MAXINE McKEW: Today marks not only the beginning of the financial year, but also a new chapter in the Federal Government's radical overhaul of job agencies.

For the first time in more than 50 years, there will be no Commonwealth-owned employment service, leaving the field to a growing number of private-run operators.

According to the Federal Government, the new round of employment contracts, which started today, will provide job seekers with more places to go and better services when they get there.

But questions have been asked about how this new system will help the disadvantaged, particularly the long-term unemployed, as Peter McCutcheon reports.

RON BAKER, JOB SEEKER: It controls your life.

It controls your daily life.

Looking for work is a job, a full-time job.

There's no doubt about that.

PETER McCUTCHEON: Ron Baker has been unemployed for years and fulfils his mutual obligation requirements by doing voluntary work.

Retrenched from a management position in the 1990s, he's only found limited short-term work since, through privatised job placement agencies.

RON BAKER: I haven't been referred to one paid job interview in the whole time I was with those job networks.

They seem more interested in trying to conscript me to various unpaid work schemes and gratuitous training that I'd completed some time ago, and it really wasn't of any use to me at all.

PETER McCUTCHEON: Despite Ron Baker's experience, the Federal Government believes the private job agencies are performing so well, there's no longer a need for a public employment service.

The last vestiges of the old public system disappeared yesterday, when more than 165 Employment National offices shut down.

The Government argues the privatised system represents a vast improvement.

MAL BROUGH, EMPLOYMENT SERVICES MINISTER: You don't jump from doing your job search training in one organisation, your job matching over here, your intensive assistance over here.

It's one organisation providing the full suite of programs to the individual.

PETER McCUTCHEON: Mark Considine, from Melbourne University Centre for Public Policy, says the radical experiment, unique amongst OECD countries, could leave the most disadvantaged out in the cold.

PROFESSOR MARK CONSIDINE, CENTRE FOR PUBLIC POLICY: There are still real problems with the way the Australian system handles those difficult cases, and some of that's got to do with the fact that we no longer have a government-type agency, an agency whose only motivation is public services for the disadvantaged to call upon, if you like, as a case of last resort.

MAL BROUGH: Every organisation that is part of the job network will have to look after both the easy, if you like to put it that way, or the short-term unemployed, and those who are deemed to be at risk of long-term unemployment.

And they'll have to look after them right throughout their episode of unemployment.

PETER McCUTCHEON: The Minister for Employment Services, Mal Brough, says the new round of employment contracts, which came into effect today, provides the most disadvantaged job seekers with more resources.

MAL BROUGH: What we've done is quite deliberately weigh the outcome payments, the payments when someone gets a long-term unemployed person into three months work or six months work, we've increased those fees quite dramatically for people who are long-term unemployed or at risk of long-term unemployment.

ANTHONY ALBANESE, SHADOW EMPLOYMENT SERVICES MINISTER:

Well I think the incentive payments simply aren't enough.

And that's not what I'm saying, that's also what job network, particularly the not-for-profit sector, are saying, and that's why we've seen long-term unemployment actually increase.

PETER McCUTCHEON: Despite the Government's assurances, at the end of another day doing unpaid voluntary work, Ron Baker is still to be convinced the new system will look after him.

RON BAKER: When you've got, say, 15 unemployed people for every job, it's quite obvious that those vacancies are going to be filled no matter what.

So the easy-to-place job seekers get the work, or get the jobs, and people like me basically get left in the background.

PETER McCUTCHEON: Nevertheless, devoting resources to the long-term unemployed the Government argues is a contractual obligation.

MAL BROUGH: I should just remind everybody that I hold a very big stick in this.

Under the contract, any job network member who does not perform has one six-month period, one milestone, to get their standard up to scratch or they can lose part or all of their contract.

PROFESSOR MARK CONSIDINE: The problem with that is it's a rather crude instrument and what I think everybody now realises is it's not going to result in an effective focus on the hard-to-place job seeker or the person with serious barriers to employment.

PETER McCUTCHEON: By September, the Government says all registered unemployed Australians will be offered help by a job network agency.

The Opposition says while the number of unemployed on the books has increased by more than a third, funding has been effectively cut.

ANTHONY ALBANESE:  It's extraordinary that you will have 700,000 people on the new contracts as opposed to 500,000 formerly, but no new money.

PETER McCUTCHEON: The job network agencies say they're waiting to see if the Federal Government will match its promise of a high standard of service with adequate funding.

Ron Baker signed up with a new job network agency only two weeks ago and he remains sceptical the new system can deliver, what for him would be, a miracle.

RON BAKER: Basically the onus is apparently on the job network to contact me for another interview.

PETER McCUTCHEON: But apart from signing up in that five-minute meeting, you've had no other contact for the past fortnight?

RON BAKER: No.