THE Select Committee on Workforce Australia Employment Services today tabled its final report, recommending large scale reform to fundamentally rebuild the Commonwealth Employment Services System. The report is available on the committee’s website.

Committee Chair, Julian Hill MP, said, "This first-principles review is the first of its kind since services were privatised by the Howard Government nearly 25 years ago.

“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.

“It should not be controversial to state that full privatisation has failed. Even the previous government implicitly admitted this by bringing a large caseload back to the public sector with Workforce Australia Online.

“The current system is inefficient, tying clients and providers up in red tape, driving away businesses and effectively making too many people less employable by requiring them to do silly courses, pointless activities or apply for jobs they simply cannot do. It has failed to prepare people for today’s red-hot labour market and to effectively address long-term unemployment, with 150,000 people stuck in the system for over five years. This must change," Mr Hill said.

“The review has identified significant and numerous flaws in the employment services system that cannot be addressed by mere tweaks to policies and programs. Fundamental change is needed to better support the most disadvantaged in society and to get better value for money. Over $9.5 billion will be spent over the next four years and employment services are the Commonwealth’s largest single procurement outside Defence.

“The nature of competition is counterproductive. In regional towns or disadvantaged suburban centres it seems there is an employment services provider on every street block, heavily regulated and providing largely the same service with little variation or innovation. Five ice-cream shops all selling the same vanilla ice-cream lined up side-by-side, while the Department studiously manages market share so everyone gets a lick. It’s nonsense.

“The world’s best systems and other human services all have a public sector core to steward the system and benchmark quality and price – think TAFEs, public hospitals, universities, schools, aged care. Just as a GP helps someone navigate the health system, a rebuilt public sector core should help clients navigate employment services.

“The committee’s report sets out a comprehensive and ambitious blueprint to rebuild the Commonwealth Employment Services System, underpinned by the guiding vision that all people in Australia be able to enjoy decent employment and participate in economic and social life regardless of who they are or where they live.”

The committee makes 75 recommendations supported by over 600 pages of detailed analysis. Fundamental changes recommended include:

• A stronger, more active role for the Commonwealth government, by establishing Employment Services Australia as a rebuilt public sector core, to steward the system, be a large digital-hybrid provider for people with the fewest barriers to work, and lead each region via physical hubs. ESA Regional hubs would be tasked with assessment, referral, employer engagement and delivery of industry transition and local projects, driven by Jobs and Skills Australia labour market data. The public sector would undertake some direct service delivery including in thin markets, for people furthest from the labour market, and in some places to rebuild capability and experience.
• An enhanced and—in some respects—radically different service model, which recognises that clients will have different pathways to employment, social and economic participation, moving away from rigid one-size-fits all rules. This would include referrals to other human services, ‘life first’ and social participation goals for some people, a Youth Employment Service, specialist services for First Nations and Culturally and Linguistically Diverse people, and a revamped service for ex-offenders.
• A new regulatory culture and more relational contracting model, moving from obsessively contracting services out and denying responsibility, to a system where service partners are contracted in to work with government and employers in local communities.
• Dialling back pointless competition in local areas and service fragmentation, by engaging only one ‘generalist’ case management service partner and one youth specialist per location – this will usually mean more than one partner per region.
• Focusing far more on demand and employer engagement, including a dedicated employer engagement service via ESA’s regional hubs to ‘hide the wiring’ for business.
• Broadened and tailored approach to mutual obligations and a new Shared Accountability Framework for compliance, supported by an individualised Participation and Jobs Plan, to cut red tape and compliance burden, stop driving employers away and more effectively support disadvantaged people into work.
• Seriously considering integrating digital employment marketplaces, such as SEEK, LinkedIn, Indeed, and competitors into the system.
• Re-professionalising the sector’s workforce, to reduce the shocking 40 per cent staff turnover rate and improve the pay, skills, and conditions of critical frontline staff.
• Establishing and Employment Services Quality Commission as an independent regulator, responsible for workforce standards, continuous learning, advising on pricing and funding mechanisms for quality services, data collection and complaints management.

Several reforms are proposed as urgent or to be undertaken in the short term during the current financial year to address critical issues and obvious pain points. For other reforms, the Committee recommends that the Government develop and publish a roadmap to a rebuilt Commonwealth Employment Services System by the end of 2024. This roadmap should be a living document and be periodically reviewed and updated.

Information about the inquiry, including Terms of Reference, published submissions, and hearing transcripts, is available on the inquiry website.

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