Private job service agencies running controversial welfare program claimed more than $350,000 in extra payments last financial year

This article is more than 1 year old

This article is more than 1 year old

Private job service agencies running the government’s ParentsNext program claimed more than $350,000 in extra payments last financial year to put welfare recipients through their own in-house training courses.

The figures, revealed in a departmental response to the Senate, suggest all 22 ParentsNext providers with a registered training arm went on to refer and bill taxpayers for participants to undertake courses run by their own organisation.

It comes as the $350m welfare-to-work program for disadvantaged parents faces fresh criticism, following a ABC investigation published uncovering further evidence of alleged rorting among providers.

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In response to written questions from the Greens senator Rachel Siewert, the employment minister, Michaelia Cash, also disclosed that:

a third of the taxpayer-funded outcome bonuses claimed by providers for getting participants into education were “noncompliant”, according to a department audit

33,620 participants have had their payments temporarily cut off last financial year – just less than half of all those on the program at any given time

546 people were kicked off payments entirely after receiving a suspension and failing to “re-engage” with their provider in 28 days

Since July last year, about 75,000 people who receive parenting payments, mostly single mothers, are now required to complete activities to keep their income support.

Under the ParentsNext scheme, providers are paid $600 per participant every six months to prepare them to get back into the workforce. They can receive further “outcome payments” of $300 for getting people into work or study, and can also dip into a participation fund worth $1,200 per person on their books.

The department said that 22 providers had also had a registered training organisation. These 22 organisations had claimed a total of $372,000 from the participation fund to pay for “accredited and non-accredited” training run by the same company or a related entity.

There is no suggestion the claims were fraudulent or unjustified. But insiders have previously said that job services agency staff are encouraged to sign people up to in-house courses to prevent what they have called a “leakage of money” out of the company.

The department describes the participation fund as a “flexible” fund that can be used to pay for employment training, work-related items such as transport costs, and mentoring. An audit put the “non-compliance” rate of this fund at 3%.

In total, ParentsNext providers reaped a total of $79.2m last financial year to run the program.

Welfare groups and the Australian Human Rights Commission have expressed concerns about the high rate of payment suspensions among participants, who can have a child as young as six months.

They are likely to be alarmed by the new data that shows more than 500 people – who are by definition considered disadvantaged by the government – have had their payments cancelled completely. Among them was an Aboriginal woman caring for eight children who was kicked off parenting payment because she could not meet ParentsNext’s requirements.

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The department also confirmed it had taken no action over allegations published by Guardian Australia that staff at the provider PeoplePlus were instructed to avoid granting exemptions to vulnerable participants in order to keep them on the books.

“The department looked into the allegation raised in relation to PeoplePlus,” a spokesman said. “These claims were not substantiated, but the department is continuing to monitor all providers.”

Last week, the ABC’s investigation aired evidence of the alleged wrongdoing within PeoplePlus – as well as similar claims of rorting within other providers. PeoplePlus denies any wrongdoing.

Both Siewert and Labor have demanded the Coalition act to fix problems within the program, but Cash has dismissed calls from a recent Senate inquiry for an overhaul in the government’s official response.

“The nature of the program and outsourcing services to private for-profit providers is a recipe for disaster,” Siewert said last week. “Private for-profit providers have a primary motivation of profit and some are putting their company bottom line over the interests of some of the most vulnerable people in our community.”

Siewert has called for the program to be scrapped, while Labor says it should be significantly modified to reduce the likelihood of payment suspensions.

Cash’s office was contacted for comment.