Julian 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.

See this speech in context