Private, for profit companies are amassing fortunes by winning employment services contracts at the expense of Aussie taxpayers.
A damning report has renewed calls to end private employment services in Australia.·Getty
The services provided tounemployed Australiansto get them back into the workforce as well as make themeligible for certain welfare paymentsis under scrutiny. The government has committed to a major overhaul of the system, but a new report has laid bare how certain private-equity backed companies make millions in profits to deliver inadequate services at the expense of the taxpayer.
Outside of national defence, employment services are the federal government's single largest procurement expenditure, the report by the Centre for International Corporate Tax Accountability and Research (CICTAR) noted. Under the banner of Workforce Australia Services, it hands out about $5.5 billion to providers of individualised job search support.
But that system has failed critics say. The privatised employment services system fills the pockets of private equity and millionaires, while leaving jobseekers without work, the report says.
Of that $5.5 billion, CICTAR's analysis found just nine private, for profit providers – including those owned by international private equity firms – claimed more than a third of that value, with the largest, APM, holding a contract worth $590.7 million alone.
Federal employment services contracts have become a prized revenue-generating asset, attracting the interest of private equity and building the fortunes of millionaires, the report says.
When individual or corporate empires are built on the back of government funding to support the unemployed, it is appropriate to ask: Is this an efficient and effective use of government resources?
The investigation didn't accuse any providers of illegal conduct, but called out unethical tactics used by the companies to extract value out of the system including aggressive tax minimisation strategies including using tax havens, blurring the lines between for profit and non-profit, misleading disclosures to financial regulators, large dividend payouts to shareholders, and political donations to governments who provide the lucrative contracts.
Meanwhile, the report noted, there are reports of jobseekers placed into inappropriate roles, such as working just an hour a fortnight, or sent to employability courses that give instruction on bathing and proper washing, while there are tens of thousands of complaints from job seekers made to the Department of Employment and Workplace Relations (DEWR) every year.
The privatised model instigated by the Howard Government has failed and must be replaced, the report argued.
It called for non-profit organisations to retain a role in the system, but for employment services to be returned to the public sector to reduce overall costs, without the need to generate returns to shareholders.
Theextensive report, titledWho's rorting who? The failure of outsourced job services, comes just weeks after the federal Employment Minister Amanda Rishworth announced the Labor government willoverhaul the system to move towards more tailored help for Aussies on income support payments.
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, Rishworth said in May when announcing the plan.
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 for individuals. Details of the overhaul remain scarce as it consults with the industry and stakeholders.
