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FutureEmploymentServices@deewr.gov.au

The Future of Employment Services in Australia Jobs Australia Submission

Jobs Australia welcomes the opportunity to respond to the Government‟s The Future of

Employment Services in Australia discussion paper which outlines the proposed new model

for the delivery of employment services. The discussion paper has actively taken on board

the widespread concerns raised in the course of Minister O‟Connor‟s review of the current

system and we appreciate the consultative approach which the Government is undertaking.

This is particularly important given that the current system and its administrative

architecture are now poorly suited to helping disadvantaged unemployed people find

sustainable employment and to addressing Australia‟s workforce participation challenges.

Providing the sector with this avenue for comment on the discussion paper and the

opportunity to contribute to the further adjustment and refinement of the new model can

help to avoid some of the problems of the past. It may also serve to draw other interested

parties into a more collaborative relationship with the Department.

Jobs Australia is the peak body for over 260 nonprofit providers of employment and related

services. Our members have delivered a wide range of employment-related services to the

most disadvantaged people in communities around Australia in many cases since the mid to

late 1970s and through the many iterations of labour market programs that have come and

gone since. Most notably in the present context is their focus on service to disadvantaged

jobseekers and the local communities in which they live. The combined experience of our

members has given us a rich depth of insight into the barriers disadvantaged jobseekers

face in finding jobs and developing the skills and career paths that will ensure their full

participation in the workforce and the life of their communities. The knowledge our

members possess of the communities in which they work, their local labour market

conditions and the skill needs of local employers is an invaluable resource on which to test

and assess the way the proposed new arrangements will work in a widely diverse range of

real world situations.

Given this background and our role as the peak body for nonprofit providers, our submission

focuses on the opportunities the new model provides for addressing the barriers faced by

the most disadvantaged jobseekers in our communities.

In its broad thrust we consider that the model is well framed to respond to the current

characteristics of the labour market and unemployment. However, following extensive

consultation with our members, we have sought here to identify areas where we believe the

model can be adjusted so that it delivers the outcomes desired for it. This includes several

areas where the model in its current form may have unintended consequences which, if

unaddressed, will stifle the good intent behind the overall policy approach.

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On behalf of Jobs Australia members I appreciate the opportunity to contribute our views to

the discussion paper, The Future of Employment Services in Australia. Should you wish to

discuss anything raised in this submission, please contact me.

We look forward to further involvement in the ongoing design and development of this new

and improved approach to the delivery of employment services as a key part of the

government‟s Social Inclusion Agenda. We share the Government‟s aim of making the new

system the very best it can be and are keen to contribute actively in the complex process of

its design and implementation.

Yours sincerely

David Thompson AM

CEO

13 June 2008

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KEY POINTS

1. That the principles and key arrangements of the new model should be sufficiently clear,

robust and defined at the time of the Exposure Draft and the Request for Tender so as

to minimise the later need for additional regulation and the attendant layers of red tape.

2. That consideration should be given to those Stream 4 job seekers whose barriers prove

such that they are unlikely to benefit from the available employment focussed services

of the new model. Possible adjustments include:

a pathway for these job seekers to transfer to another program outside the

employment portfolio;

that providers receive fees for these job seekers that recognise a broader range of

educational and foundation skills than is currently identified for Stream 4; and

that volunteering is included as an eligible activity for Stream 4 job seekers.

3. That the substantial number of unresolved issues relating to the Work Experience

component (undertaken at the conclusion of services in Streams 1-4) should be

addressed as a priority.

4. That the distinction between provider-brokered and jobseeker-initiated outcomes should

be removed.

5. That consideration should be given to collapsing proposed Streams 2 and 3 into one.

6. That measures should be put in place now to ensure that the proposed changes to the

Participation Reporting and penalties processes designed to ameliorate its excessively

harsh implementation take effect immediately.

7. That the measures that will remove the PSP waiting list should be implemented before 1

July 2009, and the Government should allocate sufficient resources to ensure that these

most disadvantaged and vulnerable job seekers have access to appropriate employment

related services at the outset of the new contract.

8. That the performance management system that is developed for the new model should

clearly and transparently reflect the Government‟s policy intention, and is such that

providers can use it to measure and improve their own performance.

9. That a regulatory body should be established to ensure that:

a balanced and collaborative contractual relationship exists between the Department

and providers;

extra administrative requirements are kept to a minimum; and

that ongoing contractual management occurs in an environment of fairness that

contains provision for review and appeal without the risk or fear of punitive action.

10. That a transition implementation plan should be made available to all providers and

other interested parties as a priority at the time of the release of the Exposure Draft.

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11. That there should be provision, under some circumstances, for some specialist providers

to tender to deliver Stream 4 services alone.

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A FRESH APPROACH

Stream 1 –work ready job seekers

While we understand the rationale behind the way services for Stream 1 have been

structured, we are concerned at the lack of incentives within its fees and payments for

providers to encourage jobseekers to look for work. Indeed, the combination of no outcome

fees and the 3-month trigger for the 60 hours of intensive activity may unintentionally

result in providers taking a laissez faire attitude towards jobseekers so that they are less

inclined to instil in these jobseekers a sense of the urgency about self-initiated job search

activities.

The decision not to provide outcome payments for Stream 1 is founded on the belief that

Stream 1 clients can be left to their own devices to find employment. And that when

Stream 1 job seekers do find work the contribution of providers will have played little or no

part in this process.

This perception is further evidenced in the distinction the new model makes between

outcome payments for provider-brokered and jobseeker-initiated jobs: that is that jobs

found by job seekers while receiving the services for Streams 2-4 and the Work Experience

component have resulted entirely from the job seeker‟s efforts.

The statistical evidence for people unemployed 1-3 months bears out the view that many of

this group will find work without the need for external assistance – the discussion paper

indicates that up to one third of Stream 1 job seekers will find work in this period.

However, we know that as the duration of unemployment lengthens the proportion that

finds employment without assistance declines. Indeed, the repackaging of the existing

Intensive Support process (intensive work preparation) in the new model as 60 hours of

intensive activity for Stream 1 job seekers indicates that the Department recognises that

considerable support is required by those two thirds of job seekers who have still not found

work at the 3-month point.

Our experience has shown us that high performing providers use the current Intensive

Support job search training (ISjst) process, with its requirements for intensive, regular

attendance and completion of job search tasks agreed to in Activity Agreements, as an

essential training mechanism for empowering job seekers who are poorly motivated, lacking

self-confidence, employment experience and/or initiative. It is designed to give them the

pre-employment and job search skills to become competent and assertive in finding their

own employment. Providers create the intensive training, skills-rich environment necessary

to encourage competence and independence in job seekers. The process draws on the skill

and resources (staff and financial) of providers. It is therefore reasonable that they should

receive payment through the outcome payment model for their successes in this area after

the 3-month mark.

We believe that the distinction made in the new model between outcome payments for

provider-brokered and jobseeker-initiated jobs reflects an incomplete understanding by the

Department of the true nature and extent of this process and the true value of the input

providers make to it. While the tag Found Own Employment (FOE) is a useful shorthand

distinction it has become a disservice in so far as it masks the extent of the provider‟s role

in addressing issues of poor job seeker motivation and confidence. A more accurate term

for these outcomes would be Assisted Employment Outcomes. We believe they should

attract the same level of fee as provider-brokered outcomes.

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Discussion point 1: prescribing job search activities in Stream 1 versus level of

service fees

Given that the fees for Stream 1 are very limited we believe that the services to be provided

by providers should be indicative rather than prescriptive. This will give providers the

leeway to use their judgement about the best and most appropriate services they will

provide during the duration of Stream 1 when drawing up the Employment Pathway Plan

(EPP) with the jobseeker while having in mind the available funds for this purpose.

The discussion paper has already identified:

an initial interview,

résumé preparation,

skills assessment,

60 hours of intensive activity, while

Appendix A lists the required contact frequency.

We suggest that this provides a sufficient and useful level of service given the available fees

and that the Department uses the same approach for the design of approved services for

intensive activity as is suggested for the new Employment Pathway Fund (EPF). That is,

that the services are determined on a principles-based approach.

This would mean that beyond the services detailed above providers would only be required

to demonstrate that their services respond to the principle that they contribute to

developing the job seeker‟s job search techniques, training and work experience and that

providers use the available funds effectively to this end.

The contract and associated guidelines could include an indicative list of appropriate service

activities and any relevant best practice advice. An important point to make here and in

relation to the basis of the contracting of, and payments for, services across the whole of

the system is that there must be a shift away from stipulation of, and payments for,

individual micro-transactions (and the associated collection, inspection and detection of

those transactions) which is the root cause of the crippling amounts of red tape in the

current system.

Reconfiguring Stream 1: removing duplication, reducing costs

While not canvassed in the discussion paper we believe more can be done to better

integrate Centrelink‟s role and capacity within the proposed new model for Employment

Services. I have previously made this proposal as part of our submission to Minister

O‟Connor‟s review (13 February 2008).

Centrelink is well placed to manage Stream 1 work ready job seekers during the first three

months of unemployment. This is particularly the case given that the discussion paper

indicates that little actual service provision is anticipated during that period. A key task of

developing a resume could be undertaken either by Centrelink or through job seekers

receiving a voucher to purchase this service from a wide range of providers.

This change would reduce duplication and costs. Under existing arrangements job seekers

are required to report to Centrelink to lodge forms. They must also report to their Job

Network member to access limited services in the first three months. This duplication and

its associated costs could be reduced if one agency took responsibility for all contacts during

this period.

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At the end of three months, if the job seeker is still unemployed, the more specialised and

intensive services of contracted employment providers would be brought into play.

Current JSSO job seekers and those with non-standard participation

requirements

More precise information is required about the levels of servicing that providers will be

required to provide to the range of Job Search Support Only (JSSO) clients.

The current employment services contract and changes under Welfare to Work have

introduced a range of participation and servicing sub-groupings among job seekers. This

includes people whom the Government wants to encourage into employment so as to

increase levels of workforce participation. The measures have been designed to increase

the hours of those in part-time work, retain older workers and attract others back into the

workforce.

Individuals affected here include those who fall outside the current label of Fully Job

Network Eligible (FJNE), such as voluntary job seekers without participation requirements.

Notwithstanding this, some of these people want to find work but need help to get started.

Included in these categories are mature age, parent and age pensioner job seekers, as well

as non-allowee young people eligible to receive assistance because of their JSCI/JCA score.

Experience has shown that the complexity of rules about the eligibility for job seekers in

these categories has created:

confusion around servicing for the Department, providers and individuals;

unnecessary delays in service delivery; and

burdensome layers of administration for providers.

To avoid a repetition of these problems more precise information is required about the

Department‟s expectations of the levels of servicing providers will be required to provide to

these clients in Stream 1.

We recommend that the Department reviews the various categories of job seeker whose

participation and servicing requirements are non-standard in order to produce a more

streamlined approach. This should be underpinned by a clear rationale to provide a robust

guide for non-standard cases generally. Consideration needs to be given to:

the job search support needs of the various categories of JSSO job seekers;

clarity within the Exposure Draft about the servicing expectations for these groups;

the construction of a realistic payment model which enables providers to support these

clients effectively;

retaining sufficient flexibility to allow providers to use their professional judgement and

discretion where necessary; and

encouraging volunteers and those who have withdrawn from the labour market to seek

and gain jobs - for example: parents, DSP recipients, carers and age pensioners.

In addition to issues about the nature and content of Stream 1 servicing, there will be a

variety of transition issues to be addressed in relation to those job seekers who don‟t sit

either neatly within, or clearly outside, the main categories of job seeker in receipt of

benefit and subject to mutual obligation. These should be explicitly addressed in the

transition implementation plan.

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Discussion point 2: contact frequency

It is reasonable to include a minimum contact time for each stream and the times given in

the model, which contain a range of frequencies1, mirror the intention of providing the most

disadvantaged job seekers with the greatest level of support. The most desirable contact

frequency for each stream will be debatable and will, inevitably, be limited by the funds

available. At the same time the views of providers are likely to be strongly influenced by

the case management style or other servicing strategies they use.

It is also good practice to require providers to include an explicit statement of the agreed

contact regime in the job seeker‟s EPP. However, we recommend that no further

prescription surrounding the way providers arrange the contact with job seekers is included.

This will leave them room to exercise their own judgement and discretion about the details

and manner of service delivery and contact they consider most appropriate for the job

seeker‟s circumstances and available funds.

Clarification is needed about:

when the EPP will be undertaken for each of the four streams and the Work Experience

component;

the relationship, if any, with the skills assessment; and

the Department‟s expectation of which service fee component will cover the drafting of

the EPP in each service stream and the Work Experience component.

It will also be necessary to clarify the legal status of the EPP and whether it will have the

same force as existing Activity Agreements. This has direct relevance to the way the

processes for mutual obligation and Participation Reporting will occur within the new model.

Discussion point 3: administrative processes for effective stream performance

The discussion paper identifies three situations in which the job seeker may transition to

another stream:

on completion of the stream leading to a move into the Work Experience component,

on becoming unemployed after 13 weeks employment, and

following a reassessment of their circumstances.

Effective administrative processes will be dependent on the model having:

robust, adequately funded and straightforward arrangements for the Work Experience

component,

a Job Seeker Classification Instrument (JSCI) instrument which provides a measure of

disadvantage that has widespread credibility with the Department, providers and job

seekers; and

1 Stream Approx Contact Time

Stream 1 1 per 2 months @ ¾ hour (begins @ 4/5 month point)

Stream 2 1 per month @ ¾ hour

Stream 3 1 per 3 weeks @ ¾ hour

Stream 4 1 per week @ ¾ hour or 1 per fortnight @ 1 hour

Work Experience 1 per 2 months @ ¾ hour

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a straightforward process with clear and well-reasoned delineation of responsibility for

implementing a review of a JSCI or for recommending a Job Capacity Assessment (JCA).

Given the close working relationship that providers develop with their job seekers they

should have reasonable latitude in requesting such reviews. However, the review should

not in our view be undertaken by providers themselves unless there are very clear

guidelines about the parameters under which such reviews are undertaken. On balance, it

may be more desirable to have reviews undertaken by Centrelink to avoid the integrity

problems associated with provider-conducted reviews.

Experience over the last few years of the contracts has highlighted significant problems

around the implementation of both the JSCI and the JCA. Re-calibration of the JSCI score

during 2006 resulted in a significant shift of job seekers who would previously have been

assessed as highly disadvantaged (ISca1/HD) to a category earning lower fees (FJNE

jobseekers at 0 months).

Similarly, the integrity and effectiveness of the JCA process has been negatively impacted

upon as a consequence of inappropriate referrals to particular programs.

It will be important that the two reviews currently underway for the JSCI and the JCA

adequately address these and other concerns so that the two tools provide more reliable

assessments and can earn and retain the confidence of providers and job seekers. The

need to challenge poor assessments results in added administration for providers and the

Department, as well as in delays in the servicing of job seekers and their progression

towards job readiness and employment.

There is an unavoidable tension between the JSCI as a relative measure of disadvantage

allowing for reasonable comparison with the circumstances of other job seekers, and the

use of the JSCI as a rationing instrument for the effective and accountable use of

government funds. Concern that the new model of the JSCI is genuinely reformed has been

one of the most consistently raised issues throughout the consultations Jobs Australia has

had with members since the release of the discussion paper.

One way to reduce the difficulty providers face in delivering the right level of services to job

seekers in instances where their JSCI score does not reflect their real level of support need

is to merge the proposed Streams 2 and 3 into one. The fees that would have been

allocated to Stream 3 could be spread across the merged stream. The resulting JSCI score

for this stream would have a wider score range and providers would be better able to use

their judgement about the best way to use the available resources.

We foresee several issues of particular concern in the way that young people will flow into

Stream 4. The discussion paper indicates that young people currently eligible for the JPET

program will in future be serviced in Stream 4. However, there is a marked absence of any

relevant youth focus in the arrangements for Stream 4.

One example of this relates to referral and eligibility for Stream 4. Jobs Australia members

currently delivering the JPET program report that much of that program‟s intake occurs as a

result of the outreach work of staff and by word of mouth. However, the discussion paper

indicates that the JCA will be the means by which job seekers flow into Stream 4. The fear

is that this will miss many of the vulnerable young people now supported by JPET and in

need of considerable help.

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We propose that the range of criteria for referrals to Stream 4 is broadened to ensure that it

does not exclude some of the most vulnerable people for whom it is designed.

We are also concerned that the number of contact hours for Stream 4 does not adequately

accommodate the service needs of some disadvantaged job seekers. In particular there is

currently no provision for providing crisis intervention which is a familiar scenario when

working with many young at-risk people.

A further issue of concern is the single emphasis in Stream 4 on employment outcomes.

The circumstances of prospective Steam 4 clients are such that employment outcomes, and

even training outcomes, lie at a considerable distance for many of these people.

Considerably more work and support will be needed along the pathway to greater

independence for Stream 4 clients than is likely for clients in the other streams. Given that

employment or lengthy training outcomes are less likely for many of the existing PSP cohort

some other form of recognition for movement toward desirable outcomes is warranted. This

could be similar to the current „social outcomes‟ in the Personal Support and JPET

programs.

One of the main strengths of the new model is its recognition of the need for additional

support to address disadvantage. People with a range of non-vocational barriers can face

particularly high barriers before their full participation in the life of the community and the

economy is achieved. For many of these people employment will not be a realistic option

before some of the other barriers are addressed. In many cases, this is unlikely to occur

within 12-18 months.

Therefore, it is reasonable that providers should receive recognition for addressing some of

the intermediate barriers. The value of recognising outcomes beyond the single prism of

employment is elsewhere acknowledged and rewarded within the model in the discussion

paper in the section about indigenous employment:

The greater flexibility in the new model will better support skills acquisition,

mentoring, and any locally developed innovative solutions to employment. In remote

areas there will be placement and outcome payments for a broader range of

educational and foundation skills outcomes including helping Indigenous job seekers

to return to school and gain greater literacy and numeracy skills. Services operating

in remote communities will also be able to explore alternative community

enterprises, in addition to WfD. (p18)

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The value of the work providers do in this area has been recognised over some years

through the availability of social outcomes within PSP and JPET2. This is a sensible

arrangement and we urge the Minister to incorporate it within Stream 4.

An alternative approach to this issue is to consider creating another program outside the

employment portfolio for those income support recipients who, under the proposed

arrangements, will be directed to Stream 4 but for whom even the maximum service period

of 18 months is assessed as unlikely to result in employment.

The issues we have raised here will also apply to the proposed progression of job seekers

within this category to the Work Experience component after completing Stream 4. For

some highly disadvantaged Stream 4 job seekers this may be unhelpful at best and

potentially counter-productive.

Work for the Dole, Green Corps and other work experience

As the Minister indicated at the recent public consultations the new model as currently

envisaged contains little detail on how the Work Experience component will work. Our

analysis of the data available in the Department‟s Labour Market Assistance Outcomes, June

2007 is that over 30 per cent of existing job seekers (i.e. nearly all job seekers unemployed

for greater than 2 years) will transition to the Work Experience component3.

We are concerned this will result in a significant number of very long term unemployed

people receiving minimal services in the new model because of the level of funding for the

Work Experience component. For this group of transitioned job seekers a more productive

approach would be to stream these job seekers into Streams 3 and 4 where they would

receive services that have a greater prospect of resulting in employment outcomes.

It is likely the Department has already considered this option and rejected it because of the

fiscal constraints on the model. Nevertheless, given the entrenched nature of the barriers

and disadvantages to economic participation faced by this group, it is critical to the

Government‟s social inclusion objectives that more appropriate servicing arrangements are

considered for this long term transitioned cohort. Alternatives to the proposed Work

2 The RFT for the current JPET contract provided this detail on to social outcomes. (Similar parameters apply within

the PSP contract): Indicators of social outcomes achieved for participants include but are not limited to the following:

• increased readiness for education, study, training or employment • stabilised accommodation situation • maximised income sources • improved education/training opportunities • improved health behaviour, including reduced substance abuse • improved mental health, if applicable • improved life skills • improved work habits • improved connections with support services • increased community participation • improved understanding of work culture • improved compliance with judicial system requirements • reduced offending.

3 This figure is a guesstimate and is limited by the nature of the available data. We urge the Department to make

available the relevant data that will enable providers to make reasoned estimates of their potential business under the new model.

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Experience servicing options could include voluntary work, and/or other educational or

social participation activities designed to strengthen social capital.

In the absence of an immediate solution to this problem we suggest that the application of

special grandfathering provisions, such as a temporary exemption, would be more

appropriate than the imposition of indefinite Work Experience for this group. It should be

remembered that they may well have already undertaken several stretches of mutual

obligation activities.

It is clear from the model that the services to be provided in the Work Experience

component will take on a very different character from Work for the Dole (WfD). More

detail is needed about the way the Department expects the Work Experience component to

operate so that tenderers can make valid income projections. Currently, assessments about

servicing costs and income require making a considerable number of assumptions about

timing, flows and the proportions of participants achieving various outcomes. The

permutations surrounding these become increasingly unreliable. Worked examples of case

loads and outcomes in the Exposure Draft would help tenderers to assess the potential

viability of service delivery from July 2009.

The following issues require consideration and resolution:

The number of days/hours per week that participants be required to attend the Work

Experience component.

The nature of the job search requirement for job seekers undertaking the Work

Experience component.

An estimate of the numbers that will need to be catered for. The Department is the only

body that can provide reasonable estimates of the rate of flow into the Work Experience

component and of the gross numbers over time if more job seekers flow into this service

than are expected to exit it.

There is no specific funding to encompass the work and role currently undertaken by

Community Work Coordinators, or for full-time WfD other than through the EPF.

Without this funding it will be difficult for providers to set up, fund and manage

supervised projects for large numbers of job seekers.

The proposed structure and payment model for the Work Experience component

suggests a greater role for hosted or in-house placements and it is therefore imperative

that potential tenderers have information about participant numbers to understand how

many places they will need to be able to arrange.

The level and adequacy of Work Experience funding for the tasks of establishing,

maintaining and supervising projects. WfD has run since 1998 and both the Department

and providers have a thorough understanding and copious data on the cost components

and dollar value of these when establishing WfD projects. It is unrealistic to imagine

that providers will be able to absorb these costs by using their stream funding and we do

not imagine that the Government intends such a sleight of hand.

We recommend that further consideration be given to funding to run Work Experience

projects over and above the small service fee and Work Experience fee identified so far.

Additional funding will be necessary for establishing, running and maintaining work

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experience projects in order for these to encompass worthwhile activities leading to

employment outcomes and to address skills shortages.

The need to ensure that the structures and funding for the Work Experience Component

enable projects of community benefit to be undertaken. Projects of community benefit

have played a central role in the design of services for long-term unemployed people

under WfD to date. This is particularly the case for those people who, research shows,

benefit from working in a team. These projects are likely to continue to have this

important role. In addition, they support and reinforce the Government‟s Social

Inclusion Agenda.

Work Experience placements with private employers or into training will be able to draw

on the resources external to the provider and can be relatively cheap for providers to

establish. By comparison, activities which have a community benefit will not have the

same capacity to draw on private sector resources. The experience of Community Work

Coordinators (CWCs) shows that community projects necessarily require considerable

inputs from providers such as supervisory staff costs, transport for job seekers and

project equipment.

A structure that is flexible enough and sufficiently funded to enable providers to make

the Work Experience Component options and places available in an ongoing way as

jobseekers feed into this activity on completion of a year in one of the four streams.

Clarification about what happens to job seekers after a year in the Work Experience

Component. The current proposal appears to indicate that some job seekers will remain

in the Work Experience component indefinitely. This is undesirable and risks creating

and entrenching environments of unemployment that are inconsistent with the

Government‟s Social Inclusion Agenda. We recommend that all job seekers undertake

assessment at the end of one year in the Work Experience component and that useful

and realistic pathways out of the Work Experience component are developed.

Explicit clarification about the length of the servicing period that the funding for the

Work Experience component is intended to cover. We recommend that the service fees

for the Work Experience component are clearly limited to one year as appears probable.

It is also reasonable to expect that the Department states clearly its expectations about

the level and content of the servicing for those job seekers who remain in the Work

Experience component beyond 12 months and how this is to be funded.

Clarification about the principles or guidelines on what will be considered valid and

suitable work experience/WfD projects. The discussion paper refers to a considerable

range of options:

. . .WfD (including full-time WfD) and Green Corps will remain an integral part of

the new employment services system, along with other forms of work experience

(for example, paid work in an intermediate labour market or social enterprise).

Brokered placements in organisations as well as project activities will be possible.

It will also be possible to ‘blend’ part-time work or training and work experience.

(p13)

Providers will need more detail about how these activities are be funded and the

required administrative and reporting processes back to the Department. These are now

onerous and complex and will need to be streamlined if providers are to be capable of

delivering an effective service at the level of funding currently proposed.

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Clarification about the length of time for which work experience can be undertaken.

Extended periods of work experience have the potential to raise issues about whether

this is de facto employment. We understand from the Questions and Answers supplied

by the Minister following the NESA Leadership Forum that the current Work Experience

Placement arrangements in the private sector will continue to be available.

Community benefit. Where unpaid work experience is undertaken in the voluntary

sector, it should serve the twin purposes of increasing the participant‟s employment

chances and involve benefit for the community.

Prevention of exploitation and displacement of paid employees. Where unpaid or

subsidised work experience is undertaken, care must be taken to ensure that

participants do not substitute for existing workers or occupy a position that may

otherwise have been filled by a paid employee for more than a short time. It will be

necessary to guard against practices such as using a series of short–term placements to

fill a position over time, and of using subsidised labour in seasonal activities.

We suggest that an overall examination of the range of employment and employment-

like situations that will be available for both private and community placements within

the Work Experience component are examined now for clear resolution within the

Exposure Draft. This would enable uniformity and coherence to be achieved at the

beginning of the contract. It would avoid later anomalies that will require corrective

regulations and their attendant red tape. The Department has a wealth of information

about the pitfalls associated with work experience arrangements to draw on in drafting

guidelines.

Re-badging of the Work Experience component. Work experience will form an important

part of the activities providers can make available to job seekers within the streams.

The use of the same term for the Work Experience component (i.e. after a year in one of

the streams) will cause continual confusion for everyone. The post one-year period

could be called Work Ready.

A response in the Questions and Answers on the Workplace website confirms that the

WfD supplement will continue to be payable to WfD participants. The $20.80 supplement

was introduced to help offset the cost of attending a two days per week WFD activity. In

the proposed model no equivalent supplement will be available to job seekers

undertaking other work experience activities. This appears inequitable.

In addition, we previously raised with the former government the point that the WfD

supplement had not kept up with inflation and that it was not increased to cover the

extra costs of attending full-time WfD (four days per week). While we are aware that

there are legislative issues to be considered, we believe that the supplement needs to be

increased, and that it should be available to all job seekers undertaking the Work

Experience component of the new service model.

Discussion point 4: The nature of the guidelines for EPF

We applaud the extension of an all purpose fund to all streams and to the Work Experience

component. The broad description of the way the EPF will work and the classes of

expenditure it will cover appears to reflect the best knowledge and experience that both

providers and the Department have developed in this area over several contracts.

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This proposal directly addresses anomalies in the current system that limit access to the Job

Seeker Account (JSKA) to some but not all job seekers. It is also more likely that this

model will avoid the underutilisation that occurred with the JSKA following on the tightening

of rules about what it could and could not be used for.

Similarly, a principles-based approach is sound because it can be used to identify categories

and purposes for expenditure thus providing a clear framework which simultaneously:

reduces time-wasting and costly red tape;

allows providers to use their experience, discretion and judgement; and

gives a benchmark against which any contentious expenditure can be tested.

We recommend that the guidelines developed for the EPF remain true to the proposals in

the discussion paper and use these as their framework.

We note that in cases where expenditure deemed irregular has been brought to the

Department‟s attention, differences in interpretation have sometimes given rise to a

situation where expenditure approved by one Contract Manager is viewed as inappropriate

by another. In other instances, a proposed expenditure which requires clearance has been

referred to DEEWR National Office resulting in long and unsatisfactory decision-making

processes.

The principles for the EPF should provide enough guidance to clearly exclude some goods

and services – these guidelines should reasonably require providers to relate the spending

to barriers to employment and to satisfy the Current Affair test. However, there will always

be some grey areas and where arbitration is necessary, it should be prompt and consistent.

One key principle that should apply for the administration of the EPF is that individual

provider transgressions with the EPF should be dealt with on an individual basis. Unless the

EPF misuse is widespread we do not think that an individual misuse should be used as the

occasion for the creation of a new rule. When this happens it needlessly circumscribes the

activities of other providers who haven‟t misused the fund. It also subjects them to the

undeserved punishment of additional administration and the curtailment of their

professional judgement about how to support their job seekers. We recommend that a

reasonable expression of this principle should form part of the proposed Charter of Contract

Management.

Much of the excessive administration in the current employment services model has crept

into the system piece by piece as the Department has sought to address individual problems

by adjusting the overall guidelines and “regulations”. The goverment should remain vigilant

about the need to ensure that the new model does not become burdened by a creeping

accretion of rules over the life of the contract. The Minister should, in our view, consider

establishing a modestly funded, arms-length regulator to ensure this doesn‟t happen.

Improving employer focus

The proposal to allocate $6 million over three years to fund organisations to become

employer brokers charged with building stronger links to the employer community builds on

existing employer demand initiatives, including DEWR‟s Employer Demand Pilots (EDP).

While maintaining and improving the focus of providers on their relationships with

employers is desirable, care needs to be taken so that initiatives undertaken by the

16

proposed employer brokers do not inadvertently cut across relationships which providers

have already cultivated with their local employers.

Equally, it will be important to ensure that employer broker initiatives are available to all

providers within an ESA (or the equivalent statistical area under the new contract) on an

equal footing so that no provider receives preferential treatment or an advantage. This

could occur if brokers were not scrupulous in advertising any opportunities in a timely way.

Unless clearly defined, there is the potential for a brokerage function to add a further level

of complexity and duplication of services, including encouraging the emergence of a sub-

market of negotiated split fees.

Encouraging skills and training

The allocation of 238,000 training places under the Productivity Places Program (PPP) is a

welcome policy development. It directly addresses concerns that providers have expressed

for some time about the lack of emphasis on and support for the training needs of job

seekers. The causes and depth of that concern are perhaps best referenced against the

level of educational attainment data of the relevant cohorts. This shows disturbingly low

levels of school attainment across all groups.

Submissions on implementation issues for PPP are currently under consideration and Jobs

Australia has identified a number of issues that relate to the needs of disadvantaged job

seekers. We wish to make the following additional points here:

As part of the Government‟s promise to minimise red tape, greater clarity is required

about what evidence providers will need to provide to demonstrate that the accredited

training course undertaken under PPP is relevant to the local labour market and eligible

for the 20 per cent bonus. It is desirable that the required proof is administratively

adequate but not needlessly complex.

The same principle should apply to the requirement to show satisfactory completion of a

course. Given that the Department has now provided a list of eligible qualifications for

PPP we suggest that the issuing of certificates should be regarded as satisfactory

evidence for course completion.

We also note that the PPP Contract requires that RTOs obtain a signed Learner

Declaration from trainees as part of their enrolment process. This gives RTOs and

employment service providers permission to contact them and follow up their learning

outcomes. This should address some difficulties that have occurred in situations where

course providers have refused to release information on the basis that it is protected by

privacy legislation.

There is a risk that job seekers may undertake training without this leading to

employment. We have argued in our submission on the PPP that clear linkages need to

be made to ensure that training undertaken by unemployed people forms part of the

broader strategy that the provider pursues to actively assist the job seeker to obtain real

work.

Additional mechanisms and incentives need to be built into the new model to ensure

Centrelink and employment services staff are competent to identify the need for

foundational training, particularly support with literacy and numeracy needs, and are

well informed about the available training options. We urge the Department to look at

17

ways to ensure that cross-sector collaboration and good working relationships are

supported at both policy and delivery level, for example through stronger linkages

between Centrelink, employment service providers, RTOs, and employers.

The experience of Jobs Australia members who deliver the Language, Literacy and

Numeracy Programme (LLNP) is that many current Centrelink staff and Job Network

employment consultants are not confident or skilled in identifying those job seekers

whose literacy or numeracy is of such weakness as to limit their capacity to obtain and

function in employment. In many case they are also not sufficiently well informed about

the referral process and its associated administrative requirements.

NCVER research has shown the importance of integrated preparatory pathways for

disadvantaged clients prior to engagement with mainstream VET programs to ensure

their effectiveness.

The work first emphasis of the current contract has militated against referrals to LLNP.

It has often resulted in Job Network providers withdrawing job seekers from the

program in favour of taking up a job. Recent modifications have eased this situation.

Nevertheless, it will be necessary to place a greater focus on training staff about the

issues and processes surrounding referral and the advantages of helping such job

seekers to gain basic skills. Without this, the Government‟s policy intention of

increasing skill levels within the workforce is unlikely to be achieved.

We recommend that the performance management system for the new model contains

incentives that will spur providers to ensure job seekers undertake and complete

training that leads to employment. Similarly, the outcome payment model should

recognise education outcomes in a manner that equates with the importance the

Government now places on skills acquisition.

We recommend that the Department reconsiders the payment structure for PPP to allow

for higher dollar limits for unemployed/underemployed trainees while leaving the current

dollar limits for existing worker clients at their present level.

Without this adjustment unemployed clients will be at a significant disadvantage

because RTO will not have the funds necessary to effectively support learners with

multiple barriers, difficult clients, those lacking confidence and those lacking access to

transport.

Discussion point 5: Job seeker choice and voice

The suggestion to allow job seekers to change provider within some limits is a sensible shift.

It recognises that many job seekers have little knowledge about providers when they are

first asked to nominate one. This measure will make their exercise of choice more

meaningful. At the same time it is reasonable to place some limit on how often a job seeker

can change provider. The suggestion of an initial brief cooling off period during which job

seekers can change their nominated provider and the capacity to make one further change

during a period of unemployment is fair.

We welcome the government‟s intention to give job seekers more say and choice about

what is contained in their Employment Pathway Plans – their own obligations and

commitments as well as those of providers - and consider this an important contribution to

more positive engagement than presently operates.

18

A clear statement should be made about the way that service fees will be distributed in

instances where job seekers change provider. We suggest that providers should be allowed

a tolerance of 20 per cent above their market share to accommodate any additional job

seekers who choose their service.

Discussion point 6: deriving and improving service fees and adequacy of clawback

mechanisms

As the discussion paper points out it is difficult to make exact comparisons of the level of

fees currently available with those proposed under the new model. Nevertheless, our

estimate, and that of many of our members, is that while there is a widespread appreciation

of the improved level of fees available for working with the most disadvantaged job seekers

the overall level of available funds will drop under the new contract. While the

Government‟s significant investments in vocational education and training through the

Productivity Place Program is welcome and needs to be taken into account in this context,

the forward estimates for the employment services system point to a significant diminution

of resources in the out years in particular.

Jobs seekers transitioning to the new model4 bring lower levels of resources than new job

seekers (having already received partial servicing in ESC 2006-09). Secondly, the

staggering of the transfer of existing job seekers under transition arrangements has been

tailored to reduce costs. This means that providers will see a significant drop in revenues of

the order of approximately 30 percent.

The proposed fee structure raises a number of other issues:

1. While we welcome the decision to multiply the service fee for remote clients by 1.7 this

leaves unaddressed the considerable costs for providers in delivering services in rural

and regional areas around Australia. In addition, many small regional communities

serviced by providers have low flow labour markets. Consequently, it is difficult for

providers to achieve economies of scale by spreading these extra costs, particularly the

cost of travel, across a widely geographically dispersed and smaller caseload than that

enjoyed by metropiltan providers. We propose that provision is made to address this

inequity. Given likely continuing increases in fuel and other transport costs this is a

major issue for providers servicing regional as well as remote Australia – one which will

disadvantage them and the people they serve if it is not addressed.

One simple measure would be to provide higher service fees for providers with sites

spread over a wide area and who can demonstrate travel requirements and costs

beyond a particular level.

2. The role and nature of the EPF is a welcome initiative. It gives providers the scope to

use their professional judgement and discretion to provide a range of tailored services to

their clients. The promise to keep the reporting and acquittal processes to a minimum is

4 Estimating the streams into which current job seekers will flow is problematic. However, our estimates suggest

that 30% of the existing caseload (all 24mth+ job seekers) will transition into the Work Experience component. This figure is based on an analysis of the categories of Intensive Support customised assistance 1, and 2 (ISca1, ISca2) populations by duration of unemployment as provided in the Labour Market Assistance Outcomes, June 2007.

19

also welcome, particularly given the problems that have arisen with the administration

of the JSKA and which have contributed to its significant underspend.

However, given the level of fees payable for Stream 1 generally, and the low EPF for

Stream 1 job seekers, we welcome the clarification on the Question and Answer site of

Workplace that all EPF funds will be pooled. This will make the fund accessible across

the provider‟s caseload at their discretion, provided only that the expenditure fulfils the

guidelines for EPF expenditure. We believe that the other constraints in terms of the

available outcome fees and service payments will act as a sufficient rein on unnecessary

or unbalanced expenditure, and that no further restriction need apply to the way

providers decide to use their pooled EPF funds. This issue needs to be taken into account

in the design of the performance management system so as to ensure that providers

have strong disincentives to avoid „parking‟ difficult to place job seekers.

3. Minister O‟Connor has indicated that fees will not be indexed over the period of the

contract. The disparity between the level of payments in the current contract and the

reality of rising costs (e.g. costs of staff, cost of petrol, cost of leasing premises) has

been a thorn for providers for many months.

Given the length of the contract and the current environment of rising inflation in which

three key cost components for providers (transport, real estate, staff wages) are subject

to appreciable cost increases it is reasonable that the contract should contain some

provision for an adjustment of fees over the life of the contract. This could be achieved

by providing for a review of payments in line with a relevant index of price movements

at the mid-point of the contract in Jan 2011.

It should be noted that in the past contracts have been rolled over or extended without

fee increases (with the exception of one very modest one-off adjustment of service fees

in 2006), and that this has meant a significant real reduction in the value of fees and

outcome payments (and other resources) over the life of the present Job Network

contract since prices were arbitrarily set without necessary regard for actual costs in

2002.

4. The introduction of differential payments for provider-brokered and job-seeker initiated

outcomes. This has:

prompted an almost unanimous view among providers that the distinction

between these outcomes is spurious and fails to recognise and reward the work

providers do in this area; and

highlighted the possibility that employers will be flooded with applications for any

advertised positions as providers seek to create the proof needed to demonstrate

their role in achieving employment outcomes, with the result that there is a

negative impact on the relationship between employers and providers.

Arrangements for clawback of service fees.

The introduction of clawback provisions in the contract has a clear rationale and we agree

with the principle that service providers are paid only for the services they deliver.

However, we draw attention to the fact that effective service provision, particularly in

Streams 3 and 4 is likely to have a high level of provider investment in the early stages of

the service provision. This will often involve (but not be limited to) assessment and actions

20

to address immediate physical and mental health, financial, housing, legal and

administrative issues.

Consistent with the principle that providers should be paid for the work they do, any

clawback provision needs to take account of front-end effort such as this. Accompanying

this is the likelihood of greater frequency of contact and greater expenditure of resources in

the early stages of service provision. Clawback provisions should make reasonable

provision for this situation.

The development of the clawback provisions will require regulations about the way that

providers account for spent and unspent funds. Caution will need to be taken in the

development of rules about the evidence of service delivery in order to avoid burdensome

and unnecessary red tape.

We strongly recommend that the development of the contract and the supporting IT

reporting systems are structured so that the required evidence of service is not based on

micro-transactions. Instead, we recommend an approach similar to that taken by the

Australian Taxation Office (ATO) with respect to taxpayer deductible expenses. This

requires that taxpayers declare the value of their total expenses but have the responsibility

to keep records of individual items to be made available for auditing by the ATO on request.

This method has been in operation for many years and indicates that the ATO is confident

that it does not lead to unacceptable levels of fraud or misuse. Another alternative which

should be considered is the approach the ATO takes to accounting for GST in small

businesses in a number of industry sectors. The ATO does not require endless tracking of

micro-transactions because the regulatory burden would be too great.

Other relevant fee and financial issues:

The Department should undertake cash flow modelling based on data available and

reasonable case load assumptions to anticipate potential start-up issues for providers.

This modelling should be made available to providers in the Exposure Draft to inform

their risk analysis prior to the Request for Tender.

Given the expected overall reduction in service fees and the low level of payments for

Stream 1, we recommend that providers are allocated a percentage of the ESA‟s active

caseload and that this is activated on a regular basis e.g. daily or monthly. This would

reward providers for achieving outcomes and would provide the necessary top up to

caseloads.

This compares with the current business allocation model under which providers are

allocated a percentage of the ESA‟s job seeker flow and this remains constant.

The current allocation method means that:

lower performing providers continue to receive a full allocation of job seekers

despite poor performance;

unless lower performers invest in additional resources services for job seekers

diminish due to the increasing caseload size;

higher performing sites are underutilised;

of the active job seekers in an ESA a higher percentage sit in the lower

performing caseloads; and

the flow of job seekers does not reflect current performance.

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The proposed model means that:

the best performers receive the most new job seekers;

parking of job seekers is avoided;

there is a more stable core of job seekers and over- or underutilisation of

resources (staff, office space) is minimised;

if an under-performing site improves performance it receives an immediate

benefit; and

the model self adjusts so that job seekers are constantly being referred to

today‟s best performers and more job seekers have access to the better

providers.

Further clarification is needed as to whether the Department expects to fund Job Search

kiosks in the new model or whether providers will be required to maintain job search

facilities from service fees.

Clarification is needed in relation to the capacity for providers to subsidise work

experience activities undertaken while job seekers are within Streams 2-4 but before the

beginning of the Work Experience component. The discussion paper makes reference to

the use of service fees for work experience while job seekers are in Streams 2-45 and it

is important that providers understand what additional capacity there will be to use the

EPF for this as well.

The Mutual Obligation framework and the Participation Reporting Process:

Discussion points 7, 8, 13, 14 and 15

Changes to the way that Participation Reports (PRs) will be applied recognise the often

punitive and counterproductive role that the harsher elements of the compliance and

penalties regime have had on some job seekers. We welcome the recent and proposed

introduction of measures which will result in a more humane implementation of the activity

and compliance and penalties regime, and to the way that the policy of mutual obligation

finds expression in the new model. These include:

More flexibility for job seekers undertaking approved training which enables them to

delay job search that interferes with this training;

The proposal to replace the automatic escalation to an 8-week suspension of benefits

after 3 failures to a comprehensive compliance assessment that will determine whether

this is appropriate. The assessment will need to happen quickly and there must be clear

expectations about the obligations of job seekers during this period;

Removal of the Financial Case Management system;

Modified circumstances that will remove the need for job seekers to make up lost time;

Greater flexibility about a range of circumstances in which providers can use their

professional judgement and discretion about applying PRs.

The proposal that volunteering activities are incorporated into the participation

requirements for parents.

5 „The fees for contacts in streams 2,3 and 4 are inclusive of activities such as a skills assessment, training, work

experience, counselling and general ongoing contact with the provider.‟ Discussion paper, p35.

22

The following issues require further clarification:

In a situation where an 8-week non-payment penalty is to be lifted on commencement

of a specified intensive activity such as a compulsory 50 hours per fortnight work

experience, training or job search program no information has been provided about the

way the associated costs will be met. It would be unreasonable to expect providers to

absorb this cost within their fees.

Furthermore, given that some groups, (for example, indigenous job seekers), are

disproportionately represented in the 8-week non-payment figures some providers will

be more likely than others to need to provide this service.

We suggest that it will be necessary for the Department to establish a dedicated source

of additional funds for the provision of this service (i.e. compulsory 50 hours per

fortnight work experience, training or job search).

The discussion paper outlines circumstances in which assessments will be undertaken to

assess the capacity of the job seeker to comply with the participation request. Again,

there is no indication of who will provide these assessments or how they will be funded.

While the idea of a more work-like No Show, No Pay penalty has some immediate appeal

we think that it would be wise to test its financial implications against the details of

some representative cases of individuals who have been subject to an 8-week penalty.

We recommend that the changes are such that they ensure that as a matter of principle

job seekers are no worse off under the No Show, No Pay rule than under an 8-week

penalty.

In addition, job seekers should be given the option of making up time rather than losing

a day‟s benefit, provided this is reasonable. The first instance of No Show should trigger

an official warning, accompanied by a specified process by which the job seeker is made

aware of the penalties that will be incurred by any further No Shows.

We recommend that greater latitude is given to parents to fulfil child care duties during

holiday periods and that this is included in the list of allowable absences, provided only

that providers are satisfied that this is the reason for the job seeker‟s absence.

Given the negative and potentially harmful impacts of the way that PRs are being

implemented currently, and especially in cases involving vulnerable job seekers such as

homeless people and people with mental illness, we urge the Minister to bring forward

the proposed more lenient changes immediately rather than waiting until July 2009.

While the new rules will need to be drafted into the next contract the Minister has the

power to make the necessary administrative changes to ensure that excessively harsh

measures do not continue for another 12 months without undermining the overall

integrity of the income support system.

We are particularly concerned at the excessively high representation of indigenous job

seekers in the penalty statistics. We believe that good policy requires that this issue is

not left to languish for what can be little more than bureaucratic convenience.

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Discussion point 10: best practice and innovation

The discussion paper indicates that:

Proposals will be sought as part of the Request for Tender and approved projects will

be funded through extensions to the main contract under which providers will

operate. Not all funds will be committed in the first year of the contract to allow time

to determine if new projects should be funded during the contract period. Discussion

paper, p19

We recommend that the tender for the Innovation Fund is not included in the Request for

Tender (RFT) for the new contract. Tenderers will preoccupied by the demands of the

employment services contract. In addition, they will not know enough about the way the

new model will work to think laterally about innovation. Rather than including it in the RFT

applications for the Innovation Fund could be advertised after the announcement of the

successful tenders and left open for organisations to make application in an on-going

fashion.

We anticipate that there will be strong interest and uptake of the Innovation Fund. It will

give providers an avenue for tailoring initiatives to the particular needs of disadvantaged job

seekers on a local basis and should also facilitate and enable the development of innovative

and place-based approaches to delivery. We also think that there is potential for the

Innovation Fund to be utilised by organisations which are not contracted to deliver Streams

1 – 4. Many organisations may not have the capacity or may choose not to tender for the

new contract for employment services but may be well placed to undertake activities that sit

within the range of the ideas targeted under the Innovation Fund. Therefore, we

recommend that the criteria for tendering for the Innovation Fund are made sufficiently

broad to enable organisations such as these to contribute their ideas.

In general terms we think there will be significant limits on the amount of best practice that

organisations can be expected to share given the competitive environment of employment

services. A better term is probably good practice, and it is more likely that the Department

itself is in the best position to learn about, circulate and promote the good practice

initiatives that providers are putting in place.

Discussion point 11: performance management and the options of benchmarking

Our members have expressed a strong preference that the future star ratings system should

be a benchmarked system, replacing the arbitrary and relative distribution of performance

that occurs under the current star ratings system. The future system needs to be

sufficiently transparent so that providers can examine the ratings they and others have

received and can readily relate this in a meaningful way to available data about their

performance.

Despite efforts made by the Department over a long period many providers do not have

faith in the star ratings‟ regression model and believe that its complexity and

implementation are such that they are denied a real opportunity to examine and understand

the conclusions derived about their relative performance. Its outcomes have acquired a

reputation for unpredictability and there is doubt about the objectivy and ultimate integrity

of the system. This is an issue which goes the good and effective management and

governance of the system. As such it requires fundamental change.

24

It is not simply that the regression model is a mystery to non-statisticians; providers

generally cannot fathom how to use the stars to identify areas where their performance is

weak and thus work to improve their performance. Given that the stars have been used to

trim off the lower performers, it could be inferred that over time service quality and

performance have risen overall. However, the forced distribution within the model means

that providers will still be ranked with the top five per cent awarded five stars and the

bottom five per cent one star. This will occur even if the differences between providers

could only be measured at two or three decimal points.

Over the past few years considerable research and energy have been expended on analyses

of the current system and its limitations and strengths in a range of employment

environments. Various alternatives have been proposed. We support the idea of

establishing an external reference group to advise on an appropriate performance system.

This group will be able to access a substantial existing body of research as the basis for

designing a performance management system that serves the cost-effective delivery of

employment services in a transparent, fair and equitable way.

Contract Management

The existing performance management system is a part of the larger relationship that exists

between the Department and providers. Particularly during the most recent contract period

this relationship has been characterised by a level of dissension bordering on hostility and

suspicion. The Minister‟s comments about the desire for a more collaborative relationship

have struck a chord with providers who have spoken at length about their desire for a more

truly balanced partnership and contractual relationship with the Department.

We welcome the proposal to develop a Charter of Contract Management to seek to develop

greater collaboration and cooperation between the Government and providers. The

Charter:

to be developed in consultation with providers and agreed to by the Minister .

. . will set out the minimum standards of performance and conduct that

providers can expect of DEEWR. This will assist in ensuring that DEEWR aims

to provide consistent and timely advice through its network of contract

managers to providers, and it will include agreed processes for resolving

differences of opinion that may arise before formal contractual dispute

resolution procedures are invoked.

The reality remains that the contractual relationship between a government department and

private providers does not exactly mirror those relations that operate in the private sector

and has some unique features of its own. Hence, we suggest that the Minister seeks the

advice and experience of those who have a thorough and expert understanding of some of

25

the unique characteristics that operate within a government/private provider relationship

when drawing up the proposed charter6.

The case for a regulator

We would go further and say that there is a strong case for establishing an independent

body to oversee DEEWR‟s management of the future employment services contract.

Throughout the various iterations of the employment services contracts to date, providers

have been subjected to varying interpretations of program guidelines by contract managers.

Some of these have entailed significant differences with substantial cost and performance

implications. Providers have also been subjected to increasing demands for administrative

information over and above that detailed in the contract.

Currently, the program guidelines form part of the contract and DEEWR can amend these at

its sole discretion. In such an environment the contract is not one between equals and the

Department is virtually omnipotent.

We recommend that under the new model any proposal by DEEWR to change guidelines or

to make additional requests for services not explicitly stated in the contract should be tested

for fairness by an independent body on a request from providers or their representatives. It

is unreasonable for DEEWR to be the funding body and also the arbiter of what it can

demand of providers.

A further issue which would benefit from the oversight of an independent adjudicator is that

of the development of additional layers of red tape over the period of the contract. This has

been a major burden for both providers and the Department. The regulatory entity we have

outlined could be given a brief to monitor and rein in this process, and to measure the value

of any proposed new administrative requirements against its cost implications.

Rather than establishing an entirely new body for this purpose consideration could be given

to allocating these responsibilities to an existing agency within another government

department.

Discussion point 12: redrawing ESA boundaries

We assume that any changes to the boundaries will be small and will not significantly

reduce the overall number of ESAs. The key aims of the exercise would be to further align

6 Three such experts are Professor Myles McGregor Lowndes, Professor Peter Shergold and Eric Sidoti.

Professor Myles McGregor Lowndes OAM is the Director of Centre of Philanthropy and Nonprofit Studies at the

Queensland University of Technology, Faculty of Business. He is a consultant to Deacons Lawyers engaged solely in high level legal and taxation advice to large national and international nonprofit organisation. Professor McGregor-Lowndes was also a member of the ATO Charities Consultative Committee

Professor Peter Shergold AC was formerly Secretary of the Department of the Prime Minister and Cabinet and is now Chief Executive of the Centre for Social Impact, a cross-university partnership based at the University of NSW. Eric Sidoti is the Director of the Whitlam Institute. Formerly he was Executive Director of the Human Rights Council of Australia, Communications director for Amnesty International Australia, and closely linked to the Dusseldorp Skills Forum. The Whitlam Institute is currently conducting research supported by Jobs Australia on the nature of contracting between government and nonprofit organisations.

26

natural labour markets and to remove relatively distant regional centres from city-based

ESAs (e.g. remove Inverloch from South East Melbourne ESA).

The examination of any redrawing of the ESA boundaries should be guided by the principle

that the benefits of the change clearly outweigh the disruption caused by the change.

Discussion point 16: managing the transition period and process

The transition period and its associated processes and implications have been raised

unanimously among Jobs Australia members as an area of great concern. We understand

from comments made by the Minister at the NESA Practitioners‟ Conference that the

Department is exploring the opportunities for bringing forward the release of the tender

results earlier than the generally anticipated timeframe of March 2009.

We strongly support this idea and urge the Department to set an earlier release date. If the

tender process commences in September 2008 as planned it seems at least feasible that the

results could be made available in January 2009.

The transition process raises a range of issues. They include:

Early release of a transition implementation plan. After ten years of contracted services

and several tender and contract processes both the Department and providers are

experienced in anticipating the complexities involved in these transition periods. The

capacity to draw on previous experience should facilitate a smooth, timely and

financially well-managed transition that minimises problems, delays and financial costs

for all parties7.

Issues that will need to be covered in the transition implementation plan include:

1. arrangements for job seekers to transition to the new model, including early

general advertising of anticipated changes and direct correspondence with

affected job seekers;

2. rules for the transition of job seekers to the appropriate Stream or the Work

Experience component;

3. services to be delivered by continuing and new providers during the transition

period;

4. payments for services during the transition period, including those involving

upfront fees;

5. guidelines on the requirements for providers who do not tender or win a contract

to finalise their service delivery to job seekers referred during the ESC 2006-09

contract period;

6. systems access requirements during the transition period; and

7. training for providers.

Current proposals for the way job seekers will be transitioned into Streams 1-4 and the

Work Experience component, including the rationing measures.

We note the details of the proposed streaming on pages 36-37 of the discussion paper.

The paper proposes that a percentage of job seekers currently classified at Highly

Disadvantaged and others assessed as requiring PSP services but currently either on the

7 We note the Transition Implementation information paper (9/12/200) issued at the time of the transition from

ESC2 to ESC3.

27

waitlist or on suspension will not be able to access services in Streams 3 and 4

immediately, but will have to wait for some months before this occurs.

While there may be financial reasons for such an arrangement it is completely at odds

with the new model‟s intention of ensuring that job seekers with the greatest level of

disadvantage receive adequate levels of service as quickly as possible. We are

particularly concerned by the decision to delay commencement of PSP assessed clients

to Stream 4, given the high prevalence of serious barriers such as mental health

concerns and substance abuse among this group. We urge the Minister to reconsider

this arrangement so that those job seekers facing the most significant barriers to

employment begin to access the requisite services at the outset of the new contract.

Maintaining continuity of service for job seekers, particularly those receiving specialist

services within PSP and JPET. Where tenderers are successful in the same ESA in which

they were previously operating, we propose that the job seekers that formed that

provider‟s caseload should remain with the continuing provider up to the level of their

new market share. Where a handover to a new service provider is to occur and

vulnerable clients are involved, special arrangements should be made to ensure the

handover is carefully managed and dual case management can continue for an agreed

period. This is in recognition of the critical role of staff working with highly

disadvantaged clients.

In cases where providers have become partners or subcontractors to another successful

provider, we propose that a mechanism for ensuring the transition of job seekers to the

previous provider entity is considered.

Existing job seekers 24mth +. Further clarification is required regarding the way that

Outcome fees for those job seekers transitioning directly into the Work Experience

component will be determined. We note that approximately 30% of the existing

caseload, i.e. all 24mth+ job seekers, will transition into the Work Experience

component.

Discussion point 17: retaining specialist providers

There has been continuing consolidation of the number of service providers since the first

employment services contracts a little more than a decade ago. Most notably the number of

Job Network providers has fallen from over 300 to around 100 today. CWC numbers have

fallen by over 30% since the end of 1999.

Collapsing the seven existing programs into one will, of itself, see further marked reduction

in the overall number of providers. This, added to the consolidation to date, will result in

the loss of even more diversity and innovation in future service provision.

The value of diversity has been in the different skills and approaches adopted by a range of

service providers within and across programs. There are many organisations delivering

specialist services, including those working with high needs job seekers (for example youth,

people with substance dependence issues, people from culturally and linguistically diverse

backgrounds, homeless people, ex-offenders, and people living with HIV AIDS).

Organisations working with these job seekers have developed a depth of specialist

knowledge and the local networks essential for the effective delivery of complex services but

the number has been in decline over the decade.

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For small and specialist organisations the prospect of tendering for the new model with its

four streams of service delivery does not sit easily with their delivery of specialist support.

We acknowledge that this varies and that some organisations are confident of being able to

achieve an effective evolution into the proposed integrated contract model.

We note the Minister‟s strong encouragement to specialist providers to explore opportunities

for partnering with other organisations. In some cases this option will be possible and we

know some organisations are already exploring it. However, our experience and a what’s in

it for me analysis suggests that relatively few partnering or consortia arrangements are

likely to arise. Takeovers or job offers for some key staff are a more likely outcome.

If the Government wants to maintain diversity in service provision, an outcome we strongly

support, it will need to make deliberate decisions within its purchasing arrangements to

leave space for smaller providers and for those without Job Network experience.

If no specific steps are taken, a routine tender for the consolidated services will almost

certainly result in a loss of skill and expertise to employment services in the very areas of

greatest need within the current job seeker caseload: job seekers with multiple and complex

barriers to employment. Secondly, these organisations often bring other resources of

specific relevance to this group of job seekers such as access to specialist housing and

health services. This access will also be lost.

Furthermore, given the ongoing problem of staff turnover within the sector the loss of this

additional workforce capacity may significantly limit the effectiveness of the new model,

particularly its focus on increasing the workforce participation of the most disadvantaged

unemployed people.

The difficulty of finding significant numbers of skilled staff to deliver quality Job Capacity

Assessments (JCA) illustrates the problems that can arise here. Since some of the skill sets

which may be lost if specialist providers don‟t tender overlap with those of Job Capacity

Assessors – already in short supply – we think that this is not a point which should be lightly

dismissed.

Therefore, we propose that a modification is made to the model to enable some categories

of specialist provider to tender for and deliver Stream 4 on its own. In the past

arrangements for the provision of specialist services have had to be made when it became

apparent that the general service provision was overlooking the needs of certain groups of

job seekers. Therefore, it seems short-sighted to now remove this capacity given that

experience indicates that there will be a strong likelihood of needing to reinvent it before

very long.

Discussion point 18: specific issues relating to IT information sessions

The first and key point to make in relation to the information technology systems which will

underpin and support the new system doesn‟t relate to the conduct of web-conference

information systems. Rather, it is a more fundamental point. The design and architecture

of the new system needs to take account of and address the needs of providers and to

operate as an enabler of a very complex human services delivery system rather than a

driver and dominator of service delivery in the system as is the case at present.

As we have said for a very long time we need the IT cart behind the program horse and not

in front of it. This means that the starting point for the design of the system should not be

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the business process models but rather the frontline workers in the system and their work

flows and approaches to service delivery. We strongly suspect that the current system gets

in the way of effective engagment of people rather than enabling and empowering the

frontline workers at the heart of the employment services system.

Similarly, the design of the system needs to take much more account of the needs of

providers – the costs of their own systems and software, integration with their own

systems, communications between their systems and those of the Department, the need for

an effective corporate interface and the need for a service level agreement which recognises

the mission criticality of the system from a provider point of view.

EA3000 has taken a long time to evolve to its present state. Its development has involved

much time and money but even with this expenditure of resources and effort it has been an

ongoing source of frustration for providers. The challenge that now faces the Department is

that the technology underpinning the current system will need to be updated for the new

model. Although this will take a lot of time and investment, it must be addressed.

However, given the lead time necessary to build a system, we expect that the existing

system will continue to form the backbone of the new support platform.

Experience indicates that problems occur when a new system or system change goes live.

This suggests that there needs to be a long and rigorous testing phase, as well as a process

in place to identify and resolve issues as quickly as possible. The platform underpinning

employment services from July 2009 must have transparent and reliable reporting functions

that enable the Department and providers to see and respond to possible errors in the data.

There also needs to be openness in communication that extends beyond the selective

release of data by the Department. This is an essential element of Department-to-provider

communication and we suggest that it is incorporated into the Charter of Management.

In the past, policy directions have sometimes had to accommodate themselves to what it is

possible for the IT to deliver. Given our great reliance on IT for so much communication

this problem cannot be not easily overcome. However, we suggest that as a clear principle

it is agreed that where the IT cannot be revised quickly enough to respond to a new

problem, this is acknowledged forthwith, that appropriate steps are taken to find alternative

solutions and that these are communicated rapidly to providers.

Finally, we wish to reiterate a point made earlier regarding the way that the new model will

define the requirements regarding the evidence of service delivery. We believe that it is

imperative to avoid, as much as possible, the excessive levels of red tape that have become

such a negative feature of the current contract. Consequently, we strongly recommend that

the IT reporting systems developed to support the contract are structured so as to avoid

their being based on micro-transactions.

Again, we point to the approach taken by the Australian Taxation Office (ATO) with respect

to taxpayer deductible expenses. Clear guidelines on auditing procedures, combined with

the various other constraints and controls within the employment contact contain sufficient

mechanisms to guard against misuse of public money and to identify and take swift action

in those cases where it does occur.