Labor has revealed a planned overhaul of a $2 billion-a-year scheme aimed at getting more people into paid work as the long-term jobless rate has worsened.
Changes to the obligations and support for job seekers will be formally announced today. Getty
The Labor government is announcing a major overhaul of the employment services industry and the rules that jobless Aussies face when navigating unemployment and related welfare benefits.The current system of mutual obligations for certain Centrelink recipientsis set to see big changes.
Perverse incentives in the current system introduced nearly three decades ago have been criticised by advocates. It has also been plagued by claims ofunfair suspensions from support payments.
Employment Minister Amanda Rishworth will today outlinea new system to support job seekersafter an increase in recent years in the percentage of people staying on unemployment benefits for longer.
More than one million Australians – many on programs such as the roughly $800 a fortnight JobSeeker payment (which varies slightly depending on personal circumstances) – are required to see privately-owned employment services providers under a $2 billion-a-year scheme aimed at getting more people into paid work.
But the system mandates so-called mutual obligations requirements which dictate that job seekersneed to carry out tasks and activities that help them find a job, but critics say they can be onerous and overly time-consuming, and not fit for purpose in certain cases.
Job seekers must attend interviews or training services and accept any job they are offered.
The current rules and tax regime also create an incentive for job service providers to place applicants in roles that may not actually be suitable, just to check the box.
“A one-size-fits-all approach, across all elements of Workforce Australia, is letting too many participants fall through the cracks and creating inefficiencies in the system, Ms Rishworth will say in a speech today at Canberra’s National Press Club.
The overhaul will stick to the system’s private provider model but change the level of support and obligations to be more tailored depending on different levels of need. The government plans to shift to a three-tiered system for people who are dealing with Workforce Australia.
Service Stream One will be the lightest touch and simply provide a digital service for people who are ready to work.
Under Service Stream Two, private providers will help participants build skills and confidence to return to the job market, while the third tier is reserved for people with complex barriers to work who need the most intensive support.
People queue to enter a Centrelink branch in Melbourne.Getty
In what Rishworth is billing as the “biggest reform to our employment services system in 30 years”, her department will introduce “effective, fair and proportionate mutual obligations, that are reflective of an individual's distance from the labour market and are designed to actually help people get a suitable job,” she will say today.
Many of the finer details are not yet clear with the government expected to consult with employers, service providers and community groups as it works through the reforms in the weeks and months ahead.
Private model ‘has not worked’ as long-term jobless rate has risen
Dr Christopher Rudge, a law lecturer at the University of Sydney, has echoed calls from the Community and Public Sector Union and the Greens to move away from a private, for profit model in the employment services system.
He pointed to data from a recent parliamentary inquiry that showed 20 per cent of unemployed Aussies on related welfare payments have been long-term unemployed, which has risen in recent years, up from about 13 per cent in 2015.
“But I would say all of that is happening under the current privatised model, and the announcement that will be advanced today doesn't change that model,” he told ABC Radio this morning.
“This kind of private provider system, in which businesses are paid to assist people finding work, has not worked.”
He noted a phenomenon known as “creaming” in which service providers are incentivised to focus on job candidates with better prospects rather than the more challenging individuals.
“These private service providers focus on people who are easy to get back to work far more than they do on those who are hard to get to work, which creates this bias in the system,” he said.
“That has been proposed today as something that the minister would like to change, however, to be respectful, I don't think we've seen a plan, we've seen a concept of a plan.”
The reforms will be funded through a $312 million allocation as part of the 2026-27 budget.
Many of the recommendations from the parliamentary inquiry in 2023 are not expected to be adopted by the government’s overhaul. The main principle of change is a move towards a more personalised system and the possible relaxation of mutual obligations for people who have been long-term unemployed, Dr Rudge said.
“Which seems to be an acceptance that putting serious obligations on people doesn't work, and we will adopt a more personalised approach to finding them unemployment. This is called tiered support, but it's hard to know how that's going to be implemented at the moment, because the system is already extremely complex.”
