Submission to the Workforce Australia Inquiry

April 29, 2023

Work and Workers

The employment services system is failing. Privatisation, announced with much fanfare 25 years ago, has not delivered on its promises, and substantial change is urgently needed. Any effort to reimagine and renew employment services as an effective system that operates in the public interest must begin with the acknowledgement that the system has failed the two groups it was built to serve: unemployed people and employers. The next step is to discover what these two groups need from employment services and use that knowledge to drive reform.

Two decades since a Productivity Commission (PC) review found that the purchaser-provider model of the Job Network was ‘a suitable policy framework for the delivery of active labour market programs,’ Per Capita finds that competition has not created increased choice or benefit for ‘consumers’, as the 2002 PC review described jobseekers.

In a 2018 survey of participants in jobactive, only around one in 10 people felt the system was helping them to find stable jobs. Fewer than one in three said they were offered tailored services, or that providers were accountable for their performance. Two-thirds of respondents in a different survey said they got jobs “with little or no help from their employment service provider”. Employers are no happier with the system and most have abandoned it as a way to find workers. At November 2022, employers had directly registered only 3.2 per cent of vacancies out of a total of 200,000 on the new Workforce Australia online platform, which was designed to streamline employers’ ability to list their vacancies. The other 197,000 vacancies had simply been transferred from other job boards.

The split between the government purchaser of employment services and the private company and not-for-profit providers of those services has over time locked all players – jobseekers, providers, and government – into narrow and rigid roles and relationships. Unemployed people must stay ‘active’ in their job search by attending prescriptive and pre-packaged services that often have no bearing on what they need to succeed in the employment market. Providers, to stay in business and grow if they can, must manage ‘up’ to the Department to comply with their contracted agreements, and manage ‘down’ to jobseekers, locking them into levels of attendance and required activities that will support the providers’ financial viability. It is as if the procurement juggernaut takes precedence over the quality of outcomes for its intended beneficiaries.

Reform must begin with government reassuming that kind of active responsibility, though there is no going back to the days of the Commonwealth Employment Service and full state control and management of the system. Nor does Per Capita propose the abolition of mutual obligation, though we support significant change to the regime it imposes on jobseekers. The reforms needed will take time, to ensure that the system works for jobseekers, employers, local communities, and the nation. This is why the process must be led by government, applying what it has learned from its experiments in creating and managing markets.

Per Capita believes that the services government buys, and on what terms, must be grounded in local employment regions and built on a rich base of local knowledge. Given the diversity of the Australian economy and workplace, services must be developed place by place, industry by industry, and group by group of unemployed people. Local solutions and trials of new initiatives should be supported by a strategy for national research and development that builds both on data insights from Jobs and Skills Australia, and on lessons from different regions’ experiences in trialling new initiatives. A renewed national strategy should mesh with the National Cabinet agenda and State and Territory initiatives that complement federal programs.

Critically, the market must be actively managed by public sector staff who have the experience and expertise, and the independence and authority, to commission and continuously develop local skills and employment solutions. These programs and products would be grounded in evidence, with knowledge shared to create public value rather than privatised to maintain competitive advantage. Both government and providers should be able to design and deliver new services and to establish a variety of initiatives that stakeholders would trust, since their rationale would be clearer in a more transparent and evidence-based approach to commissioning.

Per Capita believes that the right place to start in defining success within the system is to go to the source: unemployed people and the employers who have the potential to hire them. The government should start not by purchasing a set of standardised services but seek to learn more about what services most benefit the people for whom they are intended.

Only once needs are determined in ways recognisable and relevant to system users will it be possible to establish what to buy, what that procurement should achieve, how much it should cost, and whether it is good value for money. Per Capita is confident that because unemployed people need and want to work, government does not need to pay as much for compliance with mutual obligations as it does for more choice and better-quality services. These are the first principles on which our submission is built.