A parliamentary committee has called for a major overhaul of the Commonwealth employment system, saying it’s flawed, riddled with red tape and making people more unemployable.

The select committee report on Workforce Australia Employment Services, tabled last week, recommends rebuilding the system with the public sector at its core and establishing an independent regulator.

Workforce Australia is network of organisations contracted by the federal government, via the Department of Employment and Workplace Relations, to deliver employment services to unemployed job seekers on income support.

The inquiry marks the first inquiry of its kind since the employment services system was privatised 25 years ago.

The committee considered a range of issues, including whether Workforce Australia Employment Services delivers services in a way that is fair, respects the diverse needs of individuals and helps job seekers find secure work.

The system is failing on accounts, the committee found.

“The Committee has identified significant and numerous flaws in the system that cannot be addressed by mere tweaks to policies and programs if we are serious about addressing long-term unemployment and entrenched disadvantage,” Chair Julian Hill said.

“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.

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.

House Select Committee on Workforce Australia Employment Services

Privatisation has failed, the report concludes.

“The current system is inefficient, tying clients and providers up in red tape, driving away businesses and effectively making too many people less employable by requiring them to do silly courses, pointless activities or apply for jobs they simply cannot do. It has failed to prepare people for today’s red-hot labour market and to effectively address long-term unemployment.

“The current one-size-fits all approach is drowning the system in compliance red-tape, driving employers away and actually making many people less employable.”

The Committee’s recommendations include:

• Establishing a new entity, Employment Services Australia, within DEWR  as a digital-hybrid provider for jobseekers

• Establishing an Employment Services Quality Commission responsible for workforce standards, complaints management, learning and professional development, data collection and funding and pricing mechanisms

• Creating a national social procurement to leverage federal funds for services to help disadvantaged people back in to employment

• Reinvigorating entry-level jobs and paid internsips and traineeships into Commonwealth, state, territory and local government agencies

• Retaining mutual obligations but broadening and tailoring them to avoid a ‘one shoe fits all’ situation

Mutual obligation

Not-for-profit employment services provider Workways welcomed the recommendations, including returning mutual obligation penalty enforcements to Centrelink.

“The recommendation to replace the Targeted Compliance Framework with a Shared Accountability Framework is warmly welcomed. The current approach of requiring Job Coaches to undertake excessive and onerous administration to apply the Targeted Compliance Framework not only wastes precious time, but also destroys trust with jobseekers,” CEO Kieren Kearney said.

He also welcomed recommendations to broaden the view of Employment Services so people in casual employment and those in industries that are in the process of transition can also access support.

The Greens say the evidence in the report shows the system must be voluntary and taken out of the hands of for-profit providers, and called for “punitive mutual obligations” to be abolished.

“There is no evidence that mutual obligations work, they do not need to be scaled back or tailored, they need to be abolished,” government services spokesperson Janet Rice said.

Workforce Australia was launched in June 2022 to provide access to government employment and skill services, replacing jobactive and the current employment services network.

Employment services are currently the Commonwealth’s largest single procurement outside Defence.