Mar 1, 2004

Calls for another Job Network bailout


MEDIA RELEASE: Anthony Albanese – 1 March 2004

At a time when Treasurer Peter Costello is emphasising the need to increase the labour force participation of welfare recipients, the Government’s cornerstone labour market program, the Job Network, is facing a financial crisis.

Both The Australian and the Australian Financial Review have reported today that unless providers receive “an immediate cash injection” from the Australian taxpayer they will have to stop helping the unemployed and close their doors permanently.

That was the key recommendation contained in a report written by the peak organisation representing both private and not-for-profit Job Network providers – the National Employment Services Association (NESA).

The NESA report lists a litany of fundamental mistakes made by Employment Services Minister, Mal Brough, and his Department during the development and implementation of Job Network Mark 3. Specifically, the NESA document confirms:

• That the total number of jobseekers eligible for the full suite of Job Network services “is substantially less than the indicative number” presented to providers during the tender process and upon which they developed their business plans;

• That the money being paid to providers is inadequate, particularly when it comes to servicing the long term unemployed; The existing payment structure also fails to recognise the unique challenges confronting providers in rural and regional Australia as well as areas with depressed labour markets;

• That the IT system underpinning the operation of the Job Network has been plagued by ongoing technical and design flaws which have significantly added to the costs incurred by providers;

• That the “burdensome” and overly bureaucratic nature of accessing the money in the Jobseeker Account is discouraging its use by providers. For the current financial year (2003/04) the Jobseeker Account has a budget of $223 million. However, to date a mere $31.4 million, or 14% of the money, has been used by providers.

These factors have been a double whammy for providers – reducing their revenues while increasing their costs. A recent survey of just rural providers found that they are operating at 80% of expected income and 120% of expected expenditure.

The Government has duded both the taxpayer and the unemployed.

The problems now crippling the Job Network were identified by the industry well before 1 July 2003. Unfortunately, these industry concerns were dismissed by Minister Brough.

Job Network 3 has been a fiasco from the very beginning. Minister Brough’s arrogance and incompetence has left many providers, particularly in rural and regional Australia, teetering on the verge of financial ruin.