CHAPTER 4
JOB NETWORK AND LABOUR MARKET PROGRAMS
4.1 At the commencement of this inquiry the implementation of the Government's
Job Network policy was at its beginning stage. Both the policy and the
implementation were controversial and the Committee devoted a fair proportion
of its time during hearings to question witnesses about its effects upon
local communities and regional economies. The evidence given to the Committee
on the performance of Job Network was generally unfavourable. While the
Government has made some adjustments to Job Network, concerns remain that
regional areas still encounter difficulties. This chapter serves as both
a record of evidence taken at the time and points to some important lessons
to be learnt from this policy implementation. This Chapter reflects the
views of the Opposition and Democrat members of the Committee. Government
senators have included dissenting comments at the end of the chapter.
4.2 On 1 May 1998, Job Network replaced the Commonwealth Employment Service
(CES) and the existing network of employment services organisations, many
of them community based, non-profit organisations. The Commonwealth Government
contracted out the total funding of employment services to approximately
300 organisations from the private, community and government sectors.
Member organisations were selected from more than 1 000 organisations
after a competitive public tender. It should be noted, however, that in
the process of replacing the CES and cashing out of most labour market
programs, total public expenditure on labour market assistance between
1995-96 and 1997-98 fell from approximately $2.1 billion to $1.1 billion.
[1]
4.3 During the first eight months of its operation, Job Network attracted
widespread criticism. The Committee heard very genuine concerns from people
who had been involved in the delivery of employment services for many
years that the initial design of Job Network was flawed in many respects.
One startling realisation for agencies in the new market was that they
would only be paid for placing eligible jobseekers, that is those who
were receiving benefits. An estimated 400 000 unemployed people not receiving
benefits, who had previously had access to CES services, were ineligible
for assistance from Job Network members. The system was also criticised
when some service providers were forced to cease operations because of
excessive financial burdens. Service providers were also critical of the
referral procedures of clients from Centrelink.
4.4 These criticisms highlighted the inadequacy of the initial structure
of Job Network and forced the Government to come to its rescue on two
separate occasions. The first, in August 1998, addressed the issue of
eligibility, allowing Job Network members to claim payments for placing
persons not on unemployment benefits and provided a cash injection of
$55 million to support providers who were in financial difficulty. The
majority of the Committee note that these changes did not address all
the problems in this area. There are still job seekers who are at a great
disadvantage under Job Network, for example, young people, most of whom
are ineligible for Flex 3. No measures have been implemented to rectify
this problem. In addition, some employment service providers considered
the cash injection to have been insufficient and were concerned that that
this extra funding would not be repeated in the second tender round.
4.5 While changes have been made in consultation with the National Employment
Services Association, there still remain problems with Job Network, such
as the absence of an independent regulatory body to oversee service delivery,
and provide an avenue of appeal for job seekers. As mentioned above, the
market also lacks transparency, through the continued lack of agency performance
data.
4.6 It is the Committee's view, however, that the failure to accept the
reality of the inherent problems facing Job Network members at the early
stages of its implementation and to make appropriate adjustments earlier,
caused undue hardship to the wider community. Despite these changes, the
Committee remains concerned about the level and quality of service being
provided in regional areas. The Committee heard repeatedly from representatives
of regional communities that Job Network was failing to meet the employment
needs of those communities. As will be detailed below, the Committee heard
numerous examples of reduced services in regional areas. The majority
of the Committee considers that the government should have made more effort
to overcome the reported problems that were being experienced with outreach
services and to provide additional funding where a lack of services became
apparent. Furthermore, the announcement of Centrelink's plan to move to
a scaled-down regional presence and electronic service delivery will almost
certainly exacerbate the difficulties unemployed people in regional areas
are encountering under the Job Network.
4.7 As one submission from an organisation representing more than 300
community based employment providers suggested:
While it might be argued that spending cuts were necessary, it cannot
be convincingly argued that the unfettered market is all that is needed
to tackle problems of disproportionately high levels of unemployment
and low or negative economic growth in many regions. [2]
Job Network and the local community
4.8 A concern expressed by communities in all regions visited by the
Committee has been the loss of providers from within the community, and
with that the loss of knowledge and understanding of local industry and
the local job seeking population. Two unfortunate consequences arise.
The first is the very real impact of the reduced effectiveness of service
provision resulting from lack of local knowledge. The second is the social
and psychological impact on a community of contracts being awarded to
external providers when the community has faith in the experience and
commitment of those local providers not awarded contracts.
4.9 Communities with a record of successfully tapping the resources and
energy of their own populations to provide employment services have been
told that their knowledge of the local employment market and of the needs
of local jobseekers is inadequate and that they must now become dependent
on the services of outside organisations, often located in some other
centre, operating on a commercial basis. Anglicare Tasmania stated in
its submission that:
The recent FLEX tender that established the Job Network has all but
destroyed many effective networks and infrastructures … In Tasmania
many new players have entered the game. Many have won tenders without
any prior presence in the state. [3]
4.10 Mr David Thompson, CEO of Jobs Australia Limited, formerly the National
Skillshare Association, told the Committee that:
many local community based providers, many of which are very successful,
with very strong track records, strong labour market knowledge, and
links to local employers, with well-established networks and infrastructure,
have missed out in the tendering process. Contracts have been won in
many cases by organisations with no such links or infrastructure. This
has generated some concern in many rural and regional communities, as
to why the Government has not seen fit to award contacts to the local
organisation. [4]
4.11 This blow to the self-esteem and confidence of a community is only
exacerbated when the new service provider does not even set up business
within the community it is servicing but can only be accessed by an often
difficult, expensive or impractical journey to another centre, or by telephone.
4.12 Mr Steve Einfeld, Chief Executive Officer of Westgate Community
Initiatives Group (WCIG) in western Melbourne, emphasised to the Committee
the importance and the value of the partnership that existed between government
and a community organisation working within its community to meet the
needs of the disadvantaged. WCIG had previously been funded by the then
Department of Employment, Education, Training and Youth Affairs to operate
Skillshare, Job Clubs, contracted case management, job brokerage and the
New Enterprise Incentive Scheme.
4.13 Mr Einfeld told the Committee that partnership between government
and community:
was vital in the growth of services offered by our organisation; that
government backed the community group was … a strengthening of
community infrastructure. In backing the community, government bought
professional staff but it also got a volunteer workforce of mentors,
sponsors, managers, donors of equipment, work experience supervisors
and of course links with local government, schools, health centres and
other community services. I would ask you to reflect on wasted community
infrastructure: of the 23 community based Skillshares in this region
only four survived into the new employment services market. [5]
4.14 The loss of the community based knowledge and experience of those
nineteen organisations will have a continuing impact, particularly in
a region suffering high unemployment and a low skills base. WCIG failed
to win contracts for Flex 2 and NEIS, despite a 70 per cent outcome with
Job Club and an 85 per cent outcome with NEIS. Other local organisations
with even better records also failed to win contracts.
4.15 Information provided in feedback from DEETYA indicated that the
proven success rate of those organisations, and their obvious knowledge
of, and commitment to, the community were not important - the price was
not right. [6] It is when such commercial considerations
supersede other needs and values that communities suffer.
4.16 The allocation of contracts to providers in particular regions thus
appears to have been done on a regional basis without sufficient attention
being paid to the needs of particular communities. As a witness from Glenorchy
Skillshare in Tasmania put it: 'There was an absence of any strategic
planing on a regional level.' [7]
4.17 Evidence to the Committee from all over Australia provided examples
of inadequate service by job providers. Many anomalous situations were
reported; of a scarcity of services in some areas in contrast to what
might amount to over provision in other areas. While the level of service
provided by individual providers may have improved since August 1998,
the characteristics of the market arising from the tender have not. Foremost
among these is the limited geographical spread of services. For example,
in Noarlunga, south of Adelaide, all of the providers are located in or
near Noarlunga Centre. The City of Onkaparinga noted in its submission
that if there had been some consultation with local government the city
council may have been able to assist to ensure that services were available
in more remote locations such as Wilunga, which has an unemployment rate
well above the state and national averages. [8]
4.18 Similarly, in south east Perth:
there was concern about the geographic spread of the location of the
providers in our region. That was acknowledged right through to the
DEETYA level. For whatever reasons we seem to have providers who are
congregated … in the middle of the region … between the two
key areas of employment. The industrial areas are to the left and right
of where these providers have been placed … there does not seem
to be a strong correlation between where the providers were located
and where the areas of highest unemployment are. We were not privy to
the process. [9]
4.19 The lesson to be learnt is that local needs should receive priority
in any consideration of Job Network services. It is within the capacity
of DEWRSB to organise contracts in such a way as to ensure probity and
to recognise the value of local job search initiative. The initial allocation
of contracts appears to have taken no account of the needs of individuals
and communities at a local level by adopting a broadly regional and commercial
approach which in the long run may fail to deliver employment outcomes
most appropriate to those individuals and communities.
4.20 The Committee heard from a representative of the Albany Employment
Development Committee that in the Great Southern area of Western Australia,
where Job Network was working effectively, the reason for that effectiveness
was the fact that '[e]veryone of the providers that is a Job Network deliverer
has had long – probably more than 12 years – experience in the
region. We do not have outsiders.' [10]
4.21 It is interesting to note that during the consideration of estimates
in June 1998 DEETYA told the Senate Employment, Education and Training
Legislation Committee that 'it was not until after we had been through
the whole tender process that we were aware that in Karratha and several
other locations we did not have the coverage that we had been committed
to.' [11] As a result of that lack of coverage
the Department put out a tender for fee for service coverage in the region.
It appears, however, that the service now provided is significantly less
than what had been available previously.
4.22 The lack of a local provider, even in metropolitan areas where there
are providers in other locations, can have a significant impact. Quite
apart from the problems of time and cost associated with travelling to
providers elsewhere in the metropolitan area, there are important social
consequences. Socially and economically depressed communities with high
levels of unemployment can develop a culture of insecurity about moving
out of the area for service. 'Relying on public transport and lacking
the personal and financial resources the disadvantaged do not seek help
if it is not in their immediate vicinity.' [12]
4.23 It is concerns such as these, previously addressed by Skillshares
and the many other community organisations with their network of local
support mechanisms, which have not been taken into account in the awarding
of contracts on a broadly regional, commercial basis. The idiosyncratic
and bureaucratically inconvenient but nevertheless very real human needs
of individuals and communities were ignored.
Competition and collaboration
4.24 Lack of local involvement and local knowledge is further exacerbated
by the competitive nature of the Job Network, which works against the
sharing of information, and which, according to one witness, cuts 'right
across the way in which labour market intelligence is actually accumulated.'
[13]
4.25 There was a clear pattern of evidence, particularly from non-metropolitan
witnesses, that competition in the employment services market is in many
cases inappropriate and counter-productive. The Committee was told that
in regional centres, where the pool of potential vacancies is limited,
and particularly where there is competition in the market, providers will
focus their energies in the centre itself in order to maximise their business,
and will not be able to afford to service the surrounding district.
4.26 The Committee heard from a representative of the South East Economic
Development Board in South Australia that in a limited market the allocation
of contracts to different providers to fill a certain number of places
creates artificial competition, unstable businesses and a complete lack
of the wider community perspective that is so often a vital element in
the life of regional communities:
Fragmenting the market and saying 10 for you and 10 for you and 10
for somebody else is creating artificial competition. What has happened
is that not one of those can afford to service the other 40,000-odd
people in the region. They can only afford to be in Mount Gambier because
of the costs of running the business and the number of people who can
come through their doors. [14]
4.27 Similarly, in Tasmania, the Committee was told that when competition
is introduced into a depressed labour market, with long-term, systemic
unemployment, vacancies become 'a potential investment to be protected'
so that access for job seekers is actually reduced. Where organisations
have been accustomed to working collaboratively on behalf of the community,
'now that everything is focused on rewards for pushing the button first,
that level of collaboration does not happen.' [15]
4.28 In the case of the Great Southern area of Western Australia, referred
to above, the providers have worked together for 12 years or more, are
all members of the Albany Employment Development Committee and meet regularly
to make 'arrangements that work to the advantage of the jobseeker and
to ameliorate the process difficulties that employers are finding.' [16]
In other words, the success of Job Network in the region appears to result
from the fact that it follows as much as possible the pre-existing, effective
arrangement.
4.29 In September 1998 the Deputy Prime Minister, Mr Tim Fischer, expressed
concern that 'competition has not had enough regard to public interest'
in rural Australia, and that the Government 'must establish a human dimension,
a jobs dimension in relation to the area of competition policy.' [17]
This concern has not been in evidence, however, in the establishment of
Job Network in regional Australia. Competition generally is dealt with
elsewhere in this report.
4.30 Representatives of the then Tasmanian Government told the Committee
that the Government had made a submission to the Commonwealth arguing
for differential funding to encourage providers to enter regional markets
and not concentrate their efforts on the capital cities where there was
a greater chance of a commercial return. [18]
Eight months after Job Network's inception the Commonwealth Government
finally conceded and announced that each successful placement in regional
areas would attract a loading of $45.
The tender process and the commercial approach to employment services
4.31 Many of the issues raised above are relevant to the tender process.
One issue raised was the apparent emphasis on lowest price in the tender
process, which could mean that some providers won contracts at prices
which will not allow them to deliver an appropriate range and quality
of service.
4.32 Many of the details of the tendering process have been cloaked in
the provisions of commercial confidentiality. This approach was questioned
by Mr David Thompson of Jobs Australia Limited who told the Committee
that the expenditure of $1.7 billion of public money in 19 months, influencing
the lives of hundreds of thousands of citizens, requires that the processes
involved are subject to full public and parliamentary scrutiny. [19]
Similarly, Rick Healy, writing in the Sydney Morning Herald in
September 1998, suggested that 'The Job Network must have complete transparency
in its statistics in order to promote accountability and ensure its long-term
credibility.' [20]
4.33 During consideration of estimates in March 1998, DEETYA emphasised
to the Senate Employment, Education and Training Legislation Committee
the exhaustive nature of the assessment of tenders for employment services
and the rigour of probity checks on the assessment process. It is remarkable,
given the nature of these assurances, that the Committee heard such consistent
and widespread complaints on a number of issues relating to the process.
4.34 According to the Department, once tenderers had been assessed as
suitable, they were ranked 'in accordance with their price bid for price
competitive services and in accordance with quality for the Intensive
Assistance service.' Care was taken to ensure 'appropriate competition,
diversity and geographic coverage within a region,' and contracts were
then allocated to the highest ranked tenderers. [21]
4.35 The Committee believes that competition, diversity and geographic
coverage alone do not address some of the significant issues of concern
to the regional communities it has heard from during the course of this
inquiry. The overwhelming impression received by the Committee has been
that cost was the overriding factor in the awarding of contracts. Once
a minimum standard of suitability had been reached, cost alone was the
determining factor with no consideration of which tenderers might have
been most suitable for a particular region or client group.
4.36 The Committee does not question the integrity and independence of
the probity checks on the assessment process. The Australian National
Audit Office found that DEETYA managed the tender evaluation process effectively
and ensured procedural fairness for bidders; but did not report on the
appropriateness of the process or its outcomes because these were not
within its terms of reference. Some of the most relevant issues, of far
reaching significance, were not included in the audit. It is the Committee's
view that the tender assessment process itself was inappropriately designed
in not requiring a more stringent assessment of the relative suitability
of tenderers in relation to local needs.
4.37 While the probity of the assessment process has to be above reproach,
the Committee believes that such a requirement is not inconsistent with
the possibility of effective consultation with local government and other
bodies in relation to the circumstances of particular regions, in order
to ensure the most appropriate assessment of tenderers and allocation
of contracts. Consultation of this kind could itself be overseen by probity
checks and fall within the ANAO's examination of the overall tender evaluation
process.
4.38 There was also considerable concern in all communities over the
impact that commercial considerations may have on the quality of service
provided. Mr Steve Einfeld of Westgate Community Initiatives Group Inc.
gave the Committee a specific example of this kind of practice when he
referred to a Job Network provider with 'a bonus scheme to its staff for
success in placing people with a job under the new system … The bonus
was docked by 50 per cent if training was purchased.' [22]
4.39 The Committee finds such a practice entirely inappropriate to the
provision of employment services. It places staff in the invidious position
of choosing between their own financial benefit and the possible needs
of clients. It is unrealistic to expect that staff would ignore the personal
financial incentive when assessing the needs of clients and as a result
decisions about client needs would be compromised. As the witness said:
'Imagine making the purchase of training a business decision rather than
a developmental one.' [23]
4.40 Another concern is the cashing out of various forms of assistance
which were of direct benefit to the jobseeker. These are now contained
in the fees paid to providers, and commercial considerations and profit
margins may well affect the provider's decision as to the extent to which
these forms of assistance are offered to jobseekers. [24]
The majority of the Committee recommends that the funding for programs
that were cashed out, such as fares assistance, relocation assistance
and formal training allowance, be reinstated as guaranteed allowances
on top of the money allocated for job search assistance.
4.41 The Committee accepts that many of those organisations which were
successful tenderers in the Job Network entered the market, and are operating
in the market, with the highest possible commitment to genuinely meeting
the needs of the unemployed.
4.42 The Committee received evidence that Link Deloraine, a community
based provider in Tasmania which had not been awarded contracts for certain
services, continued to operate on the basis of volunteer labour and community
support simply because there was no other provider located in the town
and regular access to providers in Launceston was very difficult. [25]
In Hobart, Glenorchy Skillshare Inc. provided unfunded assistance to 96
ineligible jobseekers in the first six weeks of Job Network because of
the commitment of the organisation to the needs of the unemployed in its
region. [26]
4.43 The Committee was impressed by similar examples of selflessness
and community spirit around the country. It is the commitment to others
and the willingness to work for community good rather than personal gain
that embodies much of the ethos of regional communities of which all Australians
have reason to be proud, and which the move to a competitive market for
employment services has undermined.
Job Network and labour market programs
4.44 In Reforming Employment Assistance (August 1996) the Government
indicated its intention to abolish most labour market programs in order
to 'create a single pool of resources for use in the new market,' claiming
that programs such as JobSkills, the Landcare and Environment Action Program
and the New Work Opportunities program had 'failed to deliver lasting
employment outcomes.' [27] These actions should
also been seen in the context of the Government's desire to significantly
reduce public expenditure and rapidly bring the Budget into surplus.
4.45 DEETYA's 1996 study of the impact of labour market programs found
that programs targeted at the most disadvantaged people in the labour
market, such as New Work Opportunities, were expensive and had very poor
outcomes. However, Mr Michael Dockery, from the South Metropolitan Development
Organisation in Perth, told the Committee that:
research … shows that in fact these hard core programs are actually
far more successful when you allow for the characteristics of the people
that are in the programs than DEETYA's evaluations were showing …
there really is not a substitute for that sort of intervention cost
to help the disadvantaged into employment and out of the welfare and
long term unemployment trap. [28]
4.46 Moreover, as the DEETYA evaluation itself acknowledged, these programs
often had wider social benefits. [29] New Work
Opportunities projects, for example, were intended to draw on community
needs and initiatives and the program was 'designed to help ensure that
an employment opportunity could be provided to all eligible job seekers
even if they lived in areas where employment opportunities were limited,
particularly rural and remote areas.' [30]
4.47 The Committee received evidence from a number of witnesses suggesting
that programs in the previous Government's Working Nation initiative were
having an effect when they were cut by the current Government. One group
of councils told the Committee that:
the Government implemented reforms that abolished labour market programs
regardless of their effectiveness or failure. It was undertaken simply
to reduce expenditure and meet the deficit reduction target. [31]
4.48 A number of witnesses emphasised the particular importance of labour
market programs in regional communities. Professor Frank Stilwell of the
Department of Economics at the University of Sydney stated in his submission
that developing the human capital of regions experiencing severe unemployment
problems was essential, and that some steps had been made in this direction
by the Working Nation programs. He suggested that: 'it is a tragedy that
these have been scaled back.' [32]
4.49 Gladstone City Council in central Queensland stated that it had
been able to develop many positive initiatives through the Office of Labour
Market Adjustment (OLMA) program and other such funding. The Council gave
the example of an OLMA program which eventually led to the establishment
of a seafood processing centre which now employs ninety people. This and
other successful initiatives in the Gladstone area demonstrate the important
stimulus that labour market programs can give to employment in regional
communities. [33]
4.50 Some problems with the implementation of Working Nation programs
were acknowledged but there was recognition of the need for labour market
programs outside the current Job Network framework:
While there were a number of shortcomings associated with some of the
former Working Nation programs … many of the relevant problems
arose as a consequence of implementation rather than as a result of
problems in program design. Periods of paid work experience complemented
with vocational training did operate to improve the skills, self esteem,
confidence and competitiveness of long term unemployed people. Many
projects also delivered significant public benefit through development
of local public facilities and infrastructure and were seen by local
communities as a tangible manifestation of the then government's commitment
to addressing unemployment. Where projects conducted under various programs
were well conceived and carefully implemented, they did produce effective
and cost effective results and the experience gained from such projects
could have been used to develop and refine the programs to generally
achieve better results across the board. [34]
Also:
There is little doubt that cuts in funding to labour market programs
and providers such as Skillshare will have major implications in terms
of both economic and social effects, particularly in the long term.
[35]
4.51 The cancellation of wage subsidy programs such as JobStart means
that with the possible exception of those Flex 3 clients whose providers
choose to use part of their fee to subsidise the client into work, there
is no longer any incentive payment that a jobseeker can offer a potential
employer, no matter how long he or she has been out of work. One submission
argued that this was the single most significant discrimination against
the long-term unemployed in the restructured employment services market,
'and will cripple the efforts of non-contracted services to advocate on
behalf of their long term unemployed clients.' [36]
4.52 The Committee has noted above its concerns that Job Network providers
may focus on the commercial returns available to them rather than spending
funds on appropriate training for jobseekers. A number of witnesses told
the Committee that the withdrawal of previous labour market programs was
having a serious impact on the provision of training, especially in areas
with a low skills base. In Rockhampton, a representative of the Capricornia
Training Company told the Committee that:
With respect to funding regional job creation … the new Job Network
has drastically reduced the availability and priority of training as
the vehicle for that to occur … The New Work Opportunities program,
as an example, was extremely effective in terms of skills development.
[37]
4.53 One concern expressed to the Committee was the inflexibility of
the new system in catering for the needs of particular groups or communities.
Officers of Moreland City Council in western Melbourne noted the high
numbers of textile, clothing and footwear workers in the area, largely
women, and said that:
Women who work in the TCF sector tend to come from non-English speaking
backgrounds, older age groups, and they have got specific skills. We
consider that there have to be specific programs for them. The generic
programs are not going to assist them … but we do not know whether
even the Flex 3 … actually is going to cater for their needs. [38]
4.54 The Council's submission argued that labour market programs such
as JobSkills, LEAP and New Work Opportunities were effective in addressing
the needs of these workers but that without such programs appropriate,
targeted training opportunities might not be available. In regions where
there has traditionally been reliance on a single dominant industry these
concerns are especially significant. The Council's submission called for
'specific programs for regions with distinctive workforces in addition
to generic programs which are applied nationally.' [39]
4.55 Another specific group of workers often disadvantaged, particularly
in regional areas affected by the withdrawal or restructuring of a single,
dominant industry, is that of older workers, often defined as 45 or over.
Community based organisations which assisted such groups but which failed
to win a Flex contract, such as Western Older Workers in Melbourne, are
now unable to assist a particularly vulnerable group within the population.
4.56 This is despite the statement in DEETYA's Tendering Conditions
and Draft Contract document that:
For Flex 2, Flex 3 and NEIS, it is expected that a number of smaller
providers with expertise in helping specific client groups, particularly
in major rural centres and the capital cities, would be contracted.
[40]
As a result of the failure to target such groups with the specific
expertise previously available to them:
Highly qualified, experienced staff have just gone and all the employers
that we had good contacts with, who were willing to give jobs to older
workers, have been lost … and we think it is heartbreaking. [41]
4.57 Evidence of the benefits to a particular community of Working Nation
programs, and of the harm caused by their withdrawal, was supplied by
the Barwon Darling Alliance in western New South Wales. The Alliance cited
the JobSkills program undertaken in Wilcannia, a community with significant
unemployment and a record of community problems.
4.58 In a submission to the Commonwealth Government the Alliance tabled
a letter from the local magistrate in which he noted a marked downturn
in the number of matters coming before the court and stated that he was
'absolutely convinced that the fact that so many persons usually unemployed
are now gainfully engaged in work is the main factor contributing to the
marked decrease in crime.' A year later, following the withdrawal of labour
market programs by the current Government, there had been a marked increase
in social unrest, which the Alliance attributed to high levels of unemployment.
[42]
4.59 Similarly, the Orana Development and Employment Council in north
western New South Wales noted that:
JobSkills, LEAP and New Work Opportunities programs lowered the incidence
of crimes such as theft, domestic violence, drug and alcohol abuse.
This in turn reduced the associated police and court expenses. An added
benefit came from the community interest created. [43]
4.60 An example of how the competitive market has reduced the impetus
for cooperative arrangements for employment service provision was presented
to the Committee at its Melbourne hearings by a representative of the
Melbourne North West Area Consultative Committee. Prior to the introduction
of Job Network the North West ACC ran a successful Alignment of Skills
Training and Employment Program [ASTEP] where they approached business
and industries to ascertain their skill shortages, then obtained government
funding to run the training programs to equip the local unemployed with
those particular skills. One example was the partnership formed with David's
Warehousing in Laverton. The ACC developed a training program to meet
their requirements for forklift drivers, warehousing and store persons.
As part of their training, the clients would spend time in the warehouse
gaining work experience. At the end of the program if they were assessed
as attaining the adequate skills, they were employed. Due to the success
of the program, David's Warehousing requested that it be run in other
cities where they had outlets. [44] This and
other ASTEP projects were funded under the Training for Employment Program
[TEP], which is no longer available. Despite efforts from the North West
ACC, they have been unable to re-instate these projects under Job Network
notwithstanding their previous success.
4.61 The Committee believes that Working Nation and Job Network were
based on the same primary objective: to improve the employment prospects
of the unemployed, providing people with the skills and experiences required
by employers and thereby facilitating a better matching of unemployed
people with available job vacancies. Hence the focus of these scheme was
on training and job search assistance and, with the exception of the self-employment
and apprenticeship programs, were limited in their ability to generate
`new' employment opportunities. In this respect the Committee has some
reservations about the decision to scale back funding for NEIS which had
been shown to be a highly effective. The main concern of the majority
of the Committee's, however, is that in an unbridled market, while an
economically efficient outcome may be achieved, this may not necessarily
be socially desirable. In essence the government has relinquished all
control to the market and therefore has no influence over the type of
assistance being offered or its quality. This has the potential to adversely
affect regional Australia where labour market programs made an important
contribution to the social health of these communities.
4.62 The majority of the Committee recommend that the NEIS program
should be expanded and further investigation be made into the effects
of unbridled competition in the provision of employment services.
4.63 Government senators do not support this recommendation.
Dissenting Comments by Government Party Senators on Chapter 4: Job Network
and Labour Market Programs
4.64 Government senators submit the following comments given that the
majority of the Committee has chosen to largely ignore the performance
outcomes of Job Network, including those in regional Australia.
4.65 It should be recognised at the outset that Job Network is a world
first. The Government did not have any models or examples of similar systems
implemented in other countries to guide it in the establishment of a competitive
market for employment services. Evidence shows, however, that even in
its start-up phase, Job Network was already out-performing the old Commonwealth
Employment Service (CES) and has continued to do so. In this light, Government
senator's consider the implementation of the Job Network to be a major
success and a credit to all those who worked so hard on bringing it to
fruition.
4.66 Using statistics for the Job Network and the CES that can be compared
on a like for like basis, the data shows that for the twelve months from
May 1998 to April 1999 Job Network members recorded around 177,000 (54%)
more vacancies notified and over 72,000 (43%) more eligible placements
than the CES did in its last twelve months of operation between May 1997
and April 1998.
4.67 It is also encouraging to see that the Job Network is helping those
most disadvantaged in the labour market. While it is too early to assess
the full impact of Intensive Assistance in obtaining employment for job
seekers, even at this early stage, Job Network members are achieving an
impressive number of placements into jobs as well as achieving an increasing
number of sustained employment outcomes. In terms of placements into sustainable
jobs, that is jobs not subsidised by the government, analysis by the Department
of Employment, Workplace Relations and Small Business indicates that Intensive
Assistance Job Network members are achieving around 60% more outcomes
than were achieved under case management.
4.68 The release of regional performance data for the period 1 May 1998
to 4 June 1999, as shown in the table below, also shows that Job Network
is performing well in regional areas as well as metropolitan areas.
4.69 Furthermore, the Government has shown that it is committed to ensuring
the system is operating as effectively as possible and to help the system
mature and adjust to market forces as necessary. The Government understands
that in doing so, it is important to obtain the views of those people
involved with the operation of Job Network at the ground level. In late
1998 the Government consulted widely on the operation of the new system
and sought opinions on where improvements could be made. The consultations
resulted in a number of incremental changes designed to overcome some
difficulties that Job Network providers had encountered and to allow them
to provide an even better service to job seekers.
4.70 The Government also consulted the National Employment Services Association
and other organisations in relation to issues that would need to be addressed
in the second Job Network tender round. Initiatives under the second Job
Network tender will include:
- `managed competition' for Intensive Assistance with a minimum price
floor to maintain an emphasis on the delivery of quality services to
particularly disadvantaged job seekers and prevent a focus on price;
- enabling tenderers for Intensive Assistance to be Specialist Intensive
Assistance providers specialising exclusively in specific group such
as job seekers with a disability, young people and indigenous job seekers;
- requiring greater accountability from Job Network members for Intensive
Assistance services they deliver, through detailing successful tenderers'
strategies and undertakings in their Job Network contract;
- introducing a bonus of just over $260 dollars for Job Network members
where Job Search Training participants stay in a job for at least 13
weeks;
- emphasising in the tender assessment the importance of quality of
service, with past performance - wether in Job Network or elsewhere
– given a weighting of 75 per cent of the assessment outcome and
tender price being worth 25 per cent of the outcome; and
- a new regional structure based on 19 tender regions and 137 employment
service areas which will promote an improvement in the employment service
coverage in regional, rural and remote Australia.
4.71 Government senators believe that the Job Network has been very successful
since its implementation. As with any new policy it would have been incredibly
optimistic to expect that it would have been 100 per cent perfect from
day 1. Despite some difficulties early on, the evidence showed that system
would work and could out-perform its predecessor.
4.72 Government senators note that criticism of Job Network has been
reduced to insignificant levels since the beginning of 1999 as changes
have been introduced. It is also noteworthy that not even former critics
of the Job Network seriously proposed a return to the CES arrangement.
The Government has successfully risen to the challenge of introducing
a new employment agency culture and whatever fine-tuning becomes necessary
in the normal lifecycle of legislation, the basic principles are firmly
entrenched.
Source: Job Network Performance Data
Footnotes
[1] Department of Employment, Education, Training
and Youth Affairs, Annual Report, various issues. Expenditure relates
to program costs for program 4 in 1995-96 and 1997-98.
[2] Submission No. 150, Jobs Australia Limited,
vol. 6, p. 3
[3] Submission No. 122, Anglicare Tasmania Inc,
vol. 5, p. 4
[4] Mr David Thompson, Hansard, Melbourne,
7 May 1998, p. 381
[5] Mr Steve Einfeld, Hansard, Melbourne,
7 May 1998, p. 412
[6] ibid., p. 418
[7] Ms Iris Todd, Hansard, Launceston,
16 June 1998, p. 517
[8] Submission 40, City of Onkaparinga, p 10.
[9] Mr Michael Thorn, South East Metropolitan
Area Consultative Committee, Hansard, Perth, 18 August 1998, p 1470.
[10] Mr Len van der Waag, Hansard, Perth,
18 August 1998, p. 1438
[11] Mr Ian Campbell, Hansard, Budget
Estimates, 9 June 1998, p. 71
[12] Submission No. 39, Para Worklinks Inc.,
vol. 2, p. 33
[13] Professor Bob Fagan, Hansard, Parramatta,
23 July 1998, p. 1048
[14] Ms Wendy Beumer, Hansard, Noarlunga,
28 April 1998, p. 50
[15] Ms Iris Todd, Hansard, Launceston,
16 June 1998, pp. 515-7
[16] Mr Len van der Waag, Hansard, Perth,
18 August 1998, p. 1438
[17] The Hon Tim Fischer, MP, Speech, Wagga
Wagga, 18 September 1998
[18] Dr Richard Watkins, Hansard, Launceston,
16 June 1998, p. 548
[19] Mr David Thompson, Hansard, Melbourne,
7 May 1998, p. 390
[20] Sydney Morning Herald, 17 September
1998, p. 19
[21] Mr Steve Sedgwick, Hansard, Additional
Supplementary Estimates, 6 March 1998, pp. 185-6
[22] Mr Steve Einfeld, Hansard, Melbourne,
7 May 1998, p. 414
[23] ibid., p. 413
[24] Mr David Thompson, Hansard, Melbourne,
7 May 1998, p. 380
[25] Mr Lindsay Swain, Hansard, Burnie,
16 June 1998, p. 602
[26] Ms Iris Todd, Hansard, Launceston,
16 June 1998, p. 518
[27] Reforming Employment Assistance: Helping
Australians into Jobs, Statement by Senator the Hon Amanda Vanstone,
Minister for Employment, Education, Training and Youth Affairs, August
1996, pp. viii, 30
[28] Mr Michael Dockery, Hansard, Perth,
18 August 1998, p. 1416
[29] Department of Employment, Education, Training
and Youth Affairs, The Net Impact of Labour Market Programs: Improvements
in the Employment Prospects of Those Assisted, February 1997, p.2
[30] Submission No. 166, Department of Employment,
Education, Training and Youth Affairs, vol. 7, p. 98
[31] Submission No. 67, South West Group of
Councils, vol. 3, p. 237
[32] Submission No. 82, Professor Frank Stilwell,
vol. 4, p. 36
[33] Submission No. 89, Gladstone City Council,
vol. 4, p. 76
[34] Submission No. 150, Jobs Australia Limited,
vol. 6, p. 227
[35] Submission No. 25, Broken Hill City Council,
vol. 1, p. 128
[36] Submission No. 54, WOW Employment Services
Inc., vol. 3, p. 10
[37] Mr Peter Keene, Hansard, Rockhampton,
4 August 1998, p. 1158
[38] Mrs Bawani Devi Graham, Hansard,
Melbourne, 7 May 1998, p. 398
[39] Submission No. 106, Moreland City Council,
vol. 4, p. 240
[40] Department of Employment, Education, Training
and Youth Affairs, Tendering Conditions and Draft Contract for Employment
Services, August 1997, p. 5
[41] Ms Jill Milthorpe, Hansard, Melbourne,
7 May 1998, p. 429
[42] Submission No. 55, Barwon Darling Alliance,
vol. 3, p. 16
[43] Submission No. 69, Orana Development and
Employment Council, vol. 3, p. 259
[44] Mr Dominic Andreacchio, Hansard,
Melbourne, 7 May 1998, p. 366