Insourcing employment services would come at 'exorbitant' cost

The government last week released its response to the Rebuilding Employment Services report.

The parliamentary committee report found major deficiencies in the current outsourced employment services model, where private companies are paid by the Commonwealth to provide support for job-seekers and connect them with employers.

"The employment services system is not delivering adequate or optimal outcomes," the report found.

"It should not be controversial to conclude that full marketisation has failed."

The response from the Albanese government forecast a greater role for the public sector in delivering front-line employment services, including a "more active stewardship of the system".

"In some instances, this may include delivery of services where it can have the most meaningful impact."

The government is conducting trials of APS-delivered employment services in Playford, near Adelaide and in Broome, and outlaid $3.7 million for the Broome trial in the 2024-25 budget.

National Employment Services Association chief executive Kath Mandla said the industry supported a system that is cohesive and effective, meeting the needs of job-seekers, employers and communities.

"To achieve this, Australia needs a system that prioritises the best interests of job seekers and is co-designed with jobseekers, service providers and employers alike," Ms Mandla said.

However, on the proposal to bring employment services roles in-house, Ms Mandla said this was not a position the industry supported.

"The Australian government does not have the same capability that an external employment service provider has to deliver high-quality employment services to vulnerable people," she said.

"If the Australian government is serious about insourcing, it must be honest about the 'real cost' of delivering face-to-face, place-based employment services."

The starting salary for a supported employment services officer, someone who assists people with a disability to find work, is $46,358 if they are employed under the industry award. This is below the lowest salary available for an Australian public servant, apart from cadets.

Given these disparities in rates of pay, Ms Mandla said the cost of delivering employment services by the public service would be significantly higher, with the ultimately "exorbitant" cost being borne by taxpayers.

"The vastly higher rates of pay in the APS means providers regularly lose staff to government jobs with greater benefits, receiving thousands of dollars more per annum, leading to the inability to retain staff, and ongoing recruitment," she said.

While noting the current privatised system had serious flaws, in its report the committee also found the public service wanting, saying it was "detached from the realities of service delivery" with no understanding of what a quality service is or how much it would cost.

In the government's response, part of the rationale for conducting the APS-delivered trials is to understand the skills and capabilities required for public sector delivery.

A spokesperson for the Department of Employment and Workplace Relations said the government supported a "strong" APS stewardship of the employment services system.

"The government believes strong APS stewardship in the employment services system will benefit individuals, businesses and communities across Australia," they said.

"This may include direct service delivery, as will be trialled in Playford, and through the Local Jobs Program, or working more closely with local service delivery partners to support capability building to improve services and outcomes, as is the case in Broome."

Ms Mandla said there was little evidence to support that a broader involvement of government in delivering employment services would improve the currently "punitive" experience for job-seekers.

"There's no evidence to support the idea that government would do a better job," she said.

"The Rebuilding Employment Services report highlighted a government mindset that was punitive and transactional, with scant regard to the human rights and dignity of job seekers, and little support for, or understanding of, the challenges of those providers and the employers that support them."

Ms Mandla called for a transparent evaluation of the early trials underway and a full understanding of the cost of delivering these services.

"What Australia needs is an employment system that represents value for money. It also needs a system where government is transparent and held to account for their role in governing the system," she said.