E. Previous inquiries and reviews

Parliamentary inquiries

The Committee drew on several parliamentary inquiries in its examination of the employment services system. Key inquiries are summarised below. The list is not intended as exhaustive, but rather to illustrate that many issues canvassed in the current inquiry have persisted for a significant amount of time.

The list of inquiries does not include the inquiries into the ParentsNext program. These were captured in the Committee’s interim report.

Senate Education and Employment References Committee:Inquiry into jobactive

The Senate Education and Employment References Committee conducted an inquiry into jobactive (the employment services system which preceded Workforce Australia) in 2018. The final report was tabled in February 2019.

Several of the findings of the jobactive inquiry mirrored key themes in evidence provided to this inquiry. The inquiry found that jobactive was not fit-for-purpose. Participants found employment despite of the program—not because of it—and suffered due to the program’s punitive compliance arrangements. Providers were overburdened with red tape, which prevented them from delivering effective support.[1]

Specific areas of concern included:

• many jobseekers were inappropriately assessed as being ‘job ready’ despite facing multiple barriers. Even if placed in the appropriate service, jobseekers did not receive sufficient support;
• mutual obligation requirements—in particular mandatory job search and annual activity requirements—were inappropriate for jobseekers and resulted in employers becoming overburdened by masses of poor-quality job applications;
• the compliance framework was punitive, and disproportionally impacted participants experiencing homelessness and mental health issues; and
• funding arrangements incentivised providers to churn people through short-term work, rather than enabling meaningful employment outcomes.[2]

Key recommendations included:

• improving mutual obligations to promote work readiness and effective job searches;
• enhancing the negotiation process for, and the content of, Job Plans;
• transferring responsibility for compliance to a public body, including discretionary powers over the application of penalties;
• improving access to appeals and complaints processes;
• establishing independent assurance and evaluation mechanisms; and
• ensuring funding arrangements do not inappropriately incentivise attainment of short‑term or insecure jobs at the expense of secure, sustainable employment.[3]

Senate Community Affairs References Committee: Inquiry into the adequacy of Newstart

The Senate Community Affairs References Committee conducted an inquiry into the adequacy of Newstart and related payments, and alternative mechanisms to determine the level of income support payments in Australia. The final report for the inquiry was tabled in April 2020.

Key themes in evidence included that income support payments for working age jobseekers were inadequate, and that this can have devastating impacts on individuals and on the wider community. The report also asserted that the income support system could act as a barrier to employment due to inadequate payment rates that force people into poverty, flaws in the design of mutual obligations, and the inefficiency of employment programs.[4]

Of particular relevance to the current inquiry, evidence indicated that:

• mutual obligations were not leading to positive employment or education outcomes;
• employment programs must focus on the skills required for the future of work;
• additional, targeted supports were needed for some cohorts, and particularly for those who experience mental health challenges and for youth in housing insecurity;
• jobactive providers did not adequately support jobseekers; and
• compliance arrangements were punitive and did not increase chances of finding work.[5]

Key recommendations included:

• the Australian Government set a national definition of poverty, in collaboration with academic experts and the community sector;
• the Australian Government immediately undertake a review of the income support system to ensure that all eligible income support recipients do not live in poverty.[6]

Senate Select Committee on the Future of Work and Workers

The Senate Select Committee on the Future of Work and Workers considered matters relating to the ways in which work and workplaces were changing in Australia, and the impact of associated trends on workplace laws, skills and knowledge need, and the social security system. The report was tabled in September2018.

Key findings included:

• the availability and stability of decent work and decent pay is important on an individual, family and community level;
• inequality is rising in Australia and stagnant wages are impacting on Australia’s quality of life and sense of prosperity and have the potential to impede economic growth;
• workplace laws have failed to keep pace with emerging trends; and
• the world of work is being transformed by technology; however, it would be a mistake to see the future of work as only being about technological change.[7]

Key recommendations with relevance to this inquiry included:

• the Australian Government prepare and commit to a long-term plan to prepare Australian workers, business, and the economy for coming technological change;
• the Australian Government establish a central body within government to coordinate planning for the future of work;
• the Australian Government make legislative amendments that broaden the definition of employee to capture gig workers and ensure that they have full access to protections under Australia's industrial relations system;
• consideration of portable leave schemes across a range of industries, recognising increasingly flexible working patterns of modern Australians; and
• review of the income support system to ensure it is fit-for-purpose in an environment where a decreasing number of Australians are in traditional, full-time employment.[8]

Other relevant inquiries and reports

Employment Services Expert Advisory Panel

An independent Expert Advisory Panel was engaged to review the jobactive program and to provide recommendations to shape the next generation of employment services, including consideration of the digital technology could be used to deliver services and how enhanced services can be delivered for more vulnerable jobseekers. The panel’s report—I Want to Work–was provided to the Australian Government in October2018 and released in December 2018.

Key insights and recommendations in the report included:

• more accurate, comprehensive assessments are required to design and implement targeted interventions;
• the system should seek to invest in supporting and empowering people looking for work;
• penalties should only be imposed on the few income support recipients who are wilfully and persistently non‑compliant;
• jobseekers who are job‑ready should be enabled to self‑manage online;
• jobseekers should be supported according to need, with more resources and provider time directed to those that need more help;
• government departments must collaborate to support jobseekers and employers;
• jobseekers should not be obliged to repeat the same information to multiple entities;
• outcome payments should prioritise pathways to sustainable employment;
• the system must better support employers;
• employer engagement could be improved through brand consistency, a single point of contact, and proactive, strategic outreach;
• the system requires flexibility to ensure that local communities—including First Nations communities—can contribute to local solutions;
• new organisations face difficulties entering the market;
• the digital ecosystem must link with systems jobseekers and employers already use;
• providers should be set performance benchmarks, instead of performance monitoring focusing on relative comparisons of provider performance; and
• the system should be transparent and accountable.[9]

Employment White Paper

The Australian Government’s Employment White Paper review was established to develop a comprehensive roadmap for Australia’s future labour market, including building a bigger, better‑trained and more productive workforce to boost incomes and living standards and create opportunities for more Australians. The review builds on the outcomes of the 2022Jobs and Skills Summit and has an overarching focus on full employment and productivity growth and on women’s economic participation and equality.[10] The final report—White Paper: Working Future—was released in September2023.

The final report explains that building a competitive economy relies on investments in the skills and capabilities of the current and future labour force. This is increasingly the case as the economy shifts from hydrocarbons to renewables; with the development of artificial intelligence; with an increasingly older workforce; with growth in the care and support economy; and as global fragmentation puts pressure on supply chains.[11]

The final report included specific analysis of employment services. Key findings in relation to the employment services system included:

• the current system is highly fragmented and difficult to navigate, is not always sufficient help to those with multiple or entrenched disadvantage and is hamstrung by a highly transactional and poorly tailored operating environment;
• a quality employment services system has the potential to deliver significant social and economic benefits, including by lifting levels of participation, building skills, and providing supported pathways to employment; and
• employment services must effectively support employers, including by enabling access to a broader talent pool and a broader range of training and support services.[12]

Eight principles put forward for the reform to employment services are detailed in the text box that follows.

Source: Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, p. 224.

Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability (Disability Royal Commission) was established to inquire into how society should protect people with disability from violence, abuse, neglect, and exploitation. It also considered measures to promote inclusion, facilitate the independence of people with disability and their right to live free from violence, abuse, neglect, and exploitation.[13]

The Disability Royal Commission’s analysis of employment services focused on Disability Employment Services (DES) rather than Workforce Australia. However, many of its findings were directly relevant to this inquiry. For example, the Commission observed a lack of appropriate support, a failure to provide person-centred services, and a failure to place jobseekers in roles that matched their skills, interests, or abilities. The Commission further detailed concerns relating to a lack of knowledge and professionalism in DES; inaccessible information; inadequate responses to complaints of violence, abuse, and neglect; and a lack of incentives to provide quality services.[14]

The Disability Royal Commission made 222 recommendations for improving laws, policies, structures, and practices to ensure a more inclusive and just society that supports people with disability and their right to live free from violence, abuse, neglect, and exploitation. These included measures which are relevant to this inquiry, including:

• addressing fragmentation in the social services system;
• ensuring access to information in an appropriate form and enhancing digital literacy;
• building competencies for frontline staff and improving pay and conditions;
• supporting greater social procurement and government job creation;
• improving complaints processes; and
• enabling the release of public data.[15]

Royal Commission into the Robodebt Scheme

The Royal Commission into the Robodebt Scheme (Robotdebt Royal Commission) was tasked with inquiring into a range of matters connected with the Robodebt Scheme, including how, by whom and why the scheme was established, designed, implemented; how risks and concerns in relation to the scheme were addressed and how complaints and challenges were managed by the Government; the use of third-party debt collectors; and the effects of the scheme—both human and economic.[16]

Ultimately, the Robodebt Royal Commission found that:

Robodebt was a crude and cruel mechanism, neither fair nor legal, and it made many people feel like criminals. In essence, people were traumatised on the off-chance they might owe money. It was a costly failure of public administration, in both human and economic terms.[17]

The Robodebt Royal Commission made 57 recommendations. Several of these are directly relevant to the present inquiry, including:

• design policies and processes with emphasis on the people they are meant to serve;
• support easier, better engagement with Centrelink and enable greater input by income support recipients and other key stakeholders into policy design and implementation;
• increased face-to-face support for vulnerable people;
• enhanced safeguards around automated decision-making, including the establishment of a monitoring and auditing body;
• improvements to compliance processes, including measures focused on protecting more vulnerable cohorts; and
• capability development within the public service.[18]

Productivity Commission inquiries and research

The Committee drew on several inquiries of the Productivity Commission in its inquiry into employment services. Key inquiries by the commission are outlined below. Others are noted throughout the report as they relate to evidence from submitters and witnesses.

Productivity inquiry

Each five years the Productivity Commission undertakes an inquiry on Australia’s productivity and makes recommendations for reform. As part of its latest inquiry, the commission published six interim reports between August and October 2022. The final report was handed to the Australian Government in February2023 and tabled in March 2023.

Key findings of the Productivity Commission’s most recent inquiry which are relevant to this inquiry include:

• a productive labour market requires effective matching of skills and jobs is key. Moreover, productivity can be enhanced by increasing the supply of workers with valued skills and upgrading the pool of available skills within the workforce;
• building human capital—and in particular foundation skills and digital literacy—has a key role in improving productivity. More educated workers are more likely to be in the labour force and those with lower skill levels have fewer job opportunities;
• more flexible methods for upskilling or reskilling are required, supported by policies which are informed by consultation with and reflect the needs of employed people in lower-paid positions and people who are unemployed;
• programs designed to support lifelong learning—with Employability Skills Training (EST) explicitly mentioned—need to be evaluated for their effectiveness at facilitating additional training;
• the ‘non-market’ sector, including employment services, is facing a range of challenges, including processes that limit client choice in selecting services and provider, and fewer incentives for clients to hold providers to account. Moreover, while competition can help to improve efficiency, there are limits on the extent that competition will be successful in enabling employment outcomes;
• to lift productivity, barriers to innovation must be addressed. National bodies that disseminate best practice in their respective sectors is one possible solution; and
• data collected by providers of government-funded services is often not shared. More data sharing and interoperable IT systems within government agencies and across private organisations would improve services for users and system-level policy decisions.[19]

Independent review of the Job Network

The Productivity Commission conducted an independent review of the Job Network to critically examine its framework for delivering labour market assistance. The report was released in 2002.

The review found that the Job Network’s purchaser-provider model is appropriate for the delivery of active labour market programs, with the Productivity Commission expressing strong support for purchaser-provider arrangements instead of direct provision by government:

The fact that the Government funds (or purchases) employment services does not mean that it is best that it also provide them. Direct delivery of such services has been hampered in the past by inflexibility, lack of choice and diversity, the absence of competition and vague definition of objectives and outcomes.[20]

However, the review also found that not all aspects of the program were working effectively and asserted that incremental reform was needed. Key issues included:

• many disadvantaged jobseekers received little assistance while in intensive assistance. Better targeting of the needs of jobseekers, changes to fee systems, and more options for rereferring jobseekers to other programs were needed;
• many jobseekers did not choose their provider and had few choices over services given to them. Moreover, in proposed changes for the subsequent contract, jobseekers would be locked into a single provider;
• competitive tendering was complex and expensive for providers and could be disruptive to services;
• fixed caseloads frustrated growth of better providers and removed incentives to develop and promote their superior performance;
• the (then) Department of Employment and Workplace Relations was imposing too many compliance burdens on and providing excessive direction to providers; and
• certain minor programs were either poorly targeted or ineffective.[21]

The Productivity Commission made 52 recommendations to enhance the employment services system (under the Job Network and subsequent contracts). Key recommendations included:

• retaining a purchaser-provider model for employment services, with a continued strong focus on outcomes, competition, and choice;
• conducting additional research and collecting more data on the effectiveness of the Job Network, with de-identified data made available for independent scrutiny;
• continuing generalised job matching functions, with incentives used to encourage the placement of more disadvantaged jobseekers;
• greater scope for activity testing requirements (mutual obligations) to be adjusted to take account of the circumstances of a diverse caseload;
• enhancing information provided to jobseekers about key elements of the Job Network, including the assessment and referral system and complaints process;
• enabling jobseekers to change providers at certain stages during their engagement with the program, including assistance with transfers. looking to change providers;
• enhancing the assessment process;
• enabling jobseekers to be re-directed to other programs if participation in mainstream employment services is unlikely to generate an outcome;
• introducing a greater range of outcome payment categories for intensive phases of assistance, taking account of the increased barriers faced by certain cohorts;
• an automatic system for verifying employment outcomes be implemented, with the cooperation of Centrelink and the Australian Tax Office (ATO);
• reducing barriers to entry;
• competitive tendering be replaced with a licensing system in subsequent contracts;
• the Australian Government develop a risk management approach to contract monitoring and compliance which encourages innovation and minimises costs; and
• the Australian Government give consideration to establishing an independent JobNetwork agency.[22]

Auditor-General audits

The Australian National Audit Office (ANAO) has conducted several audits related to administration of employment services, including Workforce Australia and its predecessors, Disability Employment Services (DES) and remote employment services. Key audits are summarised below.

jobactive: Design and monitoring

The ANAO conducted an audit on the design and monitoring of jobactive. Audit criteria were whether the program was designed to support achievement of government policy objectives, and whether the department had effectively monitored the program against the objectives. The ANAO tabled the report in July 2017.

Key audit conclusions included:

• the (then) Department of Employment effectively managed the design of jobactive and its monitoring approach resulted in a reasonable level of assurance that the program was being delivered as required;
• there was a sound reason for redesigning employment services, and the governance arrangements established by the department were comprehensive;
• a suitable committee structure had been established to oversee the jobactive program and identified and managed risks at the program and provider levels;
• a reasonable level of assurance that the program was administered as designed and expected had been obtained; and
• the evaluation strategy for jobactive did not address some aspects of the program, including contract management and the Star Ratings.[23]

The ANAO recommended a risk-based approach to prioritising the assurance activities required to effectively manage and monitor the delivery of jobactive be adopted and an assessment be undertaken on whether current compliance arrangements were structured to detect and manage provider non-compliance effectively and efficiently. The department agreed with both recommendations.[24]

jobactive: Integrity of payments to employment service providers

The ANAO conducted an audit on the integrity of payments to providers under jobactive. Audit criteria were whether an appropriate framework was established to ensure payment integrity; and whether the department had effectively implemented the framework to manage and monitor payments to service providers. The ANAO tabled the report in June 2022.

Key audit conclusions included:

• the (then) Department of Education, Skills, and Employment was largely effective in managing the integrity of payments to providers;
• a largely appropriate assurance framework had been established to ensure payment integrity, however, the framework could be improved by a detailed analysis of payment non-compliance instances and detailed analysis undertaken as to the causes of payment non-compliance across rolling random sample cycle periods; and
• the assurance framework had been implemented effectively, but had not fully implemented the recommendation from the 2017 jobactive audit (above) as regards assessing the effectiveness of assurance activities.[25]

The ANAO recommended improvements to the assurance framework by ensuring all non‑compliant payments or findings from other assurance activities are subject to ongoing detailed analysis to identify recurrent themes and causes to ensure these are considered for future assurance activities, corrective action, or continuous improvement. The department agreed with the recommendation.[26]

Footnotes

[1]Senate Education and Employment References Committee (2019), jobactive: failing those it is intended to serve, pages xix–xxi.

[2]Senate Education and Employment References Committee (2019), jobactive: failing those it is intended to serve, pages xix–xxi.

[3]Senate Education and Employment References Committee (2019), jobactive: failing those it is intended to serve, pages ix–xiv.

[4]Senate Community Affairs Reference Committee (2020), Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia, pages xvii–xix.

[5]Senate Community Affairs Reference Committee (2020), Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia, pages 100, 105, 107, 109.

[6]Senate Community Affairs Reference Committee (2020), Adequacy of Newstart and related payments and alternative mechanisms to determine the level of income support payments in Australia, pages xi–xiii.

[7]Senate Select Committee on the Future of Work (2018), Hope is not a strategy – our shared responsibility for the future of work and workers, pages xi–xii.

[8]Senate Select Committee on the Future of Work (2018), Hope is not a strategy – our shared responsibility for the future of work and workers, pages vii–x.

[9]Employment Services Expert Advisory Panel (2018), I Want to Work Employment Services 2020 Report, pages 6, 50–53, 64–73.

[10]The Treasury, Employment White Paper—Terms of Reference, https://treasury.gov.au/review/employment-whitepaper/tor, viewed 20 November 2023.

[11]Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, p. v, https://treasury.gov.au/sites/default/files/2023-09/p2023-447996-working-future.pdf, viewed 20November2023.

[12]Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, pages 150, 222.

[13]Disability Royal Commission (2023), Final Report: Executive Summary, Our vision for an inclusive Australia and Recommendations, p.39, https://disability.royalcommission.gov.au/publications/final-report, viewed 20November2023.

[14]Disability Royal Commission (2023), Final Report: Volume 7: Inclusive education, employment and housing, pages 397-404.

[15]Disability Royal Commission (2023), Final Report: Executive Summary, Our vision for an inclusive Australia and Recommendations, pages 193-312.

[16]Robodebt Royal Commission (2023), Report of the Royal Commission into the Robodebt Scheme, p. v, https://robodebt.royalcommission.gov.au/publications/report, viewed 20 November 2023.

[17]Robodebt Royal Commission (2023), Report of the Royal Commission into the Robodebt Scheme, p. xxix.

[18]Robodebt Royal Commission (2023), Report of the Royal Commission into the Robodebt Scheme, pages xiii-xxi.

[19]Productivity Commission (2023), 5-year Productivity Inquiry:Advancing Prosperity,, Inquiry Report No. 100, vol 1: pages 5–7, 13–14, 16–17, 34–37, 71, 75, 98, 99; vol 3: p. 35, vol 4: pages 46–47, 50–56, 62–63; vol 5: pages 1, 17–18, 57–63, 66, 71–75, 78–80; vol 7:pages 1, 4; vol 8: pages 4, 9, 85–9, www.pc.gov.au/inquiries/completed/productivity/report, viewed 20 November 2023.

[20]Productivity Commission (2002), Independent review of the Job Network, Inquiry Report No. 21, p.3.1. www.pc.gov.au/inquiries/completed/job-network, viewed 20 November 2023.

[21]Productivity Commission (2002), Independent review of the Job Network, p.xx.

[22]Productivity Commission (2002), Independent review of the Job Network, pages xliii–l.

[23]Australian National Audit Office (ANAO) (2017), jobactive: Design and Monitoring, Auditor-General Report No.4 of 2017–18, p. 7, www.anao.gov.au/work/performance-audit/jobactive-design-and-monitoring, viewed 20November 2023.

[24]ANAO (2017), jobactive: Design and Monitoring, p. 10.

[25]ANAO (2022), jobactive: integrity of Payments to Employment Service Providers, Auditor-General Report No.31 of 2021–22, p. 8, www.anao.gov.au/work/performance-audit/jobactive-integrity-payments-to-employment-service-providers, viewed 20 November 2023.

[26]ANAO (2022), jobactive: Integrity of Payments to Employment Service Providers, p. 9.