status and pay … do not enhance the probability of good employment and do little to reverse the structural tendency to marginalise a substantial proportion of the labour force. There is also a risk of de-skilling people with qualifications by enforcing workfare as a mutual obligation requirement.[26]

Job search requirements

14.24The Committee heard that mandatory job search requirements (distinct from broader mutual obligations) have little impact on job readiness or finding a job and contribute to a ‘tick box’ culture in the employment services system.[27] One participant stated:

Rather than help me find a job, apply for it, dress and prepare for interview and maybe pack a few lunches for the first week at work, Workforce Australia Employment Services forced me to apply for jobs I had no interest or inclination toward, hounded me on a daily basis for proof that I was looking for work and ‘kept me honest’ with threats of payments being stopped.[28]

14.25SVA called for the system to abandon the scattergun’ approach of making jobseekers apply for a minimum number of jobs per month, and instead working with jobseekers to determine how immediate opportunities might translate into long-term labour market attachment and improved financial security.[29]

14.26A related concern was that the job search requirements lead to jobseekers making low-quality applications. This drains employers’ resources and contributes to negative perceptions of jobseekers in employment services. Moreover, jobseekers who apply for specific roles purely to satisfy mutual obligations are frequently rejected, leading to negative mental health impacts.[30] Professor Leila Green et al noted that these applications are often ‘heartbreaking documents’:

Even as they are written, without hope and with resentment, sometimes a desperate ‘maybe’ shines through. It’s as if the system’s requirements to produce these multiple applications must mean that one in a blue moon gets accepted. Maybe ‘this one’ will… It’s a damaging and dispiriting system both for the job applicant and for the would-be employer. It should be ended.[31]

14.27Feedback from participants drew attention to the desire to receive feedback on their job applications, and the role this plays in improving the quality of job placements.[32]

Flexibility and adaptation to jobseekers’ needs

14.28A discrete yet clearly related issue was that mutual obligations are not adapted to jobseekers’ needs, aspirations, or circumstances, and that there is little flexibility for the jobseeker to negotiate obligations with their provider or, if in online services, the Digital Services Contact Centre (DSCC). Stakeholders called for reform to the current framework to enable tailoring of obligations, with a view to ensuring that jobseekers can exercise control over their participation.[33]

14.29For example, the AUWU told the Committee that when they presented activities other than job searches to their provider, all were ‘shut down’:

I was coerced into taking a job that was not a good fit for me—beyond just not a good fit; it was terrible for me, which simply put me in a state of being less fit to work. I think that is an experience that I have heard that many others share to a certain extent. It clearly reflects that this mutual obligation system is not suitable, and especially is not suitable for people who should not be pressured to look for work because of their situation.[34]

14.30Dr Ann Nevile asserted that the major structural change necessary for obligations to be truly mutual is to require providers and jobseekers to develop and commit to Job Plans which enable a genuine pathway to employment.[35]

14.31Jobs Australia stated that placing mutual obligations on jobseekers with barriers to employment can be unfair and unproductive—at least if capacity to engage with the system is not fully recognised.[36] Per Capita similarly observed mutual obligations are not adapted to the circumstances longer-term unemployed people, stating:

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.[37]

14.32The National Employment Services Association (NESA) emphasised that ‘blanket’ approaches to mutual obligation that over-burden the jobseeker are counter-productive.[38] Professor Mark Considine similarly noted that while it is reasonable to impose baseline expectations on jobseekers, there must be greater alignment between mutual obligation requirements and the overall goal of building jobseekers’ capacity and supporting them to find work.[39]

14.33Academic and policy research also emphasised the importance of tailoring mutual obligations and compliance measures to the needs and circumstances of clients. For example, Professors Larsen and Caswell observed that:

The lack of recognition of the various types of incentives and needs of citizens tends to make the approach to conditionality and sanctions too generalised and poorly calibrated to change the life path of especially the most vulnerable citizens. Hence, if many of the citizens targeted with conditionality and mandatory activation are not able to meet the responsibilities of them, it creates poverty and marginalisation rather than improving their employment chances.[40]

14.34During its European delegation, the Committee heard that in Denmark the frequency of contact required is driven by the plan between the client and their case manager and tailored to the client’s unique circumstance. Case managers also have the flexibility, authority, and professional competency to determine what’s the right mix of activation requirements for each individual client.

14.35IntoWork Australia (IntoWork) provided an example of how mutual obligations could be varied so as to better take account of participants’ circumstances and barriers to employment:

• For individuals actively seeking employment in a specific industry and who have a tailored plan with agreed timeframes, mutual obligations could focus on skills development over a defined period, followed by a targeted job search.
• Long-term unemployed (LTU), vulnerable, or disadvantaged jobseekers could focus on overcoming non-vocational barriers or developing work skills, with work-specific goals and obligations identified at a later point.[41]
  36. Dr Michael McGann observed that a ‘lighter touch’ approach to mutual obligation has been adopted in Ireland, noting that the Irish approach requires jobseekers to engage with a provider, enter a job plan and attend appointments. Significant leeway and discretion are afforded to both providers and jobseekers to ensure that obligations are appropriate to the jobseeker’s circumstances.[42]
  37. During the Committee’s site visits to Northern Australia, stakeholders indicated that current mutual obligation requirements—and the income support system more generally—may not be appropriately adapted to the realities of seasonal work in wet and dry periods. For example, due to the significantly reduced availability of work the wet season, and the various disincentives to moving off of income support identified in Chapter 2, participants in Northern Australia are often less willing to move into work and off income support. The Committee heard that this leads to significant under-reporting of income and to people taking on debt.
  38. The Department of Employment and Workplace Relations (DEWR) stated that where there are fewer employment vacancies—as is the case in regions with high levels of seasonal work—mutual obligation requirements can be adapted to reflect this. According to DEWR, in periods where there are fewer jobs available a person’s job search requirements should be reduced and they should be able undertake skill development and employability activities.[43]
  39. DEWR also noted that the Australian Government has announced that it would double the income support nil rate period to 12 fortnights and expand access to the nil rate for people who enter full-time employment. DEWR indicated that this change—which should take effect in July 2024—should address some of the disincentives associated with seasonal work.[44]

Genuinely ‘mutual’ obligations

14.40A common concern was that obligations are ‘mutual’ in name only. While a jobseeker must engage in activities that (at least nominally) enable them to prepare for, find, and keep employment, other parties are not subject to corresponding requirements.[45] Stakeholders indicated that truly ‘mutual’ obligations require that:

• Providers genuinely support jobseekers increase their work readiness and obtain sustainable employment, with jobseekers enabled to hold providers to account.[46]
• Employers make efforts to recruit and support vulnerable jobseekers while still responding to their own recruitment needs. Employers and industry sectors also ensure an adequate supply of entry-level roles and pay a reasonable wage.[47]
• Government ensures that providers deliver high quality services, that the labour market is open and transparent, and respond effectively to concerns. Government must also ensure that workplaces are physically and psychologically safe, provide an adequate level of income support; and enable job creation.[48]
  41. Dr Bielefeld observed that while mutual obligations are often described as enforcing a social contract, the terms of the contract are unfair in that jobseekers must participate in onerous—often meaningless—activities to access their income support payments. Moreover, as jobseekers are under threat of having their income support suspended, reduced, or cancelled, the contract is entered under duress.[49]
  42. Per Capita asserted that mutual obligations must proceed from government seeking to learn from jobseekers about barriers to employment and supporting the jobseeker to access appropriate and effective services and supports. From there, government may set reasonable expectations for participation and compliance.[50] Per Capita also emphasised that mutual obligations must be informed by the needs of local labour markets and employers.[51]
  43. BSL emphasised that providers and jobseekers must be accountable for what is in a Jobs Plan, and that an enabling environment is required to ensure mutual accountability functions effectively. An example of mutual accountability is included in the case study below, taken from the BSL’s submission.[52]

Source: BSL, Submission 249, pages 71–72.

Exemptions to mutual obligations

14.44Where a person is temporarily unable to meet mutual obligation requirements, they can apply for an exemption. This may be on the basis of illness, temporary caring responsibilities, personal crisis, domestic violence, or other circumstances. Generally, exemptions cannot be granted for ongoing issues.[53] As of 29 September 2023, 12percent of the Workforce Australia caseload were on an exemption. The top five reasons for exemptions were medical incapacitation; the participant being overseas; the participant having a major personal crisis; home schooling; and being part of a large family. DEWR stated that individuals who are exempt from mutual obligation requirements can continue to participate in services if they choose to do so.[54]

14.45Some stakeholders raised concern that exemptions are not always appropriately applied, with a particular focus on exemptions relating to drug and alcohol dependency and for people exiting the criminal justice system. IntoWork noted that jobseekers in drug and alcohol rehabilitation programs are not automatically exempted. This creates challenges as a person is often unable to comply with the requirements of the rehabilitation program (in particular physical attendance) while meeting their mutual obligations. While providers may develop innovative service arrangements to address this issue (for example, delivering services out of a rehabilitation centre), this is not consistent across the system.[55]

14.46DEWR told the Committee that exemptions cannot be granted if the reason is wholly or predominantly attributable to a person’s misuse of alcohol or drugs. However, if a person is undergoing treatment, their points targets can be adjusted to reflect this. Aperson participating in residential treatment would also not be required to look for work or participate in other activities.[56]

14.47DEWR also told the Committee that in some cases people being released from prison will be automatically exempted from mutual obligations, notwithstanding that the person may not wish to have an exemption applied and that such an exemption could interfere with meeting parole conditions.[57] During site visits, providers told the Committee that these exemptions can create difficulties for providers in engaging with participants at a critical time during their reintegration into society. While a provider may negotiate with Services Australia to have the exemption lifted, this takes a significant investment of time and resources.

14.48CVGT Employment (CVGT) noted that recently released offenders are frequently referred to a provider with an automatic exemption from mutual obligations, on the basis that the person needs additional time to integrate into society. CVGT stated:

[T]he last thing an ex-offender needs is an immediate exemption. While we might not necessarily make referrals to employment or instigate job search[es] …the PBAS would allow [a provider] to work with a support the participant with a while range of social supports during this time ... Research indicates that offenders without stable … employment are the most likely to re-offend.[58]

The Points Based Activation System

14.49Participants in Workforce Australia are required to accrue a maximum of 100 points per month under the PBAS to meet their mutual obligation requirements. Points are accrued by participating in activities designed to increase the participant’s chances of finding, obtaining, and keeping work.

14.50Evidence indicated that while flexibility afforded by the PBAS is welcomed, the new system suffers from several issues that require urgent attention. The Committee heard that the PBAS is complex and for many jobseekers—particularly for cohorts who already face challenges understanding, completing, and reporting on their obligations. Providers are often obliged to assist participants to understand the PBAS, which takes time away from delivering support.[59]

14.51DEWR acknowledged that some participants have—at least initially—found PBAS to be confusing and stated that measures are in place to quickly identify participants experiencing challenges and refer them to websites, the DSCC, or a provider.[60] DEWR also noted that they may have also been issues with points targets being set to high, and as a result DEWR has been working with providers and the DSCC to ensure more tailored points targets are set.[61]

14.52Stakeholders also argued that the PBAS is often administratively burdensome. For example, Workways Australia Ltd (Workways) noted that activities must be created in Workforce Australia and re-entered for PBAS, engagement, and progress fee purposes. Creating an activity is also complex, with each activity taking up to 25 minutes to create.[62]

14.53Providers cannot always to adjust points to account for participants’ circumstances, as their performance is assessed based on how often the points targeted is varied.[63] This leads to points totals which do not recognise the impact of sickness, disability, or labour market variation across geographic areas.[64]

14.54Workskil proposed establishing temporary or permanent streams for jobseekers with capability, with streams differentiated according to whether points targeted may be varied.[65] APM recommended removing the ‘default’ 100-point target and starting from a neutral position, from which providers would have the opportunity to build a participant’s capacity and increase their points target over time.[66]

Recognition of activities

14.55A concern for some stakeholders was that existing mutual obligation arrangements—particularly the PBAS—fail to recognise certain activities despite the efficacy of those activities in preparing a jobseeker for work.[67] Key examples included:

• work performed by business owners who are also recipients of income support;[68]
• rideshare and other ‘gig’ economy work;[69]
• hobbies and other self-directed activities which may contribute to a person’s employability and overall wellbeing;[70]
• the various activities undertaken by professional visual artists who are actively seeking employment-like opportunities in the sector. These activities may be particularly impacted by automation in the application of the PBAS;[71]
• support programs for ex-offenders;[72] and
• driving lessons and other activities relevant to obtaining a driver license—which are particularly important for jobseekers in regional, rural, and remote areas.[73]
  56. The Committee also heard that the PBAS—at least as understood and applied by providers—does not adequately recognise education and training and can force participants to engage in work-related activities even if they are actively engaged in training.[74] Dr McGann suggested that poor recognition of education and training may be driven by performance monitoring and DEWR’s distrust of the provider network:

[Providers] had clients wanting to [voluntarily] undertake extra training and extra study that would push them above a certain threshold of points … But that comes up as a flag, from the department's end, that the provider is enforcing too many activities on the jobseekers, that they're doing in excess of their required points.[75]

14.57Stakeholders told the Committee that the PBAS leaves little room for providers to innovate or to adapt mutual obligations to participants’ needs. The Centre for Policy Futures at the University of Queensland (CPF–UQ) noted that there is little clarity around whether points have been appropriately allocated to particular activities, and there is evidence suggesting that some providers have been penalised for allocating too many points. There have also been cases of points being withdrawn or reduced after an activity has been completed.[76]

14.58Evidence indicated that while it may be possible to meet targets by participating in State employment programs, this rarely occurs and is poorly understood.[77]

Voluntary work

14.59Participants may undertake voluntary work to meet mutual obligation requirements. Voluntary work can only be undertaken with a not-for-profit or community organisation. Participants may accrue five points for every five hours (maximum 10points per month) for voluntary activities they source, and up to 20 points per week for voluntary activities sourced by a provider. For provider-sourced activities, a risk assessment must be completed and an agreement must be signed by the provider and the host organisation.[78]

14.60A key concern expressed by some participants was that voluntary work sourced by a provider attracts more points than work sourced by the participant—despite the fact that the work may be identical.[79]

14.61Volunteering Australia asserted that challenges associated in undertaking voluntary work to satisfy mutual obligations are compounded by the fact that activities cannot be completed in a person’s home. According to Volunteering Australia, this limits the accessibility of volunteering and fails to acknowledge changes to engagement, particularly in response to COVID-19.[80] Volunteering Australia also observed that:

• volunteering was included as a mutual obligation activity without adequate consultation with the sector. This has limited input into the design of mutual obligations—including the points allocated to different volunteering activities; and
• mutual obligations are not well understood by the volunteering ecosystem. Accordingly, volunteering organisations struggle to assist volunteers to undertake applicable roles and to provide evidence of their participation.[81]
  62. Volunteering Australia recommended that volunteering be included as an optional activity in future employment programs, stating that this should involve consultation with the volunteering sector ensuring that volunteering activities are supported and accessible to participants on their own terms.[82]
  63. SYC Ltd (SYC) stated that the PBAS should be adjusted to allow providers to include voluntary work as an activity for younger jobseekers, noting that voluntary work is an important work experience opportunity for this cohort and is often used as a stepping-stone to employment.[83]
  64. Per Capita stated that a ‘retrograde move’ of the previous government was to reduce the amount of volunteering hours a person over 55 may count towards their mutual obligations, noting that many people on the caseload are waiting to retire and that the community work in which this cohort engages must be better recognised.[84]

Activation and mandatory activity requirements

14.65In addition to satisfying ‘general’ mutual obligation requirements, Workforce Australia participants are required to complete a specified amount of work, education, or training by the following defined activation points:

• For Workforce Australia Online participants: after four months in the program.
• For Workforce Australia Online participants who transfer to provider services after 12 months: three months after transfer.
• For Workforce Australia Services participants there is a recurring activation point every six months.[85]
  66. Where a participant fails to meet activation requirements by the activation point, they are placed into a default activity. For participants in Workforce Australia Online, this will be Employability Skills Training (EST). For participants in provider-led services, this will be Work for the Dole (WfD).[86]
  67. According to DEWR, activation requirements are designed as a safeguard to ‘ensure that participants are not left behind, remain motivated, engaged and are supported improving their employment prospects’.[87]
  68. Some stakeholders called for a restructure of current activation requirements, noting in particular that ‘default’ activities have not been effective in terms of moving the jobseeker towards employment and that coordination of activities places significant resource burdens on providers and comes at significant cost to the taxpayer.[88]
  69. WISE Employment observed that requiring participants to engage in specific activities at six months if they have not met activation requirements may be viewed as ‘toxic’ or punitive. WISE Employment indicated that participants should instead be encouraged to engage in a range of activities throughout their journey to employment to increase social and economic participation.[89]
  70. The Committee also heard that mandatory activation disrupts relationships between jobseekers and providers and can negatively impact a jobseeker’s progress towards employment.[90] For example, CoAct stated:

Enforcement of a mandatory activity such as Work for the Dole undermines the provider relationship with the jobseeker by forcing a sudden transition in the relationship and conversation. Regardless of the positive progress being made by a jobseeker … mandatory activity means that the relationship with a jobseeker inevitably shifts from ‘choice to ‘prescription and coercion’.[91]

14.71A common theme was that jobseekers must have much greater choice in terms of the activities in which they engage, with stakeholders indicating that the current policy of ‘default’ activities is unduly restrictive.[92] For example, ACOSS stated:

As long as Work for the Dole or any other program is the default program for some period of mutual obligation, whatever called, it will undermine that element of individual tailoring of assistance. The provider should be working with people to offer them a range of choices, and they choose one that meets their needs. If you have a standard, default program then it does become a dumping ground.[93]

14.72ACOSS indicated that key elements of an activation framework which is tailored to the needs of the jobseeker should include:

• A trustful relationship between an unemployed person and a caseworker who has the skills to assess their needs and connect them with the employment, training, and other opportunities. This must involve offering the jobseeker genuine choice which aligns with their pathway to employment.
• Skills development opportunities, including support to engage with VET and with higher education.
• Work experience in ‘regular jobs’, and paid work placements. These placements may be supported by wage subsidies.
• Government taking a coordinating role to ensure people in employment services have access to education and training, work experience, and other supports.[94]
  73. In making comments on activation and mandatory activity requirements, several stakeholders raised specific issues related to WfD. Issues associated with WfD are explored in more detail in Chapter 13, in the context of reforms to Active Labour Market Programs (ALMPs).

The Targeted Compliance Framework

14.74The Targeted Compliance Framework (TCF) is the mechanism by which participants’ income support may be suspended, reduced, or cancelled. Introduced in 2018, the TCF is designed to target financial penalties to participants who persistently fail to meet mutual obligation requirements and enable protections for those who are trying to comply with their obligations.[95] It applies to all participants in Workforce Australia Services, Workforce Australia Online, DES, and ParentsNext.[96]

14.75Several stakeholders called for the TCF to be abolished, citing harmful impacts on jobseekers’ physical and mental health and level of engagement with employment services.[97] A key concern was that that financial sanctions limit jobseekers’ ability to provide for their and their families’ basic needs, with stakeholders noting that this is inconsistent with Australia’s human rights obligations.[98]

14.76Stakeholders also emphasised that certain cohorts—including jobseekers from culturally and linguistically diverse backgrounds (CALD) and refugee backgrounds, younger people, First Nations peoples, people with disability, and victim-survivors of domestic violence—are particularly susceptible to the harmful impacts of financial penalties.[99]

14.77Some stakeholders argued that the system should be restructured around supporting jobseekers and addressing barriers to participation, stating that this would be a more effective system for jobseekers whose persistent noncompliance indicates difficulty engaging.[100] For example, Dr Nevile stated:

If a program is designed to deliver outcomes valued by participants, repeated failure on the part of participants to meet their obligations should raise questions about why a participant is not meeting their obligations. In other words, repeated failure should be taken as a signal that the Job Plan may need to be revised, or more support is required, or a different mix of supports are needed.[101]

14.78Sanctions are often disproportionate to the relevant non-compliance, with jobseekers having payments suspended for a mere failure to attend appointments on time.[102] This concern can be exacerbated by errors on the part of providers and caseworks.[103]

14.79ACOSS similarly observed that the employment services system includes a ‘fairly arbitrary’ set of appointment and activity requirements that don't reflect what people need or want. ACOSS’ analysis of payment suspension also showed that 53 per cent were related to appointments and 43 per cent for PBAS reporting.[104]

14.80DEWR asserted that Australia’s compliance framework is considered less punitive than other members of the Organisation for Economic Co-operation and Development (OECD) due to the low value of penalties as a proportion of payment, and because financial penalties are not imposed until a pattern of non-compliance without valid reason has been established.[105] However, DEWR acknowledged that vulnerable participants are often disproportionately represented in compliance outcomes. For example, in the last 12 months of jobactive, 55 per cent of participants incurred a suspension, and 0.7per cent incurred a financial penalty. By contrast:

• 80 per cent of First Nations participants incurred a suspension and 2.5 per cent incurred a financial penalty;
• 79 per cent of ex-offender participants incurred a suspension and 2.0 per cent incurred a financial penalty; and
• 70 per cent of participants experiencing homelessness incurred a suspension and 1.6 per cent incurred a financial penalty.[106]
  81. From July 2022 to September 2023, 70 per cent of participants with mutual obligation requirements who moved through Workforce Australia Services were subject to at least one suspension. The majority of the suspensions were driven by failures to attend an appointment with a provider. In addition, 40 per cent of participants who moved through Workforce Australia Online in this period received a suspension.[107] Around 16 per cent of those who moved the two services (combined) were subject to five or more suspensions during a single period of assistance.[108]
  82. Disadvantaged cohorts—and particularly First Nations peoples—continue to be overrepresented in the compliance data. For example:
• In the period from April to June 2023, First Nations peoples made up 25 per cent of participants in Workforce Australia Services who received at least one payment suspension.[109] In addition, suspension data for Workforce Australia Online and Workforce Australia Services for the period from July 2022 to September 2023 shows that First Nations peoples made up 36 per cent of participants who received 10 to 19 suspensions and 47 per cent of participants who received over 20 suspensions. By comparison, First Nations peoples have consistently made up approximately 15 per cent of the Workforce Australia caseload.[110]
• In the period from April to June 2023, people with disability made up 31 per cent of participants in Workforce Australia Services who received at least one payment suspension.[111] In addition, suspension data for Workforce Australia Online and Workforce Australia Services for the period from July 2022 to September 2023 shows that people with disability made up 31 per cent of participants who received five to nine suspensions and 31.5 per cent of participants who received over 20suspensions. By comparison, people with disability have consistently made up approximately 28 per cent of the Workforce Australia caseload.[112]
  83. DEWR stated that they have engaged an external consultant to undertake research to better understand the experiences of disadvantaged cohorts’ experience with the employment services system.[113]

Impact on engagement with employment services

14.84A key concern for several stakeholders was that while the rationale for the TCF was to incentivise engagement with employment services, in many cases it has had the opposite effect. Participants and advocates argued that the mental health impacts linked to the threat and imposition of sanctions can demotivate jobseekers, reduce their trust of the system, and leave jobseekers mentally or physically incapable of participation. Jobseekers unable to meet their basic needs will also be unable to meet the costs of engaging with services and preparing for or searching for work.[114]

14.85DEWR noted that following introduction of the TCF, compliance with requirements increased while penalties were reduced by 90 per cent. DEWR also observed that there is significant international and Australian evidence demonstrating that financial penalties can be effective in encouraging engagement and increasing the likelihood that individuals will find work.[115]

14.86ACOSS called for independent research on causal relationships between compliance and employment outcomes, as well as the establishment of an advisory body which would review and re-design the compliance framework in consultation with experts and with people with lived experience of the system.[116]

14.87The Committee also heard that income support and compliance measures may not be appropriately adapted to participants in certain ALMPs. The National Self-Employment Association (NS-EA) stated that following changes to the Self-Employment Assistance (S-EA) program, people who would traditionally move from JobSeeker to the self-employment allowance and self-employment rental assistance retain eligibility through Centrelink for rental assistance and other benefits. This means that people are required to report their income on a fortnightly basis and have seen a reduction in rental assistance over time.[117] The NS-EA stated that these changes have created mistrust and confusion among S-EA participants and indicated that participants should be able to report their income less frequently.[118]

14.88The NS-EA further noted that those who elect to remove themselves from Centrelink benefits when moving into S-EA experience issues related to re-applying for healthcare cards and other benefits, stating:

There are times in [S-EA] where people do need to suspend due to ill health, quite serious ill health at times—cancer treatments and so on. They are still classified as part of the program. They are therefore not a jobseeker. They can't move on to an allowance because nothing in the Services Australia system is there. They are basically at risk of having no income support for the period they are unable to operate their business. They have up to 13 weeks in the program with potential for extensions, if needed, under specific circumstances. But three months without any income support while they are recovering from serious health issues is a really serious issue.[119]

A revised approach to compliance and enforcement

14.89Some submitters asserted that the TCF can be effective in encouraging engagement, with the caveat that much depends on whether consequences for non-compliance are proportionate to the behaviour and whether a provider is able to use the TCF fairly and effectively. The Committee heard that where compliance is not used effectively, jobseekers are likely to disengage with the system and may become aggressive or violent towards providers and their staff.[120]

14.90Some stakeholders also noted that the TtW program—which is exempt from the TCF—has been more successful than Workforce Australia in engaging young people and moving them towards employment. Stakeholders suggested that the compliance approach in TtW be adopted across the broader employment services system.[121]

14.91There were also calls for abolition of payment cancellations and financial penalties, with stakeholders noting that sanctions of this kind achieve little in practice.[122] Some of those stakeholders expressed qualified support for retaining payment suspensions, so long as they are used as a last resort and do not lead to jobseekers being unable to meet their basic needs.[123] For example, both Bamara and Asuria People Services (Asuria) expressed support for the more moderate system of financial holdbacks recommended in the Committee’s interim report, stating that this recommendation should be extended to all employment services programs.[124]

14.92The Committee also heard that the reconnection framework should be adjusted so that it is not unduly onerous for jobseekers. ACOSS recommended that government ensure reconnection requirements can be completed quickly, and do not result in the cancellation of payments unless the person no longer needs income support.[125] ACOSS also proposed changes to the notification and a ‘light touch reconnection’ process that would reduce the number of demerits and payment suspensions, having identified pain points related to poor notification practices and a lack of contact when participants miss calls from unidentified numbers.[126]

14.93Yilabara Solutions expressed support for a system which enables a graduated approach to payment suspension, under which payments are suspended for 24 to 48 hours in the first instance. Under such a mode, suspensions would still be a last resort, and reductions and cancellations would be removed for most participants.[127]

14.94NESA noted that under previous employment service models, jobseekers could accept a non-payment period and ‘clean slate’ their compliance record through participation in activities such as WfD. NESA argued for this approach over current arrangements as it promoted engagement over exclusion, encouraged compliance, and gave the participant more options and greater agency.[128]

14.95ACOSS expressed grave concerns about high rates of payment suspensions, as well as with the widespread use of automated processes to determine financial penalties. ACOSS asserted that suspensions should be paused as a matter of urgency, and should not be reinstated until a fair, workable alternative to the present system is in place. According to ACOSS, this should include:

• Decisions to suspend a person’s payment should no longer be automated, and should be made by appropriate personnel at Services Australia.
• Suspensions should not be used as the first resort, especially for minor infractions such as missing a provider appointment. Providers should also have more discretion not to initiate suspensions.
• Proper administrative law processes, including human rights protections, should be adopted to ensure that suspension is the least restrictive option, taking into account any personal vulnerabilities, the impact on individual and their family financial circumstances (such as the risk of not being able to pay rent), and the seriousness of the breach.[129]

Rewards vs penalties

14.96Some stakeholders called for current compliance and enforcement arrangements to be restructured to incentivise positive engagement rather than punishing non-compliance. A rewards-based system might also help challenge some of the negative messaging about jobseekers that persists in the system.[130]

14.97One proposal was that participants be given a base rate of income support sufficient to meet basic needs, with additional payment conditional on meetings PBAS targets, completion of specified activities, or meaningful engagement with the system.[131]

14.98DrColin Harrison stated that income support payments should not be a universal basic income, but an ‘absolute minimum lifeline’ that could be increased to the level of a full benefit via compliance with obligations. According to Dr Harrison, this would:

• reframe Workforce Australia as a system which rewards jobseekers for achievements rather than penalising them for perceived failures;
• reduce administrative complexity for providers and remove the requirement for the provider to police compliance with mutual obligations; and
• enhance personal accountability for jobseekers.[132]
  99. Other stakeholders indicated that compliance should attract rewards which are not directly linked to income support payments such as fuel vouchers and support with work-related resources such as training or equipment. Cash payments additional to a participant’s income support payments were also suggested. Stakeholders observed that incentives of this kind would help restore positive views about the employment services system and enhance jobseekers’ capacity to engage with the system.[133] Yilabara Solutions suggested combining the PBAS with the voucher system used by Services NSW, stating that a jobseeker who achieves their points target would receive a government voucher which could assist with living costs such as utilities.[134]
  100. Incentive programs have been trialled under previous employment services systems. For example, the (then) Department of Jobs and Small Business (DJSB) trialled an incentive for young jobseekers—the Job Commitment Bonus—from 2014 to 2016. The program offered an incentive payment of $2,500 for participants who started a job and remained off income support for a continuous period of 12 months. A further $4,000 was available to those who remained employed and off income support for a further 12 months (24 months total).[135]
  101. It was anticipated that the Job Commitment Bonus would influence jobseeker motivation to find and keep employment. However, evaluations of the incentive found that motivation was already present for most participants, and that the incentive had little impact on job search behaviour. Accordingly, the incentive reported a near total deadweight loss. Take-up of the incentive was also low, driven by low awareness, negative perceptions of the income support system, and the perceived limited value of the bonus relative to the requirement to be in employment for 12 months.[136]

Responsibility for imposing penalties

14.102A critical issue for a significant number of stakeholders was that providers have the dual—often incompatible—role of supporting participants and enforcing compliance. These views were shared near unanimously across current and former participants,[137] providers,[138] unions,[139] and experts, advocacy organisations, and peak bodies.[140]

14.103Stakeholders variously asserted that these arrangements:

• add to the fear and anxiety experienced by participants and are antithetical to relationships of trust that are essential to quality support;
• add significantly to providers’ administrative burden, and negatively impact the mental health of employment consultants;
• lead to qualified staff leaving the sector, contributing to a gradual decline in the skills and qualifications of the frontline workforce;
• contribute to a culture that encourages caseworkers to bully or threaten the jobseekers they are meant to support; and
• create safety issues for provider staff where jobseekers blame their caseworker for suspension of income support payments or imposition of financial penalties.
  104. Stakeholders recommended that compliance and enforcement functions—including, critically, the suspension of payments and imposition of sanctions—should be the responsibility of a public entity such as Services Australia.
  105. Dr McGann observed that even if providers are not directly responsible for applying sanctions (that is, a provider reports a breach and a sanction is applied automatically or by Centrelink), there is a perception that providers are both ‘clinician and cop’.[141]
  106. Under previous employment service programs, Centrelink had greater responsibility for compliance. For example, APM stated:

[Under previous arrangements the provider] would record a system trigger. For example, 'Johnny didn't attend his appointment.' That would be recorded and that would be where you would walk away, and then that would be in the hands of Centrelink at the time to follow up and understand why that was.[142]

14.107Stakeholders indicated that if a public agency takes responsibility for compliance and enforcement, officers must have the competencies needed to apply complex social security law fairly and consistently.[143] This would need to be underpinned by effective communication channels between jobseekers, providers, and government agencies.[144] One submitter indicated that communication with Services Australia leaves room for improvement:

You speak to a Services Australia employee over the phone who is located in another state and…this person knows nothing about you or your circumstances. The process is intimidating and embarrassing as you have to share sensitive personal information with them and be judged as being either capable or not being capable of complying with your requirements.[145]

14.108ACOSS recommended that the application of financial penalties be subject to robust processes for assessing the hardship of the jobseeker, to ensure that penalties do not cause or worsen poverty or result in negative health impacts.[146]

14.109DEWR argued that Services Australia should not take responsibility for compliance activity, noting that Services Australia staff have far less frequent contact with each participant and are significantly less likely to understand the context of a participant’s employment pathway, including non-compliance events and the extent to which a provider has tried to engage with the participant. DEWR also argued that separating compliance from setting and monitoring requirements may also lead to less tailored requirements for participants and undermine the provider-participant relationship.[147]

Automation of sanctions

14.110Several stakeholders raised concern in relation to automation of suspensions and other sanctions, emphasising that decisions impacting income support payments must be made by a person, with jobseekers given access to appeal.[148]

14.111For example, Economic Justice Australia (EJA) observed that automated decision-making processes can result in poor decisions and servicing, with little to no regard for a jobseeker’s needs or vulnerabilities. EJA explained that these processes may fail to consider impacts of payment suspensions and financial penalties on a jobseeker’s mental health and capacity to meet basic needs and may not consider practical matters relating to compliance—such as access to a phone or to reliable transport. EJA also stated that automated processes result in disproportionately high rates of suspensions and penalties among vulnerable cohorts.[149]

14.112EJA emphasised that automated decision-making makes complaints and review challenging, as it will often be difficult to identify who made a decision, how it was made and why it was made, where to go for help and how to seek review. EJA highlighted the need to learn the lessons of Robodebt,[150] including by ensuring that there is a human ‘in the loop’ in relation to all decisions relating to the suspension of payments and the imposition of financial penalties.[151] ACOSS supported this proposal, stating that the automatic suspension of payments after two days must be abandoned and replaced with a system where suspensions are not automated, there is human review before a suspension is applied, and discretion is exercised by the Secretary of DEWR.[152]

14.113Anglicare Australia stated that concerns associated with automated compliance are exacerbated by system error and poor provider conduct, stating that its review of DEWR data indicates that more than one in five people who had their payments suspended in 2020–21 were found not to be at fault.[153]

Committee comment

14.114Mutual obligation requirements and the broader issue of welfare conditionality is one of the most—if not the most—controversial components of the employment services system. These settings drive fundamental (and often counterproductive) behaviours and demand a significant use of resources across the system, including by government agencies, service providers, and people receiving jobseeker payments. Policy settings relating to mutual obligations and welfare conditionality also impact directly on levels of engagement by employers.

14.115To locate the Committee’s deliberations in a broader historical and global context, it is worth noting that every comparable jurisdiction with a public employment service grapples with the question of what unemployed people requiring income support should be expected to do while receiving social security payments, what requirements best supports them into work, as well as how sanctions should be applied for non-compliance. Having reviewed the applicable academic literature, considered the evidence tendered to the inquiry and examined the approaches taken by a dozen or more other nations, the Committee is clear that there is no perfect answer to this question. Every country’s settings are driven by an imperfect combination of evidence and changing circumstances, values, community expectations and politics, making it inevitable that this question will remain contested and subject to debate and periodic review.

14.116The same questions we grapple with today have been the subject of intense policy and political debate for centuries, with policies oscillating between the provision of goods, cash, and support tohelp enable individuals to succeed a market economy, to deploying regulatory strategies todiscipline the labour force by withholding aid or making it conditional.

14.117Having engaged comprehensively with jobseekers, employers, providers, policy experts, and other stakeholders—both in Australia and overseas—the Committee remains of the view that participation requirements must continue to be a part of Australia’s system, and that most Australians in receipt of income support should be required to make reasonable efforts to engage. Evidence indicates that while current requirements require reform, without some form of obligation there is a real risk that many of the most vulnerable jobseekers would not engage with services. It is also clear that the community expects reassurance that people in receipt of income support who are capable of work are making reasonable efforts to secure work.

14.118Every society we have examined has some form of participation requirement under various names, including mutual obligations, shared accountability, and ‘rights and duties’. However, the name is not the key question. What actually matters most is the nature and extent of requirements that should underpin a rebuilt Commonwealth Employment Services System.

14.119While the Committee does not support a voluntary system, it is clear that the current approach to mutual obligations in Australia is ineffective, self-defeating, and needs reform. As the OECD has repeatedly advised Australia and the Committee, social security payments in Australia are not sufficiently high as to be a disincentive to work. Most people want to and have a strong financial incentive to work.

14.120The small proportion of people who are deliberately or persistently non-compliant should be dealt with through appropriate compliance mechanisms. However, the system cannot be designed for everyone else around punishing that cohort. Evidence is that only a small percentage of those who are not in work are actively cheating the system. The significant majority of people want to work and are making genuine efforts to secure employment that suits their circumstances or improve their prospects. Moreover, of those who are not making such efforts, the majority are experiencing significant barriers to work or are making quite rational choices not to move off income support due to fear or disincentives in the system.

14.121In practical terms, the current nature and extent of mutual obligations is too ‘one-size-fits-all’. This has serious practical consequences:

• Red tape. Thousands of staff in service providers and government agencies are tied up in red tape.Shockingly, some providers tell us that the majority of staff time is focused on policing clients and undertaking administrative work. The time required to complete this work—which would be clearly better spent supporting clients—is exacerbated by DEWR’s terribly inefficient online IT system. The Committee was shocked to hear from one provider that more than half of all staff time is spend on such tasks. That is utterly ridiculous.
• Driving employers away. Big and small businesses alike have clearly stated that excessive job search and other mutual obligation requirements imposed on people clearly not ready for work is a key reason for their disengagement with the system. Despite improvements to the system with the introduction of the PBAS, employers are still deluged by inappropriate applications and harassed by service providers chasing payments for work outcomes for people who are demonstrably not job ready or suitable for a given vacancy.
• Ineffective, one-size-fits-all. The system is a blunt instrument, and far too often people are forced to do things they simply cannot do, which don’t help them, or which distract them from meaningful job search. Despite the promises of previous reviews, the employment services system still fails to provide genuinely tailored and efficient services—in significant part due to mutual obligation settings. Instead of improving someone’s chance of employment, the system marginalises people and harms their chances of work by:

• Requiring LTU people to do pointless things which may actually harm their future chances of employment, for example:

‒applying for unsuitable jobs that distract from meaningful job search, also noting a concern that algorithms in digital employment marketplaces may discriminate against people who apply for endless jobs they do not get and lower their chances of being considered for jobs they are actually suitable for; or

‒undertaking inappropriate and time-consuming study options which have little to no connection with future employment and which may use up a finite ability to study a qualification at a certain education level.

• Fostering stigma and shame through constant rejection and failure which harms mental health, leads to disengagement from and distrust in the system, and makes people less employable as they lose confidence.

• Not really mutual. The system is mutual in name only, as beyond a modest social safety net payment which any decent society would provide (and which as one expert frankly observed is in society’s best interests), there is no commitment to reciprocity by service providers or the State in terms of tailored services or supports. This must be addressed as a matter of urgency.
  122. In summary, Australia’s current mutual obligation requirements, designed around a small number of the ‘worst’ jobseekers, is akin to using a nuclear bomb to kill a mosquito. Moreover, the current scattergun approach to mutual obligations is like throwing spaghetti at a wall. Some may stick, but most just gets stuck on the ground and you make a giant mess. A more nuanced approach, tailored to the individual, is required. TheCommittee reiterates that it is reasonable to impose baseline expectations on jobseekers. However, there must be much greater alignment between mutual obligation requirements and the overall goal of building jobseekers’ capacity and supporting them to find work.
  123. In determining participation requirements, it is critical to differentiate between what is appropriate and effective to support LTU or disadvantaged people and what is appropriate and effective to support those who are closer to the labour market.
  124. The significant majority of LTU people have multiple individual barriers, variously including homelessness; family violence; episodic mental illness and severe anxiety; unresolved childhood or life trauma; caring responsibilities; health issues; chaotic lives or psycho-social disorders.
  125. In addition, large numbers of unemployed Australians face structural barriers beyond their control. Common barriers include age discrimination, racism, thin labour markets, education barriers, and lack of access to reliable and affordable transport. Yet there is a prevailing—and largely irrational—view often expressed in public discourse that unemployment is the fault of the individual jobseeker: if only LTU people applied for more jobs and took more courses, then that would magically change reality. This is patently not the case. People are diverse and the employment services caseload is comprised of a very heterogeneous group of citizens that need tailored responses and goals—recognising there are multiple pathways back to participation and employment.
  126. Evidence is overwhelming that for LTU people, the most effective means of encouraging and enabling progress toward employment is to build a trusted relationship with a skilled, supportive case worker, and for the caseworker and client to work together to set realistic goals for which the provider and the client are mutually accountable.
  127. In a rebuilt Commonwealth Employment Services System, the range of mutual obligations needs to be broadened and tailored to individuals in a far more considered and collaborative way. However, such a significant structural change will not be possible immediately given regulatory and IT systems. Accordingly, interim changes should be adopted where possible while broader reforms are progressed.
  128. For people closer to the labour market in online or hybrid servicing, the PBAS should broadly be retained to underpin reporting against a person’s Participation and Jobs Plan. However, changes should be made to provide more flexibility in activities; better tailor points to the individual; monitor progress and enable interventions where a person is having trouble navigating the system well; and take account of the utterly excessive volume of payment suspensions which are tying the system up in red tape and overwhelmingly impacting the most vulnerable jobseekers.
  129. It is also envisaged that the PBAS would be used as the default compliance tool for that small minority of people who persistently fail to meaningfully engage with the system or comply with their Participation and Jobs Plan.
  130. For those who are directly managed by ESA or by a service partner, mutual obligation requirements should be to attend appointments (at whatever frequency is agreed between the partner and the client) and to ‘participate meaningfully’ in employment services by undertaking agreed activities set out in a person’s (regularly reviewed) Participation and Jobs Plan. However, when a client is assessed as being work-ready, ‘meaningful participation’ should generally include appropriate job search requirements. This is broadly the approach the Committee articulated in its interim report on ParentsNext.
  131. Guidelines should be developed to inform providers’ decision-making. These should aim to achieve consistency in how service partners determine ‘meaningful’ participation, while also ensuring that mutual obligations are tailored to the needs, aspirations, and circumstances of the client. Given that a person may be supported by human services other than employment services, development and monitoring of the Participation and Jobs Plan may in some cases be the responsibility of ESA. This would typically be the case for those people whose pathway is focused on building social capacity. For the purposes of system monitoring, accountability, and evaluation, it would be possible to map the Participation and Jobs Plan for a person in a social participation pathway to the PBAS system. However, a Participation and Jobs Plan for people in this cohort should not simply be driven by a points target.
  132. As set out in Chapter 9, a more comprehensive initial assessment process will ensure a client’s aspirations, needs, and barriers are fully considered and that they can make an informed choice about the supports in their Participation and Jobs Plan. Participation in the enhanced assessment process should constitute meaningful engagement for the purposes of the social security law; that is, a person may continue to receive income support payments—at least on a provisional basis—while they are participating in assessment.
  133. Critical to a more effective approach to mutual obligations is that providers have additional frontline discretion to be able to build trust, essential for successful case management. Discretionary functions may include counselling a person for smaller or more transactional breaches rather than moving to compliance, as well as working with the person to ensure that breaches do not re-occur. This may include better explaining requirements, providing additional support, and referring a client to other services. The Committee understands that frontline staff already have scope under existing legislative and policy settings to exercise discretion, and strongly encourages government to implement measures to ensure that staff exercise this discretion in an appropriate manner consistent with supporting rather than punishing clients.
  134. The Committee expects that service partners will rely on case management best practices to ensure clients are participating in services and completing activities in accordance with their Participation and Jobs Plan. It is also envisaged that—at least for job ready clients—service partners would consider actions such as refusing a reasonable offer of employment and leaving a role without a legitimate reason to constitute a failure to participate meaningfully. This may trigger referral for assessment, review or potentially compliance action (see below).
  135. As noted in earlier chapters, proposed changes to mutual obligations are to be complemented by other reforms, including allowing a client to continue to work with a case manager to achieve their aspirations once they are in work. This will be particularly important where a client takes up a position which does not suit their long-term goals but which gets them back into the labour market, including as part of a longer journey towards more meaningful, sustainable employment.
  136. Many participants have also reported mistreatment or heavy-handed behaviour by providers or employment consultants, and the Committee acknowledges the tension between providing frontline staff with discretion and staffhaving control over clients which could be unfairly used. However, on balance the Committee is persuaded that many of the perceived negative behaviours of concern among providers are driven by system design, and particularly current compliance, payment, and performance management arrangements. Separating compliance from support and restoring frontline discretion to skilled staff—most of whom are genuinely committed to supporting jobseekers and are often performing small miracles under very trying conditions—is preferable to risking further negative impacts on clients by maintaining the status quo.
  137. The Committee considers that the PBAS was a well-intentioned addition to Workforce Australia in terms of increasing flexibility for jobseekers, and notes that the PBAS was implemented in response to a previous review. However, evidence indicates that even where this system may be broadly appropriate for jobseekers, certain activities—particularly self-directed activities with positive impacts on a client’s employability—are not recognised, and others have not been assigned appropriate points values. The Committee is also concerned that participant-sourced voluntary activities only attract a maximum of 10 points per month, while provider-sourced activities attract up to 20 points per week—even if the activity is identical. While it is acknowledged that there may be legitimate reasons for points assigned to specific activities, current points values should be reviewed in consultation with participants, providers, and other stakeholders.
  138. It is also clear that for participants assessed as not job ready, there is little to no value in imposing minimum job search requirements in addition to PBAS targets and there are often negative consequences in doing so. Retaining minimum job search requirements for jobseekers furthest from the labour market has led to a widespread belief that job search is the only or the main way of meeting mutual obligations and appears to actually be at the expense of more useful activities. Perversely, people who are depressed, demotivated, and disengaged can meet their mutual obligations requirements too easily by applying endlessly for jobs they will not get, rather than being required to negotiate other activities more likely to help them progress to the labour market. Accordingly, in reviewing the PBAS, government should consider whether exemptions from minimum job search requirements should be possible for people furthest from the labour market, in favour of other more appropriate activities.
  139. There is also a clear need to broadly align mutual obligation requirements in the mainstream employment services system with the remote service, CDP, as part of an effort to harmonise employment services programs over time. The approach proposed in this report would be a useful starting point in considering requirements that should apply in the CDP. ‘Meaningful participation’ is sufficiently broad to capture differing needs, aspirations, and circumstances. Evidence also clearly indicated that a harmonised approach to mutual obligation is needed, particularly noting that many clients often move between programs and some are currently staying in CDP as they perceive that currently they don’t need to seek work.

14.140The Committee recommends that in a rebuilt Commonwealth Employment Services System, the range of mutual obligation requirements be broadened and be much better tailored to individuals. Reforms should focus on cutting red tape, addressing employers’ concerns, and ensuring that mutual obligations are effective in supporting people into work, and should be founded on the following key principles:

• For clients who are assessed as close to the labour market and largely self-managing in online-hybrid services: the Points Based Activity System (PBAS) be retained to underpin reporting against a person’s Participation and Jobs Plan. Changes to the PBAS should be made to provide more flexibility in activities; better tailor the points to the individual; and monitor progress and intervene earlier where a person is experiencing challenges in navigating the system.
• For clients who are managed directly by Employment Services Australia or referred to service partners for case management, the core requirement be to meaningfully participate by attending appointments and undertaking activities as agreed via the Participation and Jobs Plan.
• For clients who persistently fail to meaningfully engage or to comply with their Participation and Jobs Plan, the PBAS be used as the default reporting and compliance tool.

Over time, the Australian Government should also broadly harmonise mutual obligation requirements across the ‘mainstream’ employment service program and the Community Development Program.

14.141In light of statistical evidence on the application of financial penalties, the Committee is concerned that rates of payment suspensions and cancellations under Workforce Australia are excessive, and that penalties fall overwhelmingly on the most vulnerable jobseekers in both Workforce Australia Online and Workforce Australia Services. The Committee was shocked at the latest evidence that more than 70percent of all participants who move through Workforce Australia Services have been subject a suspension, and that between 35 and 50 per cent of all participants who have been subject to more than 10 suspensions have been First Nations peoples. This clearly points to a compliance system which is not adapted to the realities and support needs of vulnerable clients or effective at supporting them into work. The evidence overwhelmingly suggests that these levels of suspensions and compliance activity drive disengagement from and distrust in the system rather than positive engagement to address barriers and secure work.

14.142The Committee was also appalled at the evidence from Anglicare Australia’s review of DEWR data which, if accurate, indicates that more than one in five people who had their payments suspended in 2020–21 were not at fault. In light of this and other compelling evidence, the Committee holds strong concerns about the largely automated compliance system–from Robodebt to Robopenalty–which are exacerbated by system error and poor provider conduct.

14.143Current rates of suspensions are simply unacceptable and excessive. Levels of red tape, along with an inefficient IT system, are killing productivity and driving staff out of the sector. As noted in Chapter 6, the level of staff turnover is unfeasibly high at 40per cent per year. In addition, the constant process of vulnerable people seeking re-connection and payment reinstatement is destroying trust and wasting precious time that could be used on more productive activities. Constant fear of and the reality of payment suspensions fuel anxiety, exacerbate poverty and drive anger towards staff in both the public sector and in service providers.

14.144Over the longer term, measures to address concerns about the compliance framework should be implemented as part of a new Shared Accountability Framework (see below). However, there remains the question of how to address at least some of these concerns in the short term while more fundamental reforms are developed and implemented.

14.145One thing which strikes the Committee as peculiar in the application of the PBAS is that the default target of 100 points is the same for people assessed as being close to the labour market (that is, ‘job ready’), and who are typically allocated to online services and for those assessed as having more significant barriers, and who typically receive supports from a provider (save for some specified cohort or geographically based adjustments). Although in theory points targets are tailored, in reality providers have under-utilised the intended flexibility in the system and are monitored and judged in aggregate by DEWR for adjustments to points targets. It makes little sense that the default be the same for people in online and provider led services.

14.146The Committee acknowledges the calls of some stakeholders including ACOSS to suspend all mutual obligations. The Committee does not consider this a preferred or sustainable option. However, the Committee proposes that the Government take urgent action to make changes to the PBAS and to other compliance settings in the immediate to short term, while broader reforms to mutual obligations and compliance requirements are progressed. Government should consider whether these measures should be retained as the rebuilt Commonwealth Employment Services System matures and as a Shared Accountability Framework is developed and implemented.

14.147The Committee recommends that the Australian Government urgently implement changes to the compliance framework for employment services, proposed to include:

• Providing case managers with frontline discretion to counsel clients regarding their obligations for the first two or three times that a person misses an appointment or commits another minor compliance breach within one year—rather than being forced to trigger demerit points and compliance action.
• Adjusting the period within which a person must reconnect with the system after committing a breach from 48 hours to no more than four or five business days.
• Amending the Points-Based Activation System (PBAS) such that:

• 100 points is seen as the maximum and not the default points target across all services;
• the Digital Services Contact Centre (DSCC) review and consider adjustments to the points targets for clients in Workforce Australia Online who have experienced repeated suspensions or other penalties; and
• for clients in Workforce Australia Services, the default points target be set at 50 points, with discretion afforded case managers to vary the points target up or down based on their professional judgement exercised in consultation with clients and that all points targets be reviewed as soon as possible after this report is tabled;

• Case managers and the DSSC are given additional discretionary points (e.g., up to 40 points) that can be allocated each month to people who fail to meet their points target but who are showing commitment and are deemed to be meaningfully participating.
  148. In addition, the Committee is concerned that mutual obligation requirements and income support arrangements may not be adapted to the circumstances of people in Northern Australia. As work and accordingly job vacancies are seasonal in this region, many people are reluctant to take up what may be short-term job opportunities for fear of being left without income support when opportunities ‘dry up’ (ironically during the wet season). Without available work clients may be less able to meet their mutual obligation requirements—particularly noting that all compellable participants have job search requirements and that many activities which attract points under the PBAS relate to seeking or maintaining employment.
  149. The Committee appreciates that mutual obligation requirements can be adapted to the needs of seasonal workers and is optimistic that the practical and cultural changes proposed in this report will if implemented go at least some way to recognising and responding appropriately to the realities of seasonal work.
  150. The Committee also welcomes the proposal in the White Paper: Working Futures to extend and expand eligibility for the nil rate period. However, further policy changes may be required to ensure people in regions with high levels of seasonal work are not disadvantaged. Government should monitor the impact of the extension to the nil rate period in case further changes are warranted, in particular for people impacted by seasonal changes to work.

14.151The Committee recommends that as part the reforms contemplated by the Employment White Paper, the Australian Government:

• monitor the impact of the proposed extension to the income support nil rate period; and
• review income support eligibility criteria to ensure that they adequately take account of the circumstances of people impacted by seasonal work arrangements, especially in Northern Australia and other regions required due to the dry/wet season.
  152. The Committee is also concerned that the framework for exempting clients from mutual obligations—both in terms of policy design and application—do not align with the lived realities of some cohorts. This is particularly the case for those in active medical treatment for drug and alcohol dependency and those with experiences of the criminal justice system.
  153. Earlier in this report the Committee made recommendations in relation to the reinstatement of Sickness Benefit for people unable to seek work for a prolonged period due to medical incapacity. Consistent with these recommendations, the Committee considers that current policy settings for people in drug and alcohol rehabilitation programs require adjustment as a matter of urgency. Currently, a person in a drug or alcohol treatment program—unless it is a residential treatment program—is required to prepare for and seek work in essentially the same manner as jobseekers who are not enrolled in and being treated in such programs.
  154. Requirements to prepare for and seek work would not apply to other people receiving medical treatment for illnesses and appear to go against medical advice, common sense, and the lived experience of people genuinely seeking to overcome addiction disorders. If a person is taking steps towards rehabilitation on the basis of medical advice and/or under medical supervision (for example, attending outpatient day services after completing a residential program, or attending intensive group support such as Alcoholics Anonymous or Narcotics Anonymous), it makes little sense to require the person to prepare for or search for work. To pretend that such requirements serve as a deterrent to people abusing alcohol or drugs is to fundamentally misunderstand the nature of addiction and substance abuse disorders.
  155. The Committee considers that people suffering from addiction but who are not genuinely seeking or engaged in medical treatment should not be eligible for exemptions. However, if a person is actively seeking and engaging in medically supervised treatment for a dependency disorder this should be able to form all or part of the person’s Participation and Jobs Plan. If a person is genuinely engaged in rehabilitation or recovery activities but not under medical supervision then this may form part but not all of a person’s plan.
  156. If legislation is required to give effect to these measures, the Committee encourages the Government to introduce a bill as soon as possible to address the harm and irrationality of the current situation.
  157. The Committee also considers that the automatic exemption for people exiting a criminal justice setting should be removed, noting that engagement with employment services is often of significant value to the process of reintegrating into the community. Ceasing to apply this automatic exemption is consistent with the proposal for a dedicated specialist service for ex-offenders as set out in Chapter 5, which would see an individual supported while in prison with supports continuing—and in some cases, increasing—following release.
  158. The Committee also would also encourage the government to review the current exemptions framework as part of the process to rebuild the Commonwealth Employment Services System, to ensure that exemptions respond effectively to the lived realities of clients on the caseload.

14.159The Committee recommends that the Australian Government implement the following clear default principles:

• People suffering from substance dependency who are not genuinely seeking and engaged in medical treatment are not eligible for exemptions from mutual obligations.
• Where a person is actively participating in medically supervised treatment for substance dependency including rehabilitation programs and early phase recovery, this can form all or part of a person’s Participation and Jobs Plan.
• Exemptions are no longer automatically applied to people exiting the criminal justice system and are considered only on a case-by-case basis.
  160. Mandatory activation requirements are a controversial element of Australia’s employment services system. In policy terms, these requirements serve as both an ‘availability test’ (for example to confirm whether a person is in fact job seeking and not working cash or engaged in other activities), and as a means of ‘nudging’ jobseekers to make meaningful efforts to improve their employability and to search for, find, and keep work. The objectives of mandatory activation are pursued by imposing additional requirements on those who have not—in the system’s view—made sufficient efforts to move toward employment by defined points in time.
  161. There is overwhelming evidence that current ‘default’ activation requirements often have little positive impact on a jobseeker’s employment prospects and can disrupt established relationships between jobseekers and providers. A common view was that the ‘default’ activation activities (WfD for those in Workforce Australia Services and EST for those in Workforce Australia Online) are simply not helpful or appropriate for many people and are inconsistent with an employment services system which offers genuinely tailored support.
  162. The Committee appreciates that data collected by DEWR over many years (including via Online Services) shows that when activation occurs there is a measurable increase in reporting of income. This is consistent with international experience of ‘availability tests’. The Committee concludes that activation requirements should be generally retained within a rebuilt employment services system as part of an ‘availability test’ for jobseekers. However, the activation framework requires significant reforms. The Committee proposes that in a rebuilt system:

• Jobseekers should have much greater choice in the activation activities in which they engage, in line with goals agreed via their Participation and Jobs Plan.
• Timing of mandatory activation points should be more flexible so they complement the client’s other activities and take account of life events that may occur. Instead of a hard requirement to undertake a mandatory activity at a specified time (for example, three or six months after starting in online or provider-led services), a range be utilised. This may include implanting a requirement that activation activities be undertaken between two and five months after a person has commenced in services, so that activation can form part of a considered Participant and Jobs Plan. Randomised control trials could also be considered to determine whether there is an optimal time for activation points for various cohorts across different service streams.
• A client and their case manager should negotiate and agree on the activities in which the client will participate, a set time within which to complete the activities, and the relevant activation activity or activities. Activities and timeframes should be set according to the jobseekers’ pathway to employment, consistent with the typology of supports included in Chapter 5.
• Single ‘default’ activation activities should no longer be imposed. Ultimately, if a client refused to choose an activity or undertake the activity in their Participation and Jobs Plan, their case manager should be empowered to determine the mandatory activation activity that would best support them. This would be a last resort but is better than a single default mandated by Canberra.
  163. Examples of activities that could bechosen might include ALMPs such as paid work experience, internships, and self-employment assistance, participation in State, Territory or community programs, engagement with foundation skills and other training, and participation in WfD or similar programs. The Committee considers that the majority of the activation activities which are currently authorised under Workforce Australia Online and Workforce Australia Services might be chosen, subject to the activity being appropriate to the client’s needs and circumstances.
  164. Several of these activities are discussed in Chapter 13, in the context of enhancing and consolidating active labour market and complementary programs. This includes a broader discussion of WfD and community-based programs.
  165. For a very limited groups of people—for example, those for whom employment is not a realistic option or who are suffering genuine life crises—it may not be appropriate to impose activation requirements within the default time-period and such requirements should be deferred.

14.166The Committee recommends that the Australian Government replace current default mandatory activation requirements with a framework of ‘availability test’ activities that help jobseekers progress to employment, including the following key elements:

• Activities in which the jobseeker must participate to meet their activation requirements are mutually agreed between the jobseeker and their provider (or Employment Services Australia) for online participants).
• ‘Default’ activation activities are removed, with jobseekers enabled to select from activities including community-based programs and paid work.
• Specific timing for activation points be removed, and replaced with a more flexible range so they work in with a person’s other efforts and activities and take account of life events that may occur.
• Activation requirements are recorded in the jobseeker’s Participation and Jobs Plan.
• If a client refuses to choose or do an activity then, their case manager or Employment Services Australia (for online participants) is empowered to determine the mandatory activation activity that would best support them.
• Employment Services Australia can exempt jobseekers from activation requirements in limited circumstances.
  167. In line with the Committee’s high-level conclusions earlier in the report, evidence overwhelmingly leads to the conclusion that the TCF should be replaced by a Shared Accountability Framework as a more effective approach to compliance. While compliance measures are necessary, consistent with evidence received they should operate in the background of the system rather than being the first thought or tool that dominates everything else.
  168. The new Shared Accountability Framework should be tailored to a very heterogenous caseload, respond in a proportionate manner to compliance failures— taking account of the broader impacts of financial penalties on children and families— and separate compliance from support. For too many jobseekers caught up in the cycle of payment suspensions and reconnection, non-compliance is inadvertent or reflects a genuine inability to comply. Only the small minority of jobseekers who persistently refuse to comply should be subject to stronger measures.
  169. Consistent with the Committee’s interim report, the Committee recommends a Partial Payment Withholding (a ‘holdback’) be implemented as a less onerous alternative to full payment suspensions. A ‘holdback’ would provide an intermediate measure that provides a strong incentive to re-engage with services without leaving people (and often their families) with insufficient funds to meet basic needs. 'Holdbacks’ should be repaid to the participant on re-engagement. The Committee acknowledges that a ‘holdback’ mechanism almost certainly requires legislative change and encourages government to introduce a bill to permit such as measure as soon as possible.
  170. The Committee is also convinced by the overwhelming evidence that responsibility for more serious sanctions such as suspensions, penalties, and cancellations must be returned to the public sector and not exercised by case managers—and especially not by outsourced providers. It is reasonable to express a principled view that the State should not contract out the power in effect to effect someone’s basic survival income to a private actor.
  171. As discussed earlier in this report, the current approach of requiring case managers to undertake excessive and onerous compliance related work not only wastes precious time, but also destroys trust. Yet trust is the critical thing needed between an often-vulnerable unemployed person and those who are paid to help them help progress into employment. International evidence also supports the view that case managers should not have the incompatible roles of both supporting participants and monitoring and enforcing compliance.
  172. In addition, while automating compliance may be ‘efficient’ from the Department of Finance’s point of view, it degrades the effectiveness of the entire service. Bringing compliance functions back in-house and reducing automation post-Robodebt will mean more friction and a call on public servant time. However, these demands are necessary. The current situation is self-defeating and is a major false economy.
  173. Ultimately, the Committee considers that a Shared Accountability Framework should provide that:

• Frontline discretion is restored so that case managers can educate and counsel people for a limited number of minor or initial compliance breaches each year (whether failing to attend an appointment or meet an activity or points requirement) rather than moving into formal compliance.
• After counselling options are exhausted, a number of warnings may be recorded which could result in a partial payment withholding (holdback) until a non-compliance is remedied, noting a case manager’s ongoing responsibilities to review a Participation and Jobs Plan to ensure requirements remain appropriate.
• People who accrue the maximum number of warnings by persistently failing to meet mutual obligation requirements are referred to ESA to assess and determine whether there are any barriers to participation. This process may result in:

• reassessment and referral back to a case manager or to a new provider or support service with adjusted participation requirements;
• a client electing to be referred back to a case manager with a warning that further breaches may result in more serious compliance measures; or
• transfer into intensive case management by ESA with the risk of suspension, penalisation, or cancellation of payments for persistent non-compliance.
  174. Stronger actions such as payment suspensions, penalties, or cancellations would be expected to apply only to a minority of people in intensive case management or who elected to remain with their provider while being subject to more serious compliance measures, subject to the following caveats:

• Holdbacks should be utilised instead of full payment suspensions in the initial warning phases, repaid on re-engagement.
• The time for a participant to reconnect with ESA after notification of a compliance failure should be extended (to no more than four or five business days to reduce friction).
• Enforcement decisions to fully suspend, penalise or cancel a payment should be made by a Services Australia staff member, rather than automatically by Services Australia’s systems, after considering a report from a case manager.
  175. Services Australia should exercise discretion in the impositions of sanctions and take account of the impact on children and family members and undue hardship in any decision to suspend, impose a financial penalty or cancel a payment.
  176. The new Shared Accountability Framework and associated guidance should be developed in consultation with participants, providers, peak bodies, academic and policy experts, and other key stakeholders, ideally utilising the new Client Councils and the Employment Services Coordinating Council as recommended be established in Recommendation 3.
  177. In addition, the Committee reaffirms its position in the interim report that Services Australia be required to provide reasonable notice of the intention to cancel a person’s income support if they have not re-engaged with their provider or DSCC within 28 days of their payment being suspended (or subject to a ‘holdback’).

14.178The Committee recommends that, consistent with the Interim Report’s recommendations, the Australian Government introduce legislation to provide an additional compliance tool of a Partial Payment Withholding (a ‘holdback’) as a less onerous alternative to full payment suspensions providing strong incentive to re-engage with services but without leaving people (and their children and families) with insufficient funds to meet basic needs. 'Holdbacks’ should be repaid to the participant on re-engagement.

14.179The Committee recommends that the Australian Government implement a new Shared Accountability Framework. This should replace the current Targeted Compliance Framework and should include the following key elements:

• Frontline discretion is restored so that case managers can educate and counsel people regarding their obligations for a limited number of minor or initial compliance breaches each year.
• After counselling options are exhausted, a number of warnings be recorded which could result in a partial payment withholding (holdback) until the non-compliance is remedied.
• People who accrue the maximum number of warnings by persistently failing to meet mutual obligation requirements are be referred to Employment Services Australia for a capability assessment.
• Should there be barriers to participation or engagement, the client is referred back to their provider or offered the option to transfer to a different provider or service.
• If there are no barriers to participation, the client may elect to be referred back to their provider and made aware of the risk of more serious compliance measures including payment suspensions, penalties, or cancellations. Alternatively, the client would be transferred to intensive case management by Employment Services Australia.
• All decisions that affect income support payments must be made by a public servant in Services Australia, and not automatically by the IT system.

Guidelines and training for staff should be developed in consultation with stakeholders and subject to periodic review by the new Client Councils and the Employment Services Coordinating Council.

14.180While acknowledging there needs to be a compliance framework, there would also be merit in experimenting and trialling the use of incentives—rather than just sanctions—to assess whether acknowledging genuine engagement, efforts and successes has a positive impact and results in greater participation and encouragement of jobseekers.

14.181In line with evidence received, incentives could take the form of a modest cash payment or a contribution toward the cost of utilities or supermarket vouchers. Government could trial such measures in the short term with a view to national scaling should the measure be effective— which of course they may prove not to be. Incentives must also be subject to robust monitoring and evaluation, with guidelines developed to ensure consistency—particularly as it is proposed to give providers greater discretion to determine whether a participant has demonstrated meaningful participation.

14.182It is important that government learn from previous incentives such as the Job Commitment Bonus and consider insights from behavioural science research and use in other public policy domains in considering the possible use of incentives. Lessons include the need to ensure awareness of incentives and ensuring the value of the incentive is at least roughly aligned with the perceived investment of time and effort for a person.

14.183The Committee recommends that the Australian Government consider trialling incentives to enhance engagement with employment services, with a view to national scaling if an incentive proves effective in increasing engagement and successful outcomes.

14.184Many Workforce Australia participants are subject to considerable compliance and reporting burden. Accordingly, income reporting arrangements should be simplified for Workforce Australia participants, and in particular those who are not receiving and do not anticipate receiving income for a defined period of time.

14.185The Committee notes that regular reporting of income helps to reduce issues associated with overpayments and debts, and that there is a balance to be struck between reducing administrative burden on clients in the short term and reducing the risk that people accrue debts and encounter financial difficulties at a later time.

14.186On balance, the Committee considers that it would be appropriate to allow an income support recipient to specify a period of time (for example, up to three months) during which they advise that thy do not expect to earn income and accordingly will not be subject to reporting requirements. This should be subject to the participant reconnecting with Services Australia at the end of that period, and to the participant reporting any income they do earn while the non-reporting period is in effect.

14.187The Committee also considers that income reporting should be simplified for participants pursuing self-employment in the S-EA program, noting concerns that the frequency and complexity of income reporting appears to be creating significant challenges for this cohort. The Committee considers that self-employment should remain an important part of the employment services ecosystem, and that measures should be taken to ensure that engagement with self-employment programs is not unduly onerous. Other measures to improve S-EA are discussed in Chapter 13, in the context of Active Labour Market Programs (ALMPs).

14.188These measures should be implemented as soon as feasible, subject to timeframes around legislative, policy, and systems changes. Ensuring reporting arrangements are simple and easy be a feature of the rebuilt Commonwealth Employment Services System.

14.189The Committee recommends that the Australian Government consider options to simplify income reporting for employment services clients, especially those who are not working and do not intend to work and those who are participating in self-employment programs, including by enabling less frequent reporting for a defined period of time.

Footnotes

[1]E Brodkin (2021), ‘Foreword: On history, poverty, and the continuous quest for reform’, in SO’Sullivan, MMcGann and M Considine (eds), Buying and Selling the Poor, Sydney University,p.ix.

[2]Brodkin (2021), ‘Foreword: On history, poverty, and the continuous quest for reform’, O’Sullivan, McGann and Considine (eds), Buying and Selling the Poor, p.xii.

[3]Department of Employment and Workplace Relations (DEWR), Submission 254, p. 98.

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

[5]See, for example, Name Withheld, Submission 158, p. [1]; Name Withheld, Submission 160, p. 14; WISE Employment, Submission 169, p. 20; SSI, Submission 193, p.4; Anglicare Australia, Submission 215, p. 13; Name Withheld, Submission 221, p. [5]; GetUp!, Submission 251, p. 3; Community and Public Sector Union (CPSU), Submission 255, p. [2]; Antipoverty Centre, Submission 276, p. [6].

[6]T Boland and R Griffin (2016), The Impact of Sanctions: Evidence from international research and WUERC primary research, Conditions of Unemployment Series, p. [3], www.wit.ie/news/humanities/report-on-welfare-reforms-harming-our-economy-society, viewed 20 November 2023.

[7]See, for example, Multicultural Australia, Submission 182, p. 7; Jobs Australia, Submission 185, p. 20; atWork Australia (atWork), Submission 210, p. 12 APM, Submission 213, p. 15; MrNick Costello, Submission 250, p. 37.

[8]See, for example, CoAct, Submission 151, p. 3; Australian Youth Affairs Commission (AYAC), Submission238, p. 2.

[9]See, for example, Mr Dan Ehlers, Submission 90, p. 1; Regional Development Australia (RDA) Kimberly, Submission 105, p. [5]; Tasmanian Government, Submission 174, p. [5]; AYAC, Submission 238, pages3–4.

[10]Australian Council of Social Service (ACOSS), Submission 203, pages 45–47. See also Jobs Australia, Submission 185, p. 21.

[11]Brotherhood of St Laurance (BSL), Submission 249, p. 69.

[12]Mrs Nicole Mattsson, National Services Design and Integration Leader, IntoWork, Committee Hansard, 14March 2023, p. 65.

[13]ACOSS, Submission 203, p. 46.

[14]The Angus Knight Group (AKG), Submission 208, pages [1–2].

[15]SSI, Submission 193, p. 14.

[16]Jobs Australia, Submission 185, p. 20.

[17]See, Per Capita, Submission, pages 11, 25, 30, 56; Dr May Lam, Senior Research Fellow, Per Capita, Committee Hansard, 19September2023, p. 29.

[18]Multicultural Australia, Submission 182, p. 7.

[19]See, for example, MAX Solution (MAX), Submission 146, p. 40; The Salvation Army Employment Plus (SAEP), Submission 199, p. 58; APM, Submission 213, p. 15; The BUSY Group Ltd (BUSY), Submission 227, p. 2; Yilabara Solutions, Submission 231, p. 19.

[20]See, for example, Campbell Page, Submission 150, p. [8]; CoAct, Submission 151, pages 3, 13, 18-19; IntoWork Australia (IntoWork), Submission 156, p. 5; MTC Australia (MTC), Submission 164, p. 4; Workskil Australia (Workskil), Submission 196, p. 26.

[21]Campbell Page, Submission 150, p. [8].

[22]See, for example, Name Withheld, Submission 2, p. [2]; South East Community Links (SECL), Submission 64, p. 8; Name Withheld, Submission 93, pages [2–4]; MTC, Submission164, p. 4; Associate Professor Ingold and Mr Tony Carr (Dr Ingold and Mr Carr), Submission 216, p. 1; Mr Nick Costello, Submission 250, pages 15, 17; Ms Annabel Brown, Deputy CEO, Centre for Policy Development (CPD), Committee Hansard, 14 March 2023, p. 23.

[23]Mr Jeremy Poxon, Officer, Australian Unemployed Workers' Union (AUWU), Committee Hansard, 19September 2023, p. 3.

[24]See Social Ventures Australia (SVA), Submission 232, p. 5; Ms Kristin O'Connell, Co-coordinator—Research, Policy and Communications, Antipoverty Centre, Committee Hansard, 19 September 2023, p. 29.

[25]See, for example, Australian Centre for Career Education (ACCE), Submission 149, p. 6; AKG, Submission 208, p. [3]; Dr Ingold and Mr Carr, Submission 216, p. 1; Centre for Policy Futures–University of Queensland (CPF–UQ), Submission 217, p. 6; Name Withheld, Submission 229, p. [5].

[26]Dr Shelley Bielefeld, Submission 204, p. 3.

[27]See, for example, Name Withheld, Submission 93, p. 2; Ms Aeryn Brown, Submission 114, p. [3], Lewis, private capacity, Committee Hansard, 20 September 2023, pages 30–31.

[28]Name Withheld, Submission 2, p. [1].

[29]Dr Lisa Fowkes, Director—Employment, SVA, Committee Hansard, 17 May 2023, p. 34.

[30]See, for example, Name Withheld, Submission 2, p. 2; Name Withheld, Submission 93, p. 2; Name Withheld, Submission 116, p. [1]; Name Withheld, Submission 125, p. [2]; Name Withheld, Submission 137, p. [2]; DrIngold and Mr Carr, Submission 216, p. 1; AYAC, Submission 238, p. 4; CPSU, Submission 255, p. [5].

[31]Professor Leila Green, Dr Kylie Stevenson, Dr Kelly Jaunzems, Ms Claire Hanlon and Mr Arthur Hanlon (Professor Green et al), Submission 120, p. [10].

[32]See, for example, Michael, private capacity, Committee Hansard, 20 September 2023, p. 33.

[33]See, for example, CVGT Employment (CVGT), Submission 105, p. 21; Enterprise and Training Company (ETC), Submission 133, p. 7; MAX, Submission 146, p. 40; AMES Australia (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 Katherine Curchin, Submission 197, p. 3; SAEP, Submission 199, p. 59; MatchWorks, Submission 263, p. 36; North Burnett Community Service (NBCS), Submission 268, p. [2].

[34]Ren McSweeney, NSW Member, AUWU, Committee Hansard, 19 September 2023, pages 5–6.

[35]Dr Ann Nevile, Submission 136, p. 9. Reforms to Job Plans are explored in Chapter 11.

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

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

[38]Ms Annette Gill, Principal Policy Advisor, National Employment Services Association (NESA), Committee Hansard, 14 March 2023, p. 39.

[39]Professor Mark Considine, private capacity, Committee Hansard, 14 March 2023, p. 15.

[40]F Larsen and D Caswell (2022), ‘Co-creation in an era of Welfare Conditionality – Lessons from Denmark’, International Journal of Social Policy, 51(1), pages 59–60.

[41]IntoWork, Submission 156, p. 5.

[42]Dr Michael McGann, private capacity, Committee Hansard, 14 March 2023, p. 15.

[43]DEWR, Submission 254.7, p. [11].

[44]DEWR, Submission 254.7, p. [11]. See also Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, p. 183.

[45]See, for example, Ms Karen Black, Submission 94, p. [3]; Name Withheld, Submission 137, p. [3]; Name Withheld, Submission 162, p. [6]; Name Withheld, Submission 187, p. [1]; Tasmanian Government, Submission 174, p. [10]; ACOSS, Submission 203, p. 42; Antipoverty Centre, Submission 276, p. [11].

[46]See, for example, Name Withheld, Submission 93, p. [3]; MxEve Geyer, Submission 220, p. [3].

[47]See, for example, Name Withheld, Submission 160, p. 11.

[48]See, for example, Mr Matthew Ford, Submission 7, p. [2]; Ms Juliet 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].

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

[50]Dr Lam, Per Capita, Committee Hansard, 14 March 2023, p. 31.

[51]Ms Dawson, Per Capita Committee Hansard, 14 March 2023, p. 31. See also RDA Kimberly, Submission 105, p. [5].

[52]Ms Cara Nolan, Senior Adviser, BSL, Committee Hansard, 20 September 2023, p. 5.

[53]DEWR, Submission 254, p. 103.

[54]DEWR, Submission 254.8, p. [12].

[55]Mrs Mattsson, IntoWork, Committee Hansard, 14 March 2023, p. 63.

[56]Ms Melissa Ryan, First Assistant Secretary—Workforce Australia for Individuals DEWR, Committee Hansard, 20 September 2023, p. 57.

[57]Ms Ryan, DEWR, Committee Hansard, 20 September 2023, p. 55.

[58]CVGT, Submission 106, p. 14.

[59]See, for example, Name Withheld, Submission 160, p. 18; MTC, Submission 164, pages 4–5; WISE Employment, Submission 169, p. 12; Nirrumbuk Aboriginal Corporation (NAC), Submission 180, p. [3]; CPF‑UQ, Submission 217, p. 4; Jobs Statewide, Submission 272, p. 7.

[60]DEWR, Submission 254, p. 103.

[61]Ms Ryan, DEWR, Committee Hansard, 20 September 2023, p. 58.

[62]Workways Australia Ltd (Workways), Submission 239, p. 18.

[63]See, for example, Mr Steve Wyborn, CEO—IntoJobs, IntoWork, Committee Hansard, 14 March 2023, p. 67.

[64]See, for example, Name Withheld, Submission 93, p. [2]; Ms Black, Submission 94, p. [3].

[65]Workskil, Submission 196, p. 26.

[66]APM, Submission 213, p. 17.

[67]ACOSS, Submission 203, p. 42.

[68]Ms Vrakas, Submission 91, p. [5].

[69]Dr Tom Barratt, Dr Caleb Goods and Dr Alex Veen, Submission 218, p. 4.

[70]Ms Vrakas, Submission 91, p. [5].

[71]NAVA, Submission 165, p. 1.

[72]Success Works, Submission 139, p. [3].

[73]Name Withheld, Submission 125, p. [2].

[74]Name Withheld, Submission 224, p. [1].

[75]Dr McGann, Committee Hansard, 14 March 2023, p. 9.

[76]CPF–UQ, Submission 217, p. 4.

[77]Ms Laura Trengove, Executive Director—Employment Policy and Strategy, Government of Victoria: Department of Jobs, Skills, Industry and Regions (DJSIR), Committee Hansard, 14 March 2023, p. 54.

[78]DEWR, Submission 254, p. 183.

[79]See, for example, Name Withheld, Submission 160, p. 18; Name Withheld, Submission 230, p. [3].

[80]Volunteering Australia, Submission 240, p. 5.

[81]Volunteering Australia, Submission 240, p. 4.

[82]Volunteering Australia, Submission 240, pages 7–8.

[83]SYC Ltd (SYC), Submission 189, p. 17.

[84]Ms Dawson, Per Capita, Committee Hansard, 14 March 2023, p. 32.

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

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

[87]DEWR, Submission 254.7, p. [8].

[88]See, for example, Name Withheld, Submission 2, p. 2; Professor Green et al, Submission 120, p. [10]; Name Withheld, Submission 123, p. 1; Name Withheld, Submission 162, p. 3; SYC, Submission 189, p. 17; Workskil, Submission 196, p. 26; SAEP, Submission 199, p. 59. It is noted that most of these stakeholders raised concerns about current activation requirements, including WfD, rather than about the concept of activation or mandatory activities.

[89]Mr Matthew Lambelle, CEO, WISE Employment, Committee Hansard, 19 September 2023, p. 27.

[90]See, for example, See also MAX, Submission 146, p. 8; Mr Anders Ross, Submission 158, p. 3.

[91]CoAct, Submission 151, p. 19.

[92]See, for example CVGT, Submission 106, p. 21; ETC, Submission 133, p. 7; SAEP, Submission 199, p. 59; atWork, Submission 210, p. 12; Mr Lambelle, WISE Employment, Committee Hansard, 19 September 2023, p. 33; Mr Coonan, Antipoverty Centre, Committee Hansard, 19 September 2023, p. 33.

[93]Dr Peter Davidson, Principal Adviser, ACOSS, Committee Hansard, 19 September 2023, p. 32.

[94]ACOSS, Submission 203, pages 23–25. See also Dr Davidson, ACOSS, Committee Hansard, 19 September 2023, p. 34.

[95]DEWR, Workforce Australia Guidelines – Part B, p. 170.

[96]DEWR, Submission 254, p. 112. From 5 May 2023, all compulsory requirements for participants in ParentsNext were paused, meaning that participants would no longer receive payment suspensions or penalties.

[97]See, for example, Professor Green et al, Submission 120, pages [11–12]; National Foundation for Australian Women (NFAW), Submission 135, p. [2]; DrColin Harrison, Submission 152, p. 4;

[98]See Dr Bielefeld, Submission 204, pages 2–3.

[99]See, for example, Mr Paul Upcroft, Submission 86, p. [8]; Youth Projects, Submission 141, pages 7, 19; SSI, Submission 193, p. 15; Australia’s National Research Organisation for Women’s Safety (ANROWS), Submission 212, p. 9; Yilabara Solutions, Submission 231, p. 25; Western Australian Association for Mental Health (WAAMH), Submission 248, p. 18.

[100]See, for example, Anglicare WA, Submission 127, p. [10]; ACCE, Submission 225, p. 2; Professor Green etal, Submission 120, p. [12]; VERTO, Submission 202, pages [24–25].

[101]Dr Nevile, Submission 136, p. 9.

[102]See, for example, Office of the Commonwealth Ombudsman, Submission 134, p. [1]; Joblink Plus, Submission 157, p. 18; AYAC, Submission 238, p. 4; NBCS, Submission 268, p. [2].

[103]See, for example, Mr Upcroft, Submission 86, p. [2]; Name Withheld, Submission 223,p. [1]; Melissa Fisher, Submission 235, p. [1].

[104]Dr Simone Casey, Senior Adviser—Employment, ACOSS, Committee Hansard, 17 May 2023, p. 3.

[105]DEWR, Submission 254, p. 108.

[106]DEWR, Submission 254, p. 113.

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

[108]DEWR, Submission 256.8, pages [13-14].

[109]DEWR (2023), TCF Public Data, April to June 2023, www.dewr.gov.au/employment-research/job-seeker-compliance-data, viewed 13 November 2023.

[110]DEWR, Submission 256.8, p. [14].

[111]DEWR (2023), TCF Public Data, April to June 2023.

[112]DEWR, Submission 256.8, p. [14].

[113]DEWR, Submission 256.8, p. [1].

[114]See, for example, Name Withheld, Submission 142, p. [2]; CoAct, Submission 151, p. 20; Dr Harrison, Submission 152, p. 4; ACOSS, Submission 203, p. 39; Anglicare Australia, Submission 215, p. 10; NameWithheld, Submission 229, p. [4].

[115]DEWR, Submission 254, p. 116.

[116]ACOSS, Submission 203, pages 45–47. See also Jobs Australia, Submission 185, p. 21.

[117]Ms Diane Minnis, CEO, National Self-Employment Association (NS-EA), Committee Hansard, 26 May 2023, pages 13–14.

[118]NS-EA, Submission 225, p. 16.

[119]Ms Minnis, NS-EA, Committee Hansard, 26 May 2023, p. 14.

[120]See, for example, CVGT, Submission 106, pages 21–22; atWork, Submission 210, p. 13; BUSY, Submission 227, p. 2.

[121]See, for example, Joblink Plus, Submission 157, p. 18; National Youth Commission Australia (NYCA), Submission 166, p. [9]; Mission Australia, Submission 190, p. 76; ACOSS, Submission 203, p. 46.

[122]See, for example, Name Withheld, Submission 187, p. [2];Workskil, Submission 196, p. 30.

[123]See, for example, CVGT, Submission 106, p. 22; Workskil, Submission 196, p. 30; Settlement Council of Australia (SCoA), Submission 211, p.16; Workways, Submission 239, p. 26; Workways, Submission 239.1, p.4.

[124]Bamara, Submission 214, pages 7–8; Asuria People Services (Asuria), Submission 246, pages29-30.

[125]ACOSS, Submission 203, p. 42.

[126]ACOSS, Submission 203 (Attachment 1), pages 2, 3.

[127]Yilabara Solutions, Submission 231, p. 25.

[128]NESA, Submission 260, p. 80.

[129]ACOSS, Submission 203.2, p. [3].

[130]See, for example, CoAct, Submission 151, p. 3; WISE Employment, Submission 169, p. 20; CPF–UQ, Submission 217, p.6.

[131]See, for example, CVGT, Submission 106, p. 22; CoAct, Submission 151, p. 19; WISE Employment, Submission 169, p. 8; SYC, Submission 189, p. 16; NESA, Submission 260, p. 83.

[132]Dr Harrison, Submission 152, p. 5.

[133]See, for example, CoAct, Submission 151, p. 18; MatchWorks, Submission 263, p. 37.

[134]Yilabara Solutions, Submission 231, p. 24.

[135]Department of Jobs and Small Business (DJSB) (2017), Job Commitment Bonus for Young Australians Evaluation, p.9, www.dewr.gov.au/employment-services-evaluations/job-commitment-bonus-young-australians-evaluation, viewed 24 July 2023.

[136]DJSB (2017), Job Commitment Bonus for Young Australians Evaluation, pages 2, 5, 7–8.

[137]See, for example, Name Withheld, Submission 2, p. 2; Mr Ford Submission 7, p. [1]; Name Withheld, Submission 93, pages 5–6; Name Withheld, Submission 104, pages [1–2]; Name Withheld, Submission 119, p. [7];Name Withheld, Submission 187, p. [3]; Name Withheld, Submission 229, p. [3]; Name Withheld, Submission 230, p. [2]; Ms Kaye Demetriou, Submission 267, p. 3.

[138]See, for example, CVGT, Submission 106, p. 23; SRJA, Submission 145, p. 14; MAX, Submission 146, pages 40–42; AMES, Submission 148, p. 3; Campbell Page, Submission 150, pages [5, 8]; WISE Employment, Submission 169, p. 21; WDEA Works, Submission 168, pages 4–5; 4; Jobs Australia, Submission 185, p. 22; VERTO, Submission 202, p. [26]; atWork, Submission 210, p. 13; Bamara, Submission 214, p. 3; Workways, Submission 239, pages 19, 26; Matchworks, Submission 263, p. 37.

[139]CPSU, Submission 255, p. [12].

[140]See, for example, Dr David O’Halloran, Submission 108, pages [7–8]; NFAW, Submission 135, pages [3, 6]; NYCA, Submission 166, p. 16; ECCQ, Submission 206, p. 4; Dr Bielefeld, Submission 204, pages 5–6; Dr Victor Quirk, Submission 209, p. 7; AUWU, Submission 253, p. [7].

[141]Dr McGann, Committee Hansard, 14 March 2023, p. 9.

[142]Mr James Muller, General Manager, APM Employment Services (APM) Committee Hansard, 14 March 2023, p. 64.

[143]Name Withheld, Submission 230, p. [4].

[144]See, for example, WISE Employment, Submission 169, p. 2; Workways, Submission 239, p. 15.

[145]Name Withheld, Submission 187, p. [2].

[146]ACOSS, Submission 203, p. 45.

[147]DEWR, Submission 254, pages 113–114.

[148]See, for example, NFAW, Submission 135, p. [3]; Name Withheld, Submission 187, p. [2]; SSI, Submission 193, p. 15; SAEP, Submission 199, p. 63; Centre for Excellence in Child and Family Welfare (CECFW), Submission 200, p. 9; APM, Submission 213, pages 16–17; Anglicare Australia, Submission 215, p. 9.

[149]Economic Justice Australia (EJA), Submission 153, pages [3–4].

[150]Ms Eagle, EJA, Committee Hansard, 17 May 2023, p. 2. See also Ms Vrakas, Submission 91, p. 4; NameWithheld, Submission 92, p. 16.

[151]EJA, Submission 153, pages [2, 4].

[152]ACOSS, Submission 203, p. 40.

[153]Anglicare Australia, Submission 215, p. 9.