House debates

Thursday, 30 November 2023


Workforce Australia Employment Services Select Committee; Report

11:24 am

Photo of Julian HillJulian Hill (Bruce, Australian Labor Party) Share this | | Hansard source

On behalf of the Select Committee on Workforce Australia Employment Services I present the committee's report, incorporating a dissenting report, entitled Rebuilding employment services: final report on Workforce Australia Employment Services, together with the minutes of the proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

I ask leave of the House to make a statement in connection with the report. You'll see it's a very big report—so big they couldn't bind it. It's got ribbons! Who knew there were ribbons? Can we have leave? Sorry; I realise that I forgot—

Photo of Milton DickMilton Dick (Speaker) Share this | | Hansard source

Order! The member for Bruce will cease speaking. Is leave granted?

Leave granted.

Photo of Julian HillJulian Hill (Bruce, Australian Labor Party) Share this | | Hansard source

Apologies, Mr Speaker; I realise that I shouldn't have said that before I got leave.

This inquiry has been the only first-principles review of the employment services system since privatisation by the Howard government almost 25 years ago. The committee's findings and recommendations have been informed by over 300 submissions, more than 60 hours of witness testimony, over 50 meetings and site visits in every state and territory, and direct engagement with OECD experts and over 10 other nations. The committee has approached its task in an open-minded and scrupulously nonpartisan manner, led by the evidence, not ideology or outside interests or direction.

Over $9.5 billion will be spent over the next four years on the employment services system, including Workforce Australia, the Commonwealth's largest single procurement outside Defence, and departmental outputs and associated programs. Workforce Australia is the latest iteration of this system. It promised respectful, connected, simple and supported services, yet the overwhelming weight of evidence is that this promise has not been met. It's harsh but true to say that Australia no longer has an effective, coherent national employment services system; we have an inefficient, outsourced, fragmented social security compliance management system that sometimes gets someone a job against all odds.

The committee's report makes 75 recommendations that underpin an ambitious blueprint to rebuild the Commonwealth employment services system. Australia's system has long been underpinned by two flawed theories: firstly, that unemployment is always an individual failing and that, if only you beat disadvantaged people hard enough, they'll somehow magically get a job; and, secondly, that more choice and competition in human services inevitably results in better outcomes for vulnerable people. Both theories have been proved for decades through the evidence to be rubbish, yet we've persisted in designing the entire system around them. Evidence confirms that the overwhelming majority of unemployed people want to work. It's what the previous government's review found, which was called I want to work, and it's certainly what we found right across the country.

The current approach to mutual obligations is drowning providers in red tape, scaring away employers and not helping people to get into work. It is ridiculous that over 70 per cent of people with providers receive payment suspensions despite no evidence that 70 per cent of people are cheating. Employers have fled the system, dodging floods of inappropriate job applications. Providers are forced by the payment and performance frameworks to repeatedly try to place jobseekers into unsuitable vacancies just to chase outcome payments so they can pay their staff, yet there are inadequate incentives or support for businesses to take on disadvantaged jobseekers.

It should not be controversial to state that full privatisation, full marketisation, has failed. The previous government implicitly admitted this by bringing a large caseload back to the public sector under Workforce Australia. The level and nature of competition is excessive and counterproductive. We visited numerous regional towns and disadvantaged suburbans centres and it seemed that there was an employment services provider operating on every street block, providing largely the same service with little variation. It's like having five ice cream shops all lined up side by side, selling the same vanilla ice cream. Meanwhile, the department sits there as the puppetmaster, studiously managing market share so that everyone gets a lick.

Frontline staff too often have to fight the system to help their clients. There's little time or ability to tailor services and the workforce is in crisis, with over 40 per cent annual staff turnover. The system is choked with red tape, with staff spending more than half their time now on administration, with a terribly inefficient IT system, rather than working with clients and employers. More than 150,000 people have been stuck in the system for over five years. People are not adequately assessed when they come in or supported to make informed choices about the supports that would best suit them. We've never harnessed the purported benefits of contestability and choice.

The committee was unable to find the department's secret Harry Potter style sorting hat which allocates people to services. We're sure it exists, and we would do away with it if we could find it. The current system also places little to no value on connections in local communities and labour markets. There's a Hunger Games style contracting model and regulatory culture, which drives very high turnover in providers during contract and licensing rounds.

Bafflingly, in the last contract round, 22 per cent of regions saw all providers removed, so more than one in five regions had 100 per cent of the providers removed. The deputy chair would remember some of the evidence. We saw service disruption and devastating impacts on local relationships in Geelong and numerous other regions across the country. There's no other human service system where this level of provider or staff turnover would be considered remotely desirable or acceptable.

The committee's conclusion is that these significant and numerous issues just cannot be addressed by mere tweaks to policies and programs. A new regulatory culture and more relational contracting model must be implemented. Government must move away from obsessively contracting services out and denying responsibility, to a system where service partners are contracted in to work alongside public agencies and employers in local communities—local, local, local. The government must have a much stronger, more active role; there's an overwhelming weight of evidence. Consistent with the world's best employment systems and other human services—think TAFE, education, health or aged care—a public sector core to the employment services system must be rebuilt. Now, before everyone freaks out or needs a dose of smelling salts, that doesn't mean recreating a giant new bureaucracy that does everything, but it's obvious that the complete hands-off approach, where the departments sit like puppet masters in Canberra, watching what goes on, having massive multibillion-dollar tenders every three to five years, has to stop; it doesn't work.

The key to enhancing the role of the government will be the establishment of a new public stewardship and service delivery entity, proposed to be named Employment Services Australia, and the establishment of an employment services quality commission to drive service capability standards, best practice and more. These significant reforms should be complemented by enhancements to social procurement and formalised arrangements for engagement with academic and policy experts, service partners and other stakeholders as part of a collaborative, continuous learning and improvement system and culture. That's what the best systems around the world do.

A rebuilt system also requires an enhanced and, in some respects, radically different service model in local areas which recognises that people have very different pathways to social and economic participation and employment. We need an enhanced assessment and referral process, a new digital hybrid service building on the previous government's establishment of Workforce Australia Online. Most countries across Europe and the developed world are moving towards digital, but the better systems have some hybrid capacity to proactively manage the case load rather than just be a call centre. For those jobseekers close to the labour market who don't need a lot of help to get back in—most unemployed people are just frictional. They're only in the system because they're poor and they don't have money in the bank, and they need a bit of income support before they get their next job. The vast majority of job seekers are like that. A combination of generalist and specialist case management services, therefore, is proposed for jobseekers who need further help.

For too long, though, in Australia employment services have focused solely on kicking people off welfare. It sounds like a harsh thing, but the only people in Australia who are eligible for any support are people who are receiving income support. If you're unemployed—like the farmer's wife, as we heard down in Albany, or Australians' partners who arrive in the country and need a job—no-one cares and no-one gives you any help. Of course, moving people off income support into work must remain a primary goal, but a rebuilt system should also value economic security, sustainable employment, productivity, skills and workforce participation, and respond to industry transitions and workforce needs. That will mean some broader service eligibility in some places.

We've also recommended measures to rebalance the focus on demand and employer engagement. The current system, because of that flawed belief that I outlined at the start, is strangely unbalanced. It focuses just about all of our effort on conditioning supply, on making unemployed people do things, with very little to no connection with demand—employers who actually have jobs. It's a peculiar system when you look at pretty much everything else around the world. This should include a dedicated employer focused service, as the BCA and many other business groups have called for, and serious consideration to integrating digital employment marketplaces, like Seek, LinkedIn and Indeed, into the employment services system.

The committee does not propose a fully voluntary system. Society expects that people receiving JobSeeker who are capable of work will make efforts to secure work or increase their participation and move back towards the labour market.

But it's the current approach to mutual obligation, activation and compliance, not the existence of requirements, which is self-defeating. A rebuilt system must include broader and much more flexible, tailored mutual obligation requirements supported by an individualised participation and jobs plan. A new shared accountability framework should replace the Targeted Compliance Framework.

Now, these reforms are not intended to go soft on the small number of people who are going to cheat the system, but it is patently ridiculous that the whole system is now designed around that small minority, that cohort, and that everyone else is lumped into the same paradigm. It actually stops or hampers the majority of people from getting back into the labour market by making them do pointless things, such as courses that have no relevance, and making them endlessly apply for jobs they know they won't get, which drives employers away.

To be effective, reforms will need to be supported by fundamentally different and fit-for-purpose commissioning, funding and performance management arrangements. These should include a notable increase—probably more than a doubling, back to where it actually started 25 years ago—in the number of service regions. The number of regions doesn't reflect regional labour markets or local labour markets. It is driven by ease of Commonwealth procurement and theories of competition. We need to reduce competition and service fragmentation in place and consider a blended funding model that reduces the reliance on chasing narrow employment outcomes. We should still reward good performance, but dial it back. We also propose measures to reprofessionalise the sector, streamline assurance and accreditation, make data publicly available and overhaul a range of active labour market and complementary programs.

We're not naive. This is an ambitious proposal. But, as I said, it's the first first-principles review for nearly three decades. Rebuilding the system will be a multiyear project requiring bold and sustained political leadership and major changes in culture led by the bureaucracy. Some of the old hardheads—those who've worked around the system and have led public agencies—who've spoken with us have said they suspect that the major impediment to reform may be bureaucratic resistance, because for decades we've had a convenient view in parts of the Australian Public Service that we can contract everything out and not be responsible for anything. That's got to change. We can get better value for money and better outcomes if it does.

In closing, I wish to convey my and the committee's heartfelt thanks to the numerous organisations and individuals who contributed to this inquiry, particularly the current and former employment services participants. We've actually suggested changing the language from 'participants' to 'clients'. These people, who have been or are in the system, have shared their stories with us in public and private. These are sometimes traumatic. It's not an easy thing to do.

We also wish to thank the dedicated staff who support jobseekers. Frontline staff are absolutely central to the delivery of quality employment services. They are the single most important factor for supporting a disadvantaged person or a long-term unemployed person back into the labour market. All the research, internationally and in Australia, has shown that the most important factor is a trusted relationship between a skilled case worker and that person. Forty per cent staff turnover doesn't build a trusted relationship. Our critique of the system is not a reflection of individuals working to support people into work.

Finally, I give a thank you to the committee members and the committee staff. Overwhelmingly, it was collegiate and professional. We were focused on what would make the system more effective. It's a fine example of how a parliamentary committee should work to seek answers to improve things. I particularly thank the deputy chair, the member for Monash, for his engagement, insights and wisdom. You brought to bear all your former lives, in business and in government, to the committee, and I thank you. I commend the report to the House.

11:38 am

Photo of Russell BroadbentRussell Broadbent (Monash, Independent) Share this | | Hansard source

BROADBENT () (): by leave—This report is for the future, not the past. It is worthy of notice by the Australian people and worthy of consideration by the Australian government. This report is about common sense, not common perceptions. People have very many barriers to overcome to access employment. The report is bipartisan, principled, professional, practical and passionate. Ideology played no part It is complete inasmuch as every recommendation is backed up by the evidence clearly articulated in the report.

The voiceless and the troubled are our responsibility. We have heard you, and we have listened. Those workers at the coalface of the unemployed in this nation have our greatest respect and grateful thanks in that they are changing the lives of so many across this great south land. You are angels of the highest order, and I thank you for what you do. Each one of you knows who I'm talking to.

I particularly draw attention to two members of the committee: the member for Bruce, for his passion, his wisdom and his experience as a former public servant in navigating what was a most difficult place to navigate—and I thank him sincerely for the work that he did and the professional way he carried out his obligations—and the member for Mayo, who brought her lived experience working in this sector to the tables of the committee. The member for Bruce carried the load, and the member for Mayo brought her lived experience working in the social security sector.

I'm most appreciative of the secretariat for their professionalism and the way they went about supporting the chair of the committee, as well as those who were seconded from the department and all of the people who had any input into this excellent report. There is a dissenting report, which you can read; it speaks for itself. I'll leave that with the parliament.

11:42 am

Photo of Rebekha SharkieRebekha Sharkie (Mayo, Centre Alliance) Share this | | Hansard source

by leave—It was a privilege to be part of this committee and to work with the member for Bruce, the member for Monash, the member for Boothby and the member for Casey. We sought to do a deep-dive, a principles-first look at Workforce Australia employment services. Up to the 2025-26 financial year we're going to spend $7 billion of taxpayers' money on the Workforce Australia program, so the question is: are we getting value for money, is it on the right track, and will it deliver the outcomes that we're seeking for our nation?

I think it's important to look at this over a landscape where we have an unemployment rate of 3.7 per cent. On 30 September this year Workforce Australia reported having 624,000 individuals connected with them. When looking at the data we realised that some groups are overrepresented: 14.5 per cent of the case load is Aboriginal and Torres Strait Islander people, and 18.4 per cent are from CALD backgrounds. These statistics come on the back of the fact that we also have over 390,000 job vacancies in our nation. When we're looking at the vacancies, knowing that 175,000 of those are in retail, wholesale, accommodation, food services and the care economy, yet we have 624,000 people who are unemployed and looking for work, it seems that there's got to be some sort of mismatch here, particularly when we look at the fact that, stubbornly, nearly one in four people on the case load have been there for five years or longer.

The truth is that many people will cycle in and out of Workforce Australia, but my focus was on how we can help the people who are in that cohort, who have been on the Workforce Australia program and its previous iteration, jobactive, and how we can intensively work with people to support them to have a better life and a better future. Clearly something's not right when you're spending that many billions yet 25 per cent of the people are not able to be properly supported into employment.

This committee was tasked with a principles-first review of employment services to look at best practice, to work out how we can potentially create a system that helps people to address their barriers, and, importantly, to look at a strengths based system that can look at the work of an individual and help that individual to see what strengths they have within to help them find employment. Some of the barriers I'm talking about are health related and some are substance abuse related, but the biggest one we came across, particularly for young people, was having a licence. A young person having their driver's licence is the biggest key indicator of them being able to find employment.

I commend the chair, the member for Bruce. His tireless dedication to this work was extraordinary; it was actually quite exhausting at times! But it was fantastic to be led by a chair that had such passion and drive, and that passion and drive has not waned over the years. On the member for Monash: I was in the previous parliament where the member for Monash was a chair of a committee—another select committee—where we were very much looking at these issues around how we better support long-term unemployed people, people who are part of a cycle of disadvantage where they've been disadvantaged for generations.

In total the committee has made 75 recommendations, and I think it's fair to say that, out of all the committees I've been on, this has very much been a deep dive into policy best practice and evidence base. I'd like to touch on some of those recommendations. Recommendation 4, I think, is critical to so much of it. When we're looking at Workforce Australia, we have contracts delivered by very large, multinational organisations, and they're delivering them in a scattergun approach right across Australia depending on where they were successful in the tender process. But we need to keep them local. Local is the greatest chance of success, where we have a network of regional hubs and service gateways, where local organisations are able to properly map what the employment needs are in their area—and they know everyone, and there is a trust built in there. Two or three contracts ago, we used to have a lot of local delivery where maybe a small organisation was delivering in one regional map, rather than there being these large multinationals I mentioned. It needs to be about flexibility, working closely with those recipients, those jobseekers, and with employers.

Recommendation 6 is a recommendation that says levels of government should implement strategies to provide those who are long-term unemployed with traineeships in the creation of entry-level jobs. Over the generations, or just over the last couple of decades, governments at all three levels have divested themselves of the responsibility of being the first job provider. Back in the 1990s, when I was a young person, the South Australian government was the biggest employer of apprentices. Now they do not provide any apprenticeships to any young people, and that's a great shame. I think that this is a very worthy recommendation, and that local, state and federal governments have a duty to provide young people in particular, but also long-term people, with a job. For young people, perhaps that first job can be a great foundation.

Recommendation 7 expands on that concept by creating a permanent administrative employee in every electorate office. When I worked in South Australian politics, we had that. I think I had four or five trainees over that period of time. They would spend up to a year in the electorate office. They also gained a certificate III in government administration or business. Not all those young people stayed in politics, but they have all gone on to have very good, sound careers. I think we have a role to play in that. It's been a joy to watch their careers flourish, and I'd love to see us do that here in the federal parliament.

Recommendation 10 relates to providing high-intensity case management for people furthest from the labour market. That's working with people on the challenges and barriers that are stopping them from getting employed. How can we expect a person to find employment when they don't have secure housing, when they are, perhaps, missing teeth, when they don't have any clothes to attend an interview or when they haven't got a quality resume or those skills for how you conduct yourself in an interview and need confidence building? We need to work with people on this. I think that someone getting a job is a byproduct of being able to have their life changed, working with them to change their life. I think this is an excellent recommendation. We need to work holistically with the person for them to lead on what issues they need the most support.

Recommendation 11 is my favourite recommendation out of all 75 recommendations. This is for a youth-specific employment service. We know that for young people up to age 25 their brains have not finished developing. We know that the transactional style that we have of dealing with a provider in Workforce Australia does not work for a lot of young people. Transition to Work is a very successful program, but not all young people can connect to Transition to Work. So this recommendation is about providing a gateway for young people, irrespective of their level of need and support. All young people would be funnelled into a youth focused, youth friendly, youth specialist employment service provider that is perhaps connected near other youth support in the community. I think this is an excellent recommendation and one that would provide enormous dividends, particularly for young people, working with them in a flexible way. It's about career development as well as addressing those barriers. We know that young people are the largest cohort of homeless. We also know that, as I said before, getting a licence and having some of those really basic life qualifications is critical.

Recommendation 45 is around employers. Very few employers connect with Workforce Australia. They don't like the system. As the member for Bruce said, there are often a number of organisations that have a shopfront in the one township. There's a huge turnover of Workforce Australia staff, so those relationships aren't built well in many locations with employers. Many employers have expressed frustration with respect to the kinds of candidates that are sent to them, candidates who are not a good fit. This all goes back to working better with the participant or the client to make sure that we can have a strengths based model where we look at what the person wants to achieve and then find the right fit for them so that employers are not flooded with people that are not going to be a good fit for their organisation, which makes them reluctant to then work again with that Workforce Australia provider.

I will mention two more recommendations. Work in the community is recommendation 49. This is a really exciting recommendation. We saw in Ireland that work in the community worked really well. What I thought was very exciting in Ireland was that the people who were involved in work in the community—it sounds a bit unusual—could be doing things like connecting to their local township and be driving a bus and or part of taking care of the gardening grounds and ovals. In my regional community and, I am sure, in many regional communities in Australia, our local councils do not own our infrastructure; we manage that ourselves. So a program like work in the community could work particularly well in regional Australia and would be very valued. It would assist participants to build their personal capacity and their self-esteem, particularly if they are very long-term unemployed and have been naturally out of the workforce for a long time.

Lastly, I will mention recommendation 50. We saw some fantastic social enterprises right across Australia—cafes, laundromats and gardening services. They are truly wonderful hubs that create a place of work experience, knowledge building and building of social connections for particularly people who are long-term unemployed, many of whom experience loneliness and social isolation.

They're excellent, and I'd like to think that we can use recommendation 50 to look at building more social enterprises across Australia.

It is my hope that this wonderful report—the writing of which has seen the blood, sweat and tears of, particularly, the member for Bruce and the secretariat—does not sit on a shelf and gather dust as so many excellent reports from committees do. There are some very sound recommendations in here. I hope that we all have the opportunity to see the minister and the department work collaboratively through these recommendations and implement some of them in the near future.

11:55 am

Photo of Julian HillJulian Hill (Bruce, Australian Labor Party) Share this | | Hansard source

I move:

That the House take note of the report.

I thank the member for Mayo for her comments and for always reminding us that people need lunch and can't work all day. I also thank Dr Bateman and the committee secretariat again.

Photo of Mike FreelanderMike Freelander (Macarthur, Australian Labor Party) Share this | | Hansard source

The debate is adjourned, and the resumption of the debate will be made an order of the day for the next sitting.