Feb 18, 2004

Matters of Public importance: Employment: Job Network


18 February 2004

Mr ALBANESE (Grayndler) (3.16 p.m.) —It is no wonder the government’s own supporters see it as mean and tricky. When the government points over here you can be sure that all Australians will have to make sure they look over there, because the government is constantly trying to deceive the Australian people. Job Network 3 and the lead-up to its implementation on 1 July is a sorry and sordid tale of deception and incompetence and of malice towards the unemployed. The government misled providers, the government vilified job seekers and the government deceived the community.

The FOI documents which the opposition has received from the Department of Family and Community Services outline the history of all this, and I intend going through those documents today. It is unfortunate that I cannot go through the FOI documents from the Department of Employment and Workplace Relations, because the government has stymied every attempt to get any information from that department about the establishment of the Job Network. The government was asked last year in Senate estimates for an Econtech report, for a number of analyses of why there were problems with Job Network 3. The secretary of the department said he did not see a problem with producing those documents. However, this week, again we received notice that it was `inappropriate’ for those publicly funded documents to be made available to the Australian people.

The fact is that the FaCS documents show that the model was flawed from the outset. Rather than fess up, the government has covered up. Way back on 11 April 2003 Centrelink were concerned about the new system. They were concerned about the numbers involved, they were concerned about the IT system and they were concerned about the coverage. That reflected the concerns that had been expressed by the sector—the providers, the people out there on the ground—as early as 2002. They had said, `We think there are problems with the introduction of ESC3,’ but the government just batted on regardless.

The new contract came in on 1 July, which led to a fully privatised system. That was the first time since the Second World War that the government said that the public sector had no direct role in giving people a job, and the CES was finally fully privatised. We know that at that time, as part of the arrangements, $500 million was cut out of the Job Network system. We know that 53 per cent of offices were closed. There were more offices closed than left open. The alarm bells were ringing. In April FaCS advised that Job Network coverage would not be available in some remote and rural areas. In May they advised that the new system would have an `inability to enact upon intervention strategies that will impact on the more disadvantaged job seekers’.

So it is not surprising that even before the new system came in the people on the ground in Centrelink were saying that the most disadvantaged job seekers would miss out. In spite of the fact that there has been an overall drop in unemployment, if you look at the number of people who have been on unemployment benefits for more than 12 months, it is greater today than it was in 1996. Having fewer people in the system combined with the IT problems so that on 1 July when the new system came in the Job Network had a massive cash flow problem. Job Network providers were saying, `We are going to go to the wall.’

What was the government’s response? The minister was coming in here and telling parliament that everything was okay. That is something he did on 26 June, the last sitting day before parliament rose for the recess and the last sitting day before the introduction of Job Network 3. What did the minister do immediately after parliament rose? He got into his Comcar, went out to the airport and flew to Sydney for an emergency meeting with CEOs of Job Network providers. The meeting was held at the Sydney airport Hilton—at a cost of five grand to taxpayers, by the way, because they had TV links throughout Australia—all because there was a crisis. Those people on the ground were telling him what would occur in just five days time.

At that time he gave a private commitment to bail out the Job Network. That commitment was given because at that stage they were threatening to just not open up on 1 July. So the minister said to them, `We understand there are some humps here, so we’ll guarantee you some $30 million.’ That was announced on 10 July. But the government knew it was in trouble. So what did it do? It did not immediately accept that there were structural problems; it went out and blamed the unemployed. The government blamed the victims of its own incompetence.

On 29 June, two days before the introduction, in the Sunday Herald Sun the minister suggested that 84,000 would lose benefits, saving the government some $1 billion a year. He said:

The review would save taxpayers hundreds of millions and force tens of thousands off benefits … This will shake the tree.

FOI documents of 4, 10, 18, 22, 25 and 28 July outline the real story. Centrelink—those decent public servants that these people hate—were notifying the government every three days and telling them that this was not the case. They were telling them that the problem was not with the unemployed but with the system. But still the government continued to vilify the unemployed. At the same time, just before the minister flew off to Sydney for this meeting, he was quoted in the Financial Review as saying:

Job Network providers are not yet feeling financial stress … the IT is working well.

There was an absolute crisis in the system. The Centrelink minute of 25 July bells the cat. It says:

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

That was not very subtle, Minister. We asked the minister about that today. What did he say? He waffled on with some figures—about 700,000—and said that they did like volunteers coming in to use the Job Network. That was not the basis of the system. The basis of the business plan that Job Network providers put in was not that people would volunteer to come in. Providers do not get a fee if someone knocks on their door and says, `Hi, can you find me a job?’ The basis was that there would be a cash flow resulting from people being referred from Centrelink to those Job Network providers. That—along with, of course, the IT problems—was why there was the huge cash flow problem. The minister said the IT was working well, but the FaCS documents show otherwise. A memo of 16 June says:

… it is now 11 weeks since ESC3 was introduced. There have only been 2 or 3 days where there has not been a system outage.

It was working for two or three days out of 77, and the minister said it was working well. That was why people were not getting the referrals. That was why, when people were getting referrals, they were sent to get jobs such as the one a young bloke was sent to get—in an escort agency in Tasmania. We know that the crisis occurred in July. We know that the first bailout was $30 million 10 days later. But that did not solve the problem, because the structural problems were still there. The minister was still saying the system was working well and it was just that those unemployed bludgers would not do their jobs; they would not turn up and were not doing their bit.

On 21 and 22 August there was a NESA national conference in Melbourne. On the Thursday morning—I was speaking on the Thursday afternoon—the NESA for-profit and not-for-profit providers, the peak of the sector, all had a meeting and said, `We’re going to go out of business; we’re going to close our doors.’ They had a meeting of the CEOs and they asked those people who in the next fortnight were going to either shut their doors or sack staff to put their hands up. Eighty per cent of those providers put their hands up, and there was a riot. So the minister had to go along the next day and make an announcement. He guaranteed $670 million per year for three years. He, of course, went on in the speech to blame the 60,000 jobseekers who had allegedly not shown up.

This is a sorry saga of maladministration from beginning to end. He made this announcement and said the 60,000 jobseekers who had not shown up were to blame. What do the figures from FaCS show? They show that from 14 April to 5 September there were 286 people breached—not 60,000 or 84,000, but 286 people who did not fulfil their obligations. This is the best quote of all: he announced, `We’re going to spend $2.1 billion; we don’t know why we’re going to give you the money, but we’re going to give it to you because that’s what you thought you were getting.’ He was asked, `How is it going to work out?’ He said, `The method of payment hasn’t been worked out; I’m not going to make policy on the run.’ He had already guaranteed $670 million every year. The minute from PM&C about the outcome, which was published in the documents on 22 August—the same day he announced his bailout—is a beauty. It is about a ministerial meeting. It says:

We also understand that, following a meeting between Ministers, there is to be some work done clarifying the size of the stock and these meetings at PMC will be vehicle for taking this forward.

To give the Prime Minister credit, PM&C took it off him. They took it off the minister and brought PM&C in over the top because the minister for FaCS was expressing outrage at what was going on. Her bills were going up to cover the Centrelink wages which were being spent to try and keep the system going. On 3 September, having already announced the $2.1 billion, there was a letter that was a beauty—on 3 September PM&C requested DEWR to write to them about the proposed changes to the payment regime for Job Network members. So much for not making policy on the run. He announced the spending essentially to fit what the model was and then he tried to work out how he was going to justify paying them. That came out.

What is clear is that unemployed people were fulfilling their obligations. On 26 August, another document shows a phone hook-up between FaCS and DEWR, under the heading `Subjects for minister re possible cabinet discussions’ of that day. FaCS and DEWR agreed that there are 633,000 Newstart and youth allowance recipients. Of these, 500,000—the common figure which comes up—have attended interviews, a further 70,000 are awaiting entry after having been exempt—so they are exempt from the system—and 63,000 are assumed not to go into the Job Network because they are in PSP or otherwise exempt. Those 63,000 are in other programs and are not part of the Job Network, so how could they have been included in the financial modelling? What this document shows is that every single one of the activity tested jobseekers has been accounted for.

In the lead-up to 1 July they knew there was a problem, they provided the bailout and then they tried to work out how the money was going in there. That came out in a minute from Peter Boxall. He said that he thinks that Australians Working Together is a good idea, because all the people who are not part of the Job Network are going to be pushed in there—people on disabilities and the mature aged unemployed are all going to be pushed into the system. What we have seen is a series of changes, including the disability support changes. It must be remembered that the biggest provider of disability employment services went bankrupt on Christmas Eve—it went into receivership. But the government announced 10 days later that they were going to place people who were involved in disability support services—which is a part of FACS, which is capped, otherwise there would be more people with disabilities who would be able to participate in and go into employment—into a pilot program of 12 Job Network members. Minister, what is the point of having a policy which is led by the needs of a system to fit in with a model that does not work rather than one that is led by the needs of the unemployed? This is a disgraceful affair, and the minister should be ashamed of himself. (Time expired