The recently announced changes to employment services will kick-start a much-needed and long-awaited conversation about government’s largest contract outside of defence.

Against the backdrop of Robodebt and unlawful payment cancellations, the proposed employment services reforms are about reviving a system in chronic failure – 60% of the Workforce Australia caseload has been in the system for more than 12 months, 20% for more than 5 years. It’s not only failing jobseekers, it’s failing employers too – the system is only connected to 4% of employers nationally.

A government inquiry handed down over two years ago found 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 government’s reform proposal

It is potentially the most significant reform in 30 years. The government is proposing four reform areas:

1. Tailor support to need: a person’s distance from the labour market will determine the type of support they get. Three streams of services are proposed:

• • Stream 1 - an online service for those that need minimal support;
  • Stream 2 - a service that responds to people’s need to reskill or upskill; and
  • Stream 3 - a service that works with people who face more complex barriers like physical and mental health challenges or homelessness.

2. Respond with flexibility: the activities a person on income support undertakes – their mutual obligations – will reflect where they’re at in the job search.

3. Better understand needs: a person’s situation will be assessed from day one to identify a service response (Stream 1, 2 or 3) that helps them get to where they want to go.

4. Achieve accountability through agreement: providers and participants work together to set, agree on and manage progress towards agreed goals.

These changes replace the one-size-fits-all nature of the system with one that “invests in people’s capability for sustainable, meaningful, decent work.”

With global conflict, trade disruptions and the growing spectre of AI and other tech innovations fuelling job insecurity, there is no time like the present to breathe fresh life into a system that Australians desperately need to work.

Australia used to have a model of employment services that worked. The Commonwealth Employment Service (CES) was trusted because it delivered results. Government had boots on the ground and public servants played a hands-on role in service delivery. It wasn’t perfect, but it had a clear focus on people’s needs. Many people remember this service fondly, few can say the same of the current system.

Since abandoning the publicly run CES and outsourcing the system to the private sector in 1996, there has been a hyper-focus on managing compliance and costs under the banner of good public management. The outcomes speak for themselves.

The opportunity is not to recreate the past but to build an employment services system that helps people navigate labour market transitions and find secure, meaningful work – setting Australia up for the future.

Don’t rewrite the playbook, change the rules of the game

People lose jobs for lots of reasons – industry transitions, economic shocks, monetary policy, discrimination – circumstances outside of their control. The core purpose of an employment services system should be to help people navigate these challenges and come out the other side better able to contribute to their community and participate in the economy.

In her National Press Club address, Employment Minister Amanda Rishworth called the proposed changes “once in a generation reforms”. In order to achieve this goal, the government should boldly reimagine employment support. This means moving away from the assumption that everyone is trying to game the system, and empowering jobseekers to overcome barriers rather than waste time meeting ineffective compliance requirements. It also means putting local knowledge and learning at the centre of commissioning processes.

The Centre for Policy Development (CPD) is drawing on more than a decade of employment services reform experience and putting forward four system design changes:

1. Devolve and empower - The tailored support outlined in reform area 1 is a promising shift. But tailoring support to individuals seeking work doesn’t just happen through formal assessments; it’s an ongoing process that continues throughout the relationship between service provider and jobseeker. Doing this effectively means returning decision-making power to those closest to the issues, giving individuals and communities more agency over the support they need. Strengthening partnerships between governments and communities is essential, ensuring policy decisions are shaped by practices that work on the ground. The proposed Employment Goal Plans need to genuinely give jobseekers agency and frontline support workers need greater autonomy to build on approaches that are working.

2. Move from compliance to alliance - The redesign of mutual obligations will help jobseekers focus on activities that are better linked to finding meaningful employment. However, what really needs to be addressed is the harmful compliance framework that crowds out meaningful support and leaves people in vulnerable situations. The evidence tells us fear of punishment isn’t an effective motivator. Mutual obligations should reflect a shared commitment that providers are also obligated to fulfil. Services must work with jobseekers to make progress on their employment goals and empower them to resolve underlying issues, rather than threaten payment suspensions and cancellations.

3. Fix the incentives - Serious reform will come at a cost, but there is scope to redirect funding already flowing through the system towards approaches that deliver better outcomes. The funding model that enables this profit-churn rewards service providers when their clients meet certain goals, such as being employed for 26 weeks. This incentivises some providers to focus on the people most likely to be able to get and keep a job. It also means that communities with higher levels of unemployment go without adequate funding, through no fault of their own. Regional communities, communities facing disadvantage, and those that need the most support miss out. The government’s discussion paper identifies “payments and performance frameworks” as key ways to fix incentives in the system, but only references funding three times. We suggest the Commonwealth should use long-term, flexible, up-front funding, ensuring service quality through continuous learning rather than relying so heavily on narrow outcomes payments and unsuitable performance frameworks.

4. Build service insight into the public service - As noted in the government’s discussion paper, effective support systems require active stewardship from government. And effective stewardship requires the public service to understand the “complexities of employment service delivery”. The role of the public service should extend beyond the initial assessment phase and bring a relational approach into contract management arrangements. Contract managers need to spend more time in communities and with providers to build knowledge of local services. This would enable providers to adapt to individual and community needs – the type of quality support government has said these reforms should deliver.

These reforms are an opportunity to create an employment services system that works for individuals, communities and the economy. However, if designed and implemented poorly, they risk increasing complexity by introducing additional layers of administration. We suggest a system transformation that leaves punitive approaches behind and puts jobseekers and communities first.

An employment services system that works for people

As the failures of privatised and arms-length government funded services continue to mount, we need to acknowledge that outsourcing also comes at a cost. We are not proposing reinstating the CES – but rather a combination of locally connected services and stronger government stewardship to get the job done.

For now we need to focus on the task at hand, set out a clear purpose for the system – focused on building human capability – and designing a service that helps people get free from the safety net and into secure, decent work.

Imagine the difference if people felt the weight of the system was behind them instead of on top of them.

Cliff Eberly is a Policy Director at Centre for Policy Development. He has worked on people-centred government in Australia and internationally for 18 years.

Ryan Martin is a Policy Adviser at the Centre for Policy Development. He brings strong experience in translating lived experience into practical policy recommendations, including through his work as a researcher for the Royal Commission into Defence and Veteran Suicide. Ryan also teaches at the University of New South Wales and the Council on International Educational Exchange.

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