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Saving the long term jobless

By Peter Saunders - posted Friday, 4 April 2008

It is ten years since the federal government shut down the Commonwealth Employment Service and replaced it with Centrelink and the Job Network.

Centrelink was given responsibility for registering job seekers and assessing their eligibility for benefits and their need for assistance. The task of helping job seekers find work, and providing them with specialised assistance where appropriate, passed to more than 200 members of the new Job Network who signed service contracts with the government and were paid by results.

This system has evolved during the last ten years in the light of experience and in response to changing circumstances. The number of Job Network members has more than halved and price competition for contracts has given way to fixed-price tenders. Fees and outcome payments have been amended to stop unscrupulous agencies from milking the system, and a new code of practice and service guarantee have been agreed.


Funds have been provided for jobseeker training, travel to interviews and subsidised placements, and employment agencies operating outside the Job Network now share and contribute to a common vacancies database. In 2003, a new “Active Participation Model” was established under which job seekers progress from job search support, through job search training and mutual obligation, to “customised assistance”, all with the same service provider.

Like any huge service delivery system, there have been hiccups and problems. Procedures have become more complex and service providers have complained about high administrative costs when complying with the government’s demands. There has been a recurring tension between quantitative and qualitative measures of success, and there have been periodic complaints about unethical practices and unfair competition. Recently, concerns have also been raised about inadequate payments, and some Job Network members appear to be struggling to make ends meet.

All things considered, however, the purchaser-provider model has worked remarkably well. Last year the Job Network placed 186,400 long-term unemployed people in jobs lasting at least three months, and it did this more cheaply than under the system it replaced.

Some of the people who got jobs would have found employment anyway, but in 2005, the Department of Employment & Workplace Relations completed a “net impact study” which took account of this. It found that programs like job search training, Work for the Dole and customised assistance were contributing directly to many people getting jobs, and that success rate of these programs was at least as good as that of the highest-performing programs internationally. So the Job Network is out-performing other countries and doing better than the system it replaced.

Australia was the first country in the world to contract out employment services in this way. It has become a world leader, and the results have been so impressive that other countries are now copying what we have done.

How depressing, then, that just at the point where the system has been bedded down, and other nations are seeking to emulate it, voices are being raised here demanding that it be radically changed. The calls for change are coming from the welfare sector, and the new Workforce Participation Minister, Brendon O’Connor, seems sympathetic to much of what he is hearing.


The problem the critics are pointing to is a problem born of success. The Job Network was set up when unemployment in Australia was running at greater than 8 per cent. Unemployment has almost halved since then, leaving fewer cases for Job Network agencies to manage.

The cases that remain are tougher to clear. Catholic Social Services, which runs the Job Network agency Centacare, reports that the proportion of its clients with less than a year 10 education has increased from 19 per cent to 25 per cent since 2003. The CEO of Jobs Australia, another Job Network agency, suggests that “A significant number of the people left in the queue have very complex needs, typically mental health issues, housing issues, family relationship issues, all sorts of things that may make it difficult for them to comply [with work requirements].” And ACOSS claims that 35 per cent of those on the Newstart unemployment payment for more than two years have a mental health problem which could make it difficult for them to work.

These increasingly difficult caseloads are being cited as evidence that the emphasis on job-placement outcomes is no longer appropriate and should be scrapped. The Brotherhood of St Laurence, for example, claims that a system geared to finding jobs for job-ready unemployed people is not well-suited to handling the more difficult clients who remain, and it is critical of the continuing emphasis on “rapid movement into any job without ongoing support for career advancement or skill development”.

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First published in the Australian Financial Review on February 18, 2008.

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About the Author

Peter Saunders is a distinguished fellow of the Centre for Independent Studies, now living in England. After nine years living and working in Australia, Peter Saunders returned to the UK in June 2008 to work as a freelance researcher and independent writer of fiction and non-fiction.He is author of Poverty in Australia: Beyond the Rhetoric and Australia's Welfare Habit, and how to kick it. Peter Saunder's website is here.

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