Mar 3, 2004

Appropration Bill (no.3) 2003-2004 Cognate bills: Appropriations Bill (no.4) 200

APPROPRIATION BILL (NO. 3) 2003-2004 Cognate bills:APPROPRIATION BILL (NO. 4) 2003-2004 APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 2) 2003-2004: Second Reading


3 March 2004


Mr ALBANESE (Grayndler) (11.29 a.m.) —Today I want to limit my comments on the Appropriation Bill (No. 3) 2003-2004, the Appropriation Bill (No. 4) 2003-2004, and the Appropriation (Parliamentary Departments) Bill (No. 2) 2003-2004 to the fiasco that has become Job Network mark 3. This system was meant to assist the unemployed in getting off welfare and into work, but it is struggling to work itself. The roll-out of Job Network mark 3—the third significant overhaul of employment services in just eight years—has been a litany of government mismanagement, government incompetence and delusional denials from the Minister for Employment Services.

The transition to Job Network 3 has been a failed experiment in social policy, implemented not with the welfare of job seekers foremost in mind but to satisfy the ideological agenda of the Howard government at a cost to taxpayers of $2.85 billion over the coming three years. Just nine months into the Job Network’s latest three-year contract, known as Employment Services Contract 3 or ESC3, its longer term financial viability is still far from certain. Only this week both the Australian and the Australian Financial Review reported on a confidential document written by the National Employment Services Association, the peak body representing private as well as not-for-profit Job Network providers, which warned that, unless providers receive an immediate cash injection from taxpayers, many will have to close their doors. One can only lament the crisis now besetting the Job Network, particularly given the fanfare and great promises made by the government at the time of its development.

Let us cast our memories back to the months leading up to the start of ESC3 on 1 July 2003. We can recall the confident claims being made by the Minister for Employment Services, the member for Longman, Mal Brough. There was the press release on 27 March 2003 in which the minister said:

… from July, Job Network members will deliver even better services to Australia’s unemployed … They will have greater access to jobs, more flexible assistance through a Job Seeker Account and a Service Guarantee … The state-of-the-art job matching service will compare every job seeker’s resume with every listed job, every night and the result can be accessed the next day for quicker access to work opportunities.

On 28 March in the Courier-Mail, the minister said that ESC3 `will be delivering a very personalised, visualised service’. In the parliament on 27 May, the minister said that ESC3 `builds on what has been a very successful transition from the old CES to the Job Network’. Also on that day, he said:

… there will in fact be more Job Network personnel working in the [system] delivering quality services to Australians in country towns and in suburbs where the service is needed. Furthermore, it will be backed up with the world’s best IT.

In a press release on 19 June 2003, the minister said:

We’ll have the same Australia-wide coverage as in previous Job Network but the services will be more relevant and better tailored to the needs of local communities.

On 19 June in the parliament, he said:

An unemployed person needs to be treated as an individual. We need to take them, build them up personally and provide them with the skills and the connections for the jobs. To do that, we have provided what we call the job seeker account.

Unfortunately, the reality has simply not matched the government’s earlier rhetoric. We know this from talking to the unemployed and to Job Network providers. We also know this from freedom of information documents provided by the government’s own department which show the contrast between what the minister was saying publicly, what the government and the minister were being told privately and what was actually occurring on the ground.

The transition to ESC3 resulted in the closure of some 1,100 offices around the country. This is a government that closed more offices than it left open—53 per cent. Most of those office closures occurred in rural and regional Australia. Some 58 per cent of the offices there—691 Job Network offices—closed as a result of that transition. As a result of that, many towns have been left without any Job Network office, forcing job seekers to travel further to get the help, assistance and training that they need to find a job.

While Labor first exposed the cut to regional Job Network services more than eight months ago, the FOI documents obtained from the government show that the government itself was being told by its departments that the level of service available to regional and rural job seekers would be lower. The FOI documents state:

Job Network membership coverage is not available in some remote and rural areas (and appears to have been reduced with the third Job Network contract) and [the Department of Employment and Workplace Relations] has not yet provided a service strategy for these jobseekers.

What an outrage! The FOI documents clearly show that this government was alerted to what the problems were but was not alarmed enough to take action. The closure of these offices was part of the shutdown of any public sector provision role. This is a government that wound up Employment National, resulting in the loss of more than 400 jobs across 165 localities. When the government moved to the Job Network it argued that we needed a public sector provider as a safety net; yet it moved away from that commitment.

On top of that, the size of the Job Network pool meant that the whole basis of the contracts for Job Network 3 was simply not what providers were told. Providers were told that there would be 720,000 or 780,000 people in the system. We know that that simply is not the case. What the minister purported to say was: `That’s because unemployment has fallen.’ But we know that that is not true, because the data shows that at the time that the tender documents went out, September 2002, there were 644,722 people receiving benefits. In July 2003, when the Job Network contract started, there were 633,259 people receiving benefits—a reduction of only 11,463. The latest figures from January 2004 show a further reduction of just 3,036, down to 630,223 people.

We know that the government confused those people who were activity tested, and therefore compelled to participate in the Job Network, with volunteers—people who could certainly go along to a Job Network office but who had no compulsion because of the nature of their benefit or because they were involved in some other program. That meant that the pool was more like 500,000. The government initially, in some circumstances, talked about a pool of 900,000. That meant that, even if you took their lowest figure of 720,000 to 780,000 people, when the real figure was 500,000, the size of the market was some one-third less. So, if you established your business under ESC3, expecting a revenue base of, say, $300,000 a month to be coming in, and all of a sudden you are getting only $200,000, then no wonder you are in strife. That is the basis of the fundamental flaw in the model from 1 July. And the minister knew, because on 25 July 2003 a minute from Centrelink to FaCS stated:

I think we need to bring out the fact that there are only perhaps 500,000 customers who can be compelled to come in.

So, in spite of spending $11.3 million on preparing, developing and implementing Job Network 3, the minister simply got his numbers wrong. The combination of increased costs and reduced revenues has already claimed one provider. Options Community Enterprises was a provider that specialised in helping people with disabilities to find work and was a top performer under Job Network 2. However, under Job Network 3 this 27-year-old organisation has been forced out of business.

Then we go to the IT debacle. On top of diminished service coverage, the operation of the Job Network has been further impaired by ongoing so-called technical difficulties with the IT system. Honourable members will recall that earlier in my speech I referred to the minister calling this `the world’s best IT’. A briefing note to the Minister for Family and Community Services dated 11 June 2003 stated:

It is now 11 weeks since ESC3 was introduced. There have been only two or three days where there has not been a system outage.

For only two or three days out of the first 77 days when the system was supposed to be operating was it actually up and running. No wonder one provider has labelled the system a dog. A major component of this IT system is of course the Australian Job Search database. This system seeks to automatch job seekers with job vacancies. The vacancy information sent via various electronic means is supposed to be tailored to the job seeker’s skills, work experience and areas of employment interests. But what have we seen? We have seen Joanna, a 53-year-old Tasmanian woman and former art gallery worker, matched with a job requiring a chainsaw licence. We have seen Rosa, a 56-year-old woman from Daylesford, who suffers from severe blood pressure and severe arthritis, matched with a job in the Army Reserve as a combat medic. We have also seen a young Tasmanian man matched with a job in an escort agency and a Western Australian matched with a job seeking someone to launder money. This is on the government’s web site. The government is critical of the old operation of the CES. I say this to Minister Brough: the CES did not send people who were unemployed to jobs in escort agencies, while the government system has done that.

I now want to move to the job seeker account. This was the flexible part of the system. There was $900 available to Job Network providers. This fund had a total of $223 million allocated to it. It was there to be used to increase the employability of the unemployed. However, just last week we asked in Senate estimates hearings how much of the job seeker account had been accessed and we were told that, to date, a mere $31.4 million or 14 per cent of the money had actually been used by providers. Providers have been warning for some time that the overly bureaucratic nature of accessing the money in the job seeker account was discouraging its use. In one case study reported in the Australian on 1 March 2004, a rural provider calculated it had spent $75,408 on 3,240 job seeker account transactions without compensation. Unfortunately, when providers raise these issues the government simply ignores the problem. Therefore, the money sits unused in a government bank account rather than being used on the unemployed. The combination of the problem with the lack of numbers, the problems with the IT and the problems with the usage of the job seeker account means that many providers are under severe pressure. A February board report of a major Job Network provider stated:

It is prudent to report to the board the general low ebb in morale that the organisation is experiencing at present—not too surprising, when you recall the historic graph. The situation hasn’t happened overnight, but steadily, as our Job Network income has decreased and focus on performance has increased, the result is of course that people have departed either voluntarily or by termination of contract. This is unsettling, naturally.

It goes on:

It is sometimes difficult to appreciate the real wins we have actually made on the board when dealing with the seemingly constant run of problems.

Then it goes on to say:

They really need to see a few small successes very soon, in order to re-energise the morale and provide a light at the end of the tunnel (that hopefully is not a train).

Indeed, I hope that the light at the end of the tunnel for the Job Network is not a train, because that train will run over Job Network providers—decent people, largely operating in not-for-profit organisations, who are not in it for the money but in it because they are committed to the satisfaction that comes from getting someone who is unemployed into work and making a fundamental difference in people’s lives. But, more importantly, the unemployed at the moment simply are not the priority of the government. The priority of the government is defending the flawed system rather than acknowledging that the problems are there. Unless you acknowledge the problems that are there, you cannot take the steps to fix them, and that is what the minister needs to do. Just last week the head of a Dubbo job agency called for the service to be overhauled. The CEO of the OEC group, Rod Cooke, said a contract system that worked in the city was sending battling regional agencies broke. In the Daily Liberal, which is the local newspaper in Dubbo, he said:

We’re all hoping we can convince the Government to wake up to itself and give us the money we need to run their employment service.

The article says:

Mr Cooke said regional agencies were wearing the cost of trying to source jobs in areas where high unemployment meant few “outcomes” are achieved.

“A survey of rural providers showed they are operating at 80 per cent of expected income and 120 per cent of expected expenditure,” he said.

That is not the Labor Party but the CEO of a Job Network provider in rural Australia saying that. I concur with Mr Cooke’s comments and the comments that are being made by providers all around the nation that the government does have to wake up to itself. It does have to make changes, because it needs to back up the system that is only struggling to keep going because of the commitment of Job Network providers and Centrelink staff. (Time expired)