COMMONWEALTH SERVICES DELIVERY AGENCY BILL 1996
REFORM OF EMPLOYMENT SERVICES BILL 1996
REFORM OF EMPLOYMENT SERVICES (CONSEQUENTIAL PROVISIONS) BILL 1996
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MINORITY REPORT

Commonwealth Services Delivery Agency Bill 1996

Reform of Employment Services Bill 1996

Reform of Employment Services (Consequential Provisions) Bill 1996

Senator Kay Denman (ALP)
Senator Chris Evans (ALP)
Senator John Faulkner (ALP)
Senator Sue Mackay (ALP)
Senator Belinda Neal (ALP)
Senator Kerry O'Brien (ALP)
Senator John Woodley (AD)
Senator Cheryl Kernot (AD)

A. INTRODUCTION

These Bills make fundamental and far-reaching changes to the way social security and other cash transfer payments are delivered and dramatically overhaul long-standing arrangements for the provision of assistance to the unemployed.

We are concerned that the Bills pose a threat to Australians' access to adequate and appropriate income support and employment services. In our view, the Bills also establish dangerous precedents, in the quasi-privatisation of the delivery of income support payments, in the erosion of a truly public service, and in the establishment of a system of residual, rather than universal, public assistance for the unemployed.

 

B. COMMONWEALTH SERVICES DELIVERY AGENCY BILL 1996

The scope of the Agency's functions

At this stage it is envisaged that the Agency will be responsible for:

• all services and income support payments currently provided by the Department of Social Security;
• student assistance [AUSTUDY];
• registration and assessment of applicants for income support and employment assistance;
• assessment and payment to families of childcare assistance and the childcare cash rebate;
• provision of touch-screens with national job vacancies data;
• referrals for intensive labour market assistance and employment placement; and
• specialist services to assist people including sole parents, people with a disability, Aboriginal and Torres Strait Islander peoples, migrants and young people. [85]

Like ACOSS [86], we see advantages in customers dealing with a single Agency to access a range of Commonwealth payments and services, rather than a number of different Departments. We are also aware that the 'one stop shop' concept comes with the risk that staff may lose their specialist knowledge, and we would be concerned if the initiatives of the former Labor government to develop specialist service centres for, for example, families and older Australians, were jeopardised by the creation of a single service delivery agency.

It is clear that the government also intends that, over time, the Agency will enter into service agreements for the delivery of other, unspecified, Commonwealth services [87].In addition to setting out the Agency's core function, the Bill empowers the Minister to direct the Agency to perform any function. These functions are not necessarily restricted to income transfer functions, or to services associated with the provision of income support, and the broad scope of the definition of 'Commonwealth service' contained in the Bill would not constrain any expansion beyond this core role.

While we see some merit in the separation of 'purchaser' and 'provider' functions, we believe that the provider authority should be expressly precluded from taking on regulatory, accrediting or outcomes monitoring roles. These are properly the responsibility of Commonwealth policy departments, or independent authorities.

Under item 14 'Notification of policies', the Minister has the power to notify the Board of 'the general policies of the Commonwealth Government that are to apply in relation to the Agency, the Board or the employees'. We are concerned that such notifications are not subject to any form of parliamentary or public scrutiny. 'General policies' is neither defined in the Bill nor tested at law, and the Board has no option but to ensure that these 'general policies' are carried out. Any notification given by the Minister under this provision should, at the very least, be included in the annual report for the Agency, as is the case for Ministerial directions about the performance of the Agency's functions. In contrast, Ministerial directions about the Agency's functions are disallowable instruments.

The Agency's employees

The Bill provides the Agency with the capacity to employ staff outside the provisions of the current Public Service Act, on terms and conditions determined by the Chief Executive Officer. As the CPSU noted in evidence, 'we could have people within the Agency under different categories of employment performing the same levels of work for different pay and condition outcomes' [88].

While we recognise the precedents for employing staff outside the provisions of the Act under legislation establishing other Commonwealth authorities, we are concerned that such precedents have yet to be tested in the context of new industrial relations arrangements.

We are not persuaded by the Department's argument that the present Public Service Act hampers their capacity to employ temporary staff to deal with peak workloads. We note also that this and other significant issues will be dealt with in the context of the government's foreshadowed changes to public service terms and conditions. In the meantime, and given the Department's stated intention to negotiate a single enterprise agreement with Agency staff which could deal with arrangements for peak workload staffing we see the provision as unnecessary.

Recommendations

Accordingly, we recommend that the Commonwealth Services Delivery Agency Bill 1996 be amended to:

• (item 3) preclude the Agency from negotiating service arrangements to provide regulatory, accrediting or monitoring functions
• (item 14) ensure Ministerial notifications are published in the annual report of the Agency
• (item 30) require the Board to seek advice from the Remuneration Tribunal on the appropriateness of the terms and conditions of the Chief Executive Officer and to publish that advice in the annual report of the Agency
• (item 35) remove the provision allowing the Agency to employ staff on terms and conditions determined by the Chief Executive Officer.

C. REFORM OF EMPLOYMENT SERVICES BILL (1996)

REFORM OF EMPLOYMENT SERVICES (CONSEQUENTIAL PROVISIONS)

BILL 1996

Background

The Reform of Employment Services Bill 1996 and Reform of Employment Services (Consequential Provisions) Bill 1996 are part of a package including the Commonwealth Service Delivery Agency Bill 1996 which seek to abolish the CES and establish in its place a market to deliver publicly funded labour exchange services. These bills fundamentally change the arrangements for delivery of employment assistance in Australia, essentially privatising most of this assistance and denying assistance previously available to many.

They would repeal in full the Employment Services Act 1994 which was the main legislation for the Working Nation approach to the provision of labour market programs and case management for the long-term unemployed.

Obligation to provide a publicly funded labour exchange service

Contrary to earlier statements by the Government, these bills do not establish a Public Employment Placement Enterprise (PEPE) which will instead be set up as a corporation. No reference is contained in these bills to the establishment of this PEPE.

The CES will in effect start to wither on the vine from April as the new Commonwealth Services Delivery Agency commences operations and picks up responsibility for referral of jobseekers, although the CES will apparently not be formally closed or re-badged as PEPE until September. The visible disappearance of the 50 year old comprehensive public employment service will cause great concern among taxpayers who have a right to expect that they and their children can obtain adequate public employment services when needed, particularly at this time of high and rising unemployment. We believe it is imperative that our community service obligation to ensure that labour market assistance is available to all regions is maintained under this new regime.

Concern was expressed by a number of the witnesses [89] at the hearing that regional areas with high unemployment may not have access to any services due to the failure of competitive tendering in areas where provision of employment services is not profitable. ACOSS stated in their written submission that regional areas are likely to be disadvantaged due to the high costs of service delivery in country areas, meaning that more regions than expected might be regarded as non-viable for "out-comes based funding." [90] The CPSU predicted that there may be huge geographic areas of the country with no servicing.

This is particularly the case in regions of high unemployment. There are no concrete, adequate measures provided in this legislation to ensure these services are delivered in regions of great need.

The Government's report purports to address this concern by stating that the Minister will have the power to order fixed price tender in regions where there is no access to employment placement services, and, as a last resort, has power to direct that a PEPE operate in such areas. However, we echo the concern expressed by ACOSS that "...the legislation makes no reference to those arrangements or to the nature of the services offered to jobseekers in these regions or, indeed, to the existence of or operations of the public EPE." [91]

The provisions of the bill ought to be changed in order to build back in an adequate and balanced role for the public sector in the provision of labour exchange and other employment services. We recommend that the bill be amended to enshrine the right of access to and provide for the public provision of labour exchange services for all Australians.

We also note serious concerns expressed during the Committee hearing that the effect of passing these two new Bills will be to prevent the public employment service provider from having the resources to adequately compete with private providers, so that there will not in fact be true competition and freedom of choice for all. Not only will the PEPE not be adequately researched to compete with private providers. Concern expressed at the Committee hearing by ACROD, the CPSU and the Brotherhood of St. Lawrence, that many of the smaller and more community-based providers will also find it difficult to get through the tender process and survive in the medium terms as EPEs by comparison with the larger commercial organisations.

The public provider as a corporation

A number of submissions expressed concern about the Government's decision to establish the PEPE as a corporation. ACOSS and the CPSU submitted that failure to establishment the PEPE and the operation of the PEPE in the legislation leaves open the possibility that the government could, without prior reference to parliament, decide to cease operation of the PEPE. The CPSU stated at the hearing their concern that; "We have very little experience of major government services being turned into private companies under the Corporations Law." [92] The removal of the operations of the PEPE from statutory regulation is of great concern because the government intends to set up a public employment placement enterprise without providing for parliamentary scrutiny of its operations.

The decision also means that, in contradiction to earlier assurances from the Government, the Public Employment Placement Enterprise will not operate to fill the gaps in service to the unemployed from commercial and other providers.

Instead, as Minister Vanstone told the Senate on 10 December 1996, “The Public Employment Placement Enterprise will be incorporated as a company under the Corporations Law and a company structure will ensure it has a commercial focus as soon as possible”.

This means that the PEPE will not be able to effectively look after the unemployed who are not catered for by the new, private profit-driven Employment Placement Enterprises.

There are many unanswered questions about the extent to which public assistance to the unemployed and other Social security recipients will be further eroded if these bills pass in their present form. This is highlighted by statements by Departmental Officers at Estimates' Hearings that the PEPE be steadily downsized. It was acknowledged in the evidence to the Committee that there is no guarantee that the PEPE, as a corporation, will survive at all in a competitive market.

We believe that the Government has an obligation to provide universal job search assistance to those unfortunate enough to find themselves without work. This obligation is critical enough to warrant the establishment of a PEPE by statute in order that its activities can be scrutinised by and be accountable to Parliament. In response to these serious concerns, we therefore recommend that the PEPE be set up by statute and not by way of a corporation.

Need for proper accountability and monitoring of EPEs

A major concern expressed in the submissions is that the level of service provided by EPEs to the jobseeker will be insufficiently monitored. We believe that providing for the accreditation of providers will help address this concern. The Government's response stated that DEETYA will have a rigorous assessment process to select employment service providers. However, we agree with the submissions and maintain that the placement of a community service in the hands of private providers strengthens the argument for the need for accreditation of such providers.

The level of service provided to the jobseeker by the PEPE was of particular concern in the submissions which pointed out the lack of a code of conduct in the bill. ACOSS stated during the hearing that this market; "...will carry with it significant risks that unemployed people will be given less than satisfactory quality of service by providers, some of which at least will have a strong interest in maximising the surpluses and profits they generate and, in doing so, by minimising the amount and quality of assistance they provide to unemployed people." [93] ACOSS also submitted that in view of the magnitude of public money invested, there should be some protection for the taxpayer in terms of the standard of service required of providers. The Welfare Rights Centre also argued for an agreement to provide a code of conduct. As ACOSS stated in their written submission, at the very least the code should be referred to in the legislation.

We agree that the investment of public monies of $1 billion per year and the rising number of unemployed people who will rely on such services, means that accountability mechanisms for service such as the provision of a clear code of conduct, are imperative.

Regulation of service to jobseekers

Under this bill, the rights and responsibilities of the jobseeker vis-a-vis the EPE are set up by a contract between the two parties. A number of the submissions expressed concern about the unequal relationship between the two parties because the private provider has the power to "breach" the job-seeker and affect entitlement to Social Security benefits. The Victoria Social Justice Commission expressed a view that this would not be an "agreement" in any sense of the word, but rather would have the effect of a form of law not directly approved by Parliament. We share that concern and also point out that this bill gives the Employment Secretary power to delegate approval of such agreements to EPEs. The CPSU have expressed concern that the bill should ensure that no jobseeker may have unreasonable demands placed upon them by the private providers and that the jobseekers be made aware of their rights and responsibilities.

The Government's report responds to this concern by stating that the bill enables compliance with the terms of the agreement to be monitored under the act. However, this response does not address our substantial concerns about what may be contained and therefore required of the jobseeker, through the terms of this contract. The Welfare Rights Centre, for example, proposed a series of benchmarks; that guarantee genuine negotiation between the employment placement provider and jobseeker; that the terms in the agreement when finally reached are fair and reasonable and that all parties should have clearly established appeal rights and access to independent review.

We therefore will be seeking to have the principles underpinning these contracts incorporated into the bill. We will seek to have an express prohibition upon unreasonable demands being placed upon the jobseeker. We believe that such changes will help redress the imbalance in power between the two parties.

Conditions of service and job losses for employees under the new regime

Many thousands more public sector jobs will be lost as a result of the implementation of these bills. In its oral testimony to the Committee, the CPSU anticipates; "the loss of probably between 3000 and 6000 jobs...who currently work in the public service."

There has been a great deal of concern expressed by the CPSU that the terms and conditions of those presently employed by the CES will not be maintained under the new regime. We would recommend that these be addressed in the legislation by guaranteeing that public service terms and conditions apply to all employees in the PEPE.

There remain many unresolved problems about the fairness and equity of conditions of employment under the new arrangements as the CPSU has made clear in its written and oral submissions.

Access to employment assistance

There was a great deal of concern expressed at the hearing that this bill will not ensure that all unemployed people will be provided with access to intensive employment assistance in the future.

A serious concern expressed in oral and written submissions is that some jobseekers are more marketable than others and therefore the jobless who are cheapest to place will be given preferential treatment. This "creaming' was viewed as a likely result of outcomes-based funding. The also led to concerns, such as those expressed by the Australian Council for Social Service, that some providers will seek to minimise the level of training and other sorts of assistance they give a jobseeker and place them in less secure, lower-paid employment so that they maximise the amount of fee they keep. A related concern was that the competitive market would simply fail to pick up certain "less-marketable" members of the unemployed. This concern was heightened by suggestions from ACOSS, ACROD and the CPSU, that smaller community-based providers who have experience with people with disabilities and the long-term unemployed, would be unable to survive in the competitive tendering process upon which this new regime is predicated.

We share the concerns expressed in oral submissions that some of the long-term unemployed may miss out on employment assistance. We also note that funding of labour market programs has been significantly cut and fewer people will be able to access employment assistance.

OTHER RECOMMENDATIONS

In addition to recommendations contained earlier in the report we recommend that the bills be amended to:

• Enshrine the right of all unemployed people to local and accessible labour market assistance;
• Guarantee the delivery of accessible and appropriate public employment services in regional Australia;
• Establish standards for registering, accrediting and regulating the performance and ethical practices of the new Employment Placement Enterprises (EPEs);
• Provide for public accountability of contract performance by EPEs;
• Provide mechanisms for greater enforceability of legal privacy and secrecy requirements on EPEs, including through the scrutiny of the Privacy Commissioner;
• Make the Minister clearly accountable for the operations of EPEs;
• Define the different types of employment services available to jobseekers;
• Ensure adequate and accessible complaint and appeal rights for the unemployed;
• Ensure compliance with Australia's international obligations.

Senator Kay Denman (ALP, Tasmania)	Senator Chris Evans (ALP, Western Australia)
Senator John Faulkner (ALP, New South Wales)	Senator Sue Mackay (ALP, Tasmania)
Senator Belinda Neal (ALP, New South Wales)	Senator Kerry O'Brien (ALP, Tasmania)
Senator John Woodley (AD, Queensland)	Senator Cheryl Kernot (AD, Queensland)

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FOOTNOTES:

[85] Letter from Senator the Hon J Newman, 17 February 1997, information kit on the Agency.

[86] ACOSS submission, pp. 2-3.

[87] Explanatory Memorandum, Commonwealth Services Delivery Agency Bill 1997, p.1.

[88] Transcript of evidence, 7 March 1997, p.8.

[89] For example, the Community and Public Sector Union (CPSU) submission.

[90] ACOSS submission, p 5.

[91] ACOSS submission, p 5.

[92] Transcript of evidence, p 9.

[93] Transcript of evidence, p 16.