- by M Santos
- The Guardian
- Issue #2193
Photo: pickpik.com
The present privatised Workforce Australia system is cruel and punitive, failing the unemployed as opportunistic, private for-profit rorters milk it. The Albanese Labor government’s planned reforms are a thinly disguised cost-cutting exercise that fails to address the key failings of the current system – privatisation and mutual obligation requirements.
The Keating Labor government introduced private providers alongside the Commonwealth Employment Service (CES) and sowed the seeds for mutual obligation .
Then in 1998 the Howard Coalition abolished the CES, ending the government’s responsibility to serve the unemployed, and outsourced all employment services to private operators. Centrelink and Job Network, a market of competing private organisations took over. The Mutual Obligation policy was punitive as if those receiving unemployment benefits chose not to work – the dole-bludger myth.
Since then the system has undergone a number of iterations until today we have the totally privatised system called Workforce Australia and a highly automated Mutual Obligation (MO) program that contains built-in provisions paying providers handsomely to keep the unemployed on their books.
The system is failing the unemployed and costing millions of dollars that are syphoned off in profits. According to Employment and Workplace Relations Minister Amanda Rishworth, 20% or more of Workforce Australia’s one million unemployed participants have been stuck in the system for five years or more.
ONE-SIDED OBLIGATIONS
Rishworth has made it clear that the Mutual Obligation policy would remain in place. Mutual obligations are “job-readying activities,” such as short courses, traineeships and volunteer work, that people on Centrelink payments such as JobSeeker and Youth Allowance need to complete to continue receiving support. There is nothing mutual about the obligations.
Failure or deemed failure (by the automated digital system) results in suspension of benefits and other financial penalties causing considerable stress and desperation to the job seeker.
Providers are known to concentrate on those who are easiest to place in work, or to force workers into unsuitable, lower-paid or lower-skilled jobs in order to maximise government payments and hence profits.
Last year the Commonwealth Ombudsman found almost 1,000 jobseekers had payments unlawfully terminated over a two-year period under the automated Targeted Compliance Framework that was set up to monitor mutual obligations.
“The very low rate of unemployment payments in Australia, combined with uncapped suspensions and the threat of payment cancellations, suggests the Australian regime violates the right to subsist,” a review by the Australian Council of Social Service (ACOSS) found.
The review found that the system has failed on all fronts including alleviating poverty and adhering to human rights obligations, in particular the right to social security.
“We have also been alarmed about the multiple negative impacts of mutual obligation policy on the health and wellbeing of people affected. In our work as national anti-poverty advocates, we have consistently heard people’s accounts of the distress, anxiety, shame and hardship people experience as a result of the impact of mutual obligation policies,” ACOSS noted.
Rishworth has outlined the government’s plans for the unemployed to be triaged into three streams:
Service Stream One will be a new, digital robo-style scheme with algorithms replacing humans, that will have the ability to suspend dole payments and impose financial penalties.
It also includes $5.9 million for a Future Women scheme to trial a virtual “advisory service specifically for parents, to help them move back into work.” Rushworth does not indicate how much the government expects to save on this inhumane approach.
Stream Two is for those who “are not digitally literate or need more support than the online service can provide.” This could include such things as active job coaching, work-ready supports and training linked to in-demand jobs.
The Third Stream will apply to those people who are “furthest from employed” and require intensive services to (re)enter the labour market. It will include employment such as work experience, volunteer work and employment in social enterprises.
Stream two and three providers will be different and have different systems of remuneration.
The reforms fail to address the principal failings of the present scheme that cause so much distress and condemns hundreds of thousands to poverty – poverty level payments, private operators, and mutual obligations.
Antipoverty Centre spokesman Jay Coonan said keeping mutual obligations denied any meaningful change. “You can’t punish people into employment in an economy designed to keep at least four per cent of us unemployed,” he said.
Unemployment is an intrinsic component of capitalism. The system relies on a reserve labour force to dip into when needed and to suppress wages by instilling fear of replacement by unemployed workers.
“It’s not a major overhaul if you keep ‘mutual’ obligations in place. That’s punishment-as-usual,” Coonan said.
Greens government services spokeswoman Penny Allman-Payne said: “One million people have been waiting for years for Labor to reform John Howard’s employment services system so that it actually helps them find work and doesn’t coerce and punish them.
“But what they’ve discovered … is that Labor is continuing to prop up a system which punches down on welfare recipients.”
RAISE THE RATE
The current fortnightly JobSeeker rate is $404.35 weekly for singles, a punitive payment condemning the unemployed to poverty or dependency on others. ACOSS has been calling for the scrapping of mutual obligations altogether and for the rates of Jobseeker, Youth Allowance and other payments to be increased to lift recipients above the poverty line.
ACOSS’s Edwina MacDonald said the rates “… are so low, they create an additional barrier to people getting into paid work. People are focussed on struggling to survive, to keep a roof over their head and eat three meals a day, let alone buy a new outfit or get a haircut for a job interview.”
“The social security system should provide to those eligible a guaranteed liveable income which is not subject to participation or other conditions. This payment should be benchmarked to ensure it is adequate to meet essential living costs.”
Allman-Payne, said these reforms will do nothing for those who are out of work.
“If the government was serious about reforms, it would have listened to its own inquiry that it had in 2023 that told them that we need to bring employment services back into public hands, we need to have an independent watchdog oversighting it, and we need to stop pumping money into for-profit providers who are simply making money off harming vulnerable people. If this government is not prepared to bring job services back into public hands and to abolish the punitive coercive mutual obligations framework, then frankly, these reforms aren’t worth the paper that they’re written on.”
Senate estimates in 2025 heard that the government knew the automated target compliance framework was causing harm and that questions remain over its legality, while an ombudsman’s report found that private employment services were making large-scale mistakes in recommending people be eligible for harsh financial penalties.
Jay Coonan said: “What we need to see is to re-nationalise these services. Of course, there were issues with the [original] Commonwealth Employment Service, but what is happening now is we’re essentially seeing billions of dollars in money going overseas through hedge funds and investment firms that these providers are attached to, so what we’re seeing is money being taken from people or money that should be spent on helping people and it’s being sent away or going to these companies’ profits.
“A far better way to do it would be for the government to run these services, to make sure that those finances were being used appropriately and accordingly to help people when they need it.”
