Opposition vows to fix incentives in government scheme that small businesses say is not delivering

This article is more than 1 year old

This article is more than 1 year old

Labor plans to dramatically overhaul the employment services system Jobactive, saying it is incentivising job providers to churn unemployed people through unsuitable jobs, and flooding businesses with disingenuous job applications.

Terri Butler, the shadow spokeswoman for employment services, says labour market programs are supposed to connect unemployed Australians with decent, stable jobs, but the government’s Jobactive system is not delivering value for money.

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Under the current system, long-term unemployed people are referred to private and non-government providers funded by the taxpayer to help them become job-ready and look for work through training and face-to-face meetings with case managers.

But the incentives in the system have had unintended consequences – including employment service providers receiving multiple payments for placing the same unemployed person in different jobs.

Labor says that means thousands of jobseekers have been placed into insecure work over and over again, rather than into suitable, stable positions.

Butler said the current requirement for unemployed people to submit 20 job applications a month was also problematic, because it was flooding businesses with disingenuous applications and turning job service providers into welfare compliance officers.

“Instead of ticking boxes, Jobactive providers should be getting to the bottom of what’s stopping their unemployed clients getting work, building relationships with employers, and getting a better understanding of the local labour market,” Butler said.

She said employers had also lost faith in the system, because it was failing to connect them with work-ready Australians.

A recent report by the Department of Jobs and Small Business, I Want to Work: Employment Services 2020, found 18% of employers used the Jobactive system in 2007 to help them find workers, but that figure had dropped to 4% by 2018.

Butler said Labor wants to retain “mutual obligation” requirements for jobseekers, but the system must work better for unemployed people and employers.

“The Jobactive system costs the Australian public more than $6bn over four years. It needs to provide value for money,” Butler said.

“But almost 5,000 people in the system have had seven or more job placements in the past three years. Many of those placements resulted in some form of publicly-funded outcome payment to the Jobactive provider even though the same person just keeps coming back again and again.

“The incentives and structures for providers are all wrong under this government.

“Labour market programs should be geared to making people more work-ready, help them get the skills they need, and help them to get a secure, decent job,” she said.

The Coalition has jumped on Labor’s plan, saying it proves that the opposition wants to fundamentally weaken Australia’s mutual obligation requirements.

“If you’re an Australian who’s being supported through our social welfare system while you’re looking for work it’s only fair that you should comply with the mutual obligation requirements,” said Paul Fletcher, the minister for social services.

“At the next election there’s going to be a very clear contrast in so many ways, Labor wants to add $200bn of new taxes but we now know that Labor also wants to fundamentally weaken mutual obligation.”

Tony Abbott also attacked Labor’s plan, saying Labor was now the “welfare class party not the working class party.”

Tony Abbott (@TonyAbbottMHR) People on unemployment benefits are supposed to be looking for work. Applying for one job a day is hardly unreasonable. These proposed changes show Labor is now the welfare class party not the working class one.

But Peter Strong, the chief executive of the Council of Small Business of Australia, said the $6bn spent on Jobactive service providers was not delivering.

He said the requirement for unemployed jobseekers to send out 20 job applications a month was particularly hated by business, and the Jobactive program was not communicating properly with apprenticeship centres, the vocational education and training sector, or disability support services.

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“They’re all treated like they’re different parts of society,” Strong told Sky News on Tuesday.

“They are not talking to each other and that’s what’s costing us the money. If you combine them … you’ll actually save money in administrative costs, and you’ll have them talking to each other, so if someone has a disability and needs training and wants an apprenticeship, at the moment they have to go to three different places, it doesn’t work,” he said.

The Jobactive contract ends in 2020 and Labor has asked the Coalition government not to rush through any new contract before the election.