WEBVTT - Our job system is broken: Are private providers to blame?

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<v Speaker 1>I'm Ruby Jones and you're listening to seven AM. Almost

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<v Speaker 1>thirty years ago, the Howard government shut down Australia's public

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<v Speaker 1>Employment Service and privatized the system that helps unemployed people

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<v Speaker 1>find work. Since then, repeat inquiries have found the system

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<v Speaker 1>is failing the people who need it, while the company's

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<v Speaker 1>paid to run it raking huge profits. Now the Abaneze

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<v Speaker 1>government has admitted the system isn't working and promised its

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<v Speaker 1>biggest overhaul in decades, but Labour says these private providers

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<v Speaker 1>will remain part of the system, even as a new

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<v Speaker 1>report has followed the billions of dollars flowing through the industry. Today,

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<v Speaker 1>ABC Business and Economics reporter Gareth Hutchins on how helping

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<v Speaker 1>unemployed Australians became a massive money spinner and whether Labour

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<v Speaker 1>can fix the system while leaving private companies at its center.

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<v Speaker 1>It's Friday, August seven, so Gareth, let's begin with this

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<v Speaker 1>new report from Siktar, the global corporate tax research firm.

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<v Speaker 1>It examined the private companies that are paid to help

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<v Speaker 1>people on job seeker to find work. To begin with,

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<v Speaker 1>just how profitable is this entire industry?

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<v Speaker 2>So os tender data shows that the value of the

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<v Speaker 2>contracts that are out there at the moment for employment services,

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<v Speaker 2>it's worth five point five billion dollars. Forty five providers

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<v Speaker 2>have been awarded those contracts. Now, the top twenty five

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<v Speaker 2>of those providers take the line share of those contracts,

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<v Speaker 2>pretty much all of it. When you dig a little

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<v Speaker 2>deeper into it, you'll find that nine for profit providers

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<v Speaker 2>have been awarded contracts worth two point one billion, so

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<v Speaker 2>it's about forty percent of that five point five billion

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<v Speaker 2>is going to nine for profit providers. The two largest

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<v Speaker 2>of those are private equity controlled multinationals. The two others

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<v Speaker 2>are quite famous.

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<v Speaker 3>I'm Tangent, the national apperatious manager for Job Straight Wide.

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<v Speaker 4>I'm so excited now as today our success and we

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<v Speaker 4>need twenty six sides under the Australia contract.

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<v Speaker 3>They've made their owners multimillionaires in Australia.

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<v Speaker 5>Serena Russell Institute is a strange leading provider of the

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<v Speaker 5>Career Transition Systems program. Our program mentors up skills and

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<v Speaker 5>supports you back into the workforce.

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<v Speaker 2>So it's a pretty lucrative, profitable venture for some of

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<v Speaker 2>these companies. But they're also using things like offshore profit

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<v Speaker 2>shifting they have domiciled in tax havens, say over in Jersey.

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<v Speaker 2>In the US, you have dividend payouts to shareholders, big

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<v Speaker 2>profits sent to the executives.

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<v Speaker 3>Of the companies that own it.

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<v Speaker 2>So they have really developed ways of extracting more profits

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<v Speaker 2>from the system. So it's hugely football in that way.

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<v Speaker 2>And the SIGTAR report asks the question are we really

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<v Speaker 2>getting value for money given its government money which is

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<v Speaker 2>paid for by tax payers. So Australians getting value for money?

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<v Speaker 2>And is the system serving the job seekers themselves? Is

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<v Speaker 2>helping them find employment?

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<v Speaker 1>Okay, so could you explain to me how the business

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<v Speaker 1>model works and what it is that these private providers

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<v Speaker 1>are supposed to be delivering for that money.

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<v Speaker 2>The business model is that you're awarded a contract to

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<v Speaker 2>find work for unemployed Australians. Now, within the system, there

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<v Speaker 2>are for profit agencies that are not for profit agencies

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<v Speaker 2>and there are a few government run job hubs. But

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<v Speaker 2>for the for profit agencies think about what their actual

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<v Speaker 2>product is. Their product is unemployed people. So when unemployment

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<v Speaker 2>is high, it's actually good for business because they'll get

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<v Speaker 2>more unemployed.

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<v Speaker 3>People on their books.

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<v Speaker 2>And when someone comes on your books, you'll get a

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<v Speaker 2>payment you can get of progress payments, you can get

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<v Speaker 2>job placement payments, you can get bonuses. These things are

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<v Speaker 2>all there to incentivize you to find work. For these people,

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<v Speaker 2>so they're meant to be there to get unemployed Australians

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<v Speaker 2>into work, but they're also there to enforce mutual obligations.

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<v Speaker 2>So some of those mutual obligations could be things like

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<v Speaker 2>you have to submit a certain number of job applications

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<v Speaker 2>every week, you have to go to a certain number

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<v Speaker 2>of job interviews a week. You may have to go

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<v Speaker 2>to a skills and training program to become more employable

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<v Speaker 2>and more presentable. Now, the problem is that these are

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<v Speaker 2>private companies that have the power to say yes, you

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<v Speaker 2>have met your mutual obligations or no, you haven't, and

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<v Speaker 2>there are numerous reports of them using this to punish people.

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<v Speaker 2>So if they say that you have not met your

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<v Speaker 2>mutual obligations, they can trigger a suspension of your unemployment benefits,

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<v Speaker 2>which can be disastrous for people that really should not

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<v Speaker 2>be in the power of these for profit companies. It's

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<v Speaker 2>been a major tension in the system, and it's been

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<v Speaker 2>there from the beginning.

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<v Speaker 1>Let's talk a little more about the impact that we

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<v Speaker 1>know this has had because there's been investigations over the

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<v Speaker 1>years that have uncovered false payment claims. There's been inquiries

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<v Speaker 1>that have shown how people are pushed through these pointless

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<v Speaker 1>activities or left without meaningful help. So what do we

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<v Speaker 1>already know about the flaws in the way this operates.

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<v Speaker 2>Well, you could go back into any year and pull

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<v Speaker 2>up the news stories from that year and there'd inevitably

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<v Speaker 2>be some scandal involved with the system.

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<v Speaker 6>There are credible claims of widespread rauting by some agencies,

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<v Speaker 6>but the relevant minister has declined to discuss the problems

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<v Speaker 6>with us. We have now completed an investigation with the

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<v Speaker 6>help of whistleblowers, which suggests that significant fraud criminality is

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<v Speaker 6>going on.

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<v Speaker 2>So back in twenty fifteen, the federal government had to

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<v Speaker 2>claw back forty one million dollars worth of false clas

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<v Speaker 2>aims that some private job agencies had been submitting over

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<v Speaker 2>a three year period forgery, manipulation of records and the

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<v Speaker 2>lodgment of inflated claims for fees were really widespread.

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<v Speaker 7>Dozens of ors claims have been examined by four Corners,

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<v Speaker 7>and more than seventy percent of them relied on suspect paperwork,

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<v Speaker 7>with clients repeatedly disputing the company's records. Hours were bumped up,

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<v Speaker 7>wages were inflated, and in several cases their claim forms

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<v Speaker 7>appeared to have been forged.

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<v Speaker 2>Also, there is the work for the doll scheme that's

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<v Speaker 2>also had massive problems. Ten years ago, an eighteen year

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<v Speaker 2>old boy in Queensland died on a work for the

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<v Speaker 2>doll site. He had fallen off the tray of a

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<v Speaker 2>tractor who went over speed bump and he fell off

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<v Speaker 2>and hid.

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<v Speaker 8>His had a young job seeker, mister Joshua park Thing,

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<v Speaker 8>who was a participant. Any workplace accident is a tragedy. Unfortunately,

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<v Speaker 8>they occur usually through the entire accident and no fault

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<v Speaker 8>of any particular person. And I think in the case

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<v Speaker 8>of this accident, it was a situation that could have

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<v Speaker 8>easily been avoided but wasn't avoided on this occasion, and

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<v Speaker 8>this man's life has been taken, which is a great tragedy.

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<v Speaker 3>Now.

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<v Speaker 2>The investigation into this death then led to this massive

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<v Speaker 2>public discussion about how unsupervised a lot of these work

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<v Speaker 2>for the doll sites are, how little training is given

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<v Speaker 2>to the kids. Many of them are kids, they're only

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<v Speaker 2>just leaving school and getting into the workforce, people in

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<v Speaker 2>their late twenties and early thirties. They're given very little

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<v Speaker 2>training before entering these job sites, and that job sites themselves,

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<v Speaker 2>not only are they unsupervised, but they're in pretty.

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<v Speaker 3>Dangerous conditions under the hot sun.

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<v Speaker 2>All of these types of things, I mean, the more

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<v Speaker 2>you look into it, you will find those types of examples.

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<v Speaker 1>Everywhere coming up are political donations from these companies muddying

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<v Speaker 1>the waters.

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<v Speaker 4>Today, I'm announcing that the Albanese Labor government is embarking

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<v Speaker 4>on the biggest reform in employment services in over thirty years.

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<v Speaker 4>This is a major positive step for the over one

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<v Speaker 4>million Australians who access this system each year by ensuring

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<v Speaker 4>that they get the right support at the right time.

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<v Speaker 1>So Garetha Labor government has promised now that we'll see

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<v Speaker 1>the biggest overhaul to the unemployment system in three decades.

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<v Speaker 1>What is the minister said about the system about how

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<v Speaker 1>broken they think it is?

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<v Speaker 2>Right now, they've been frank they say the system is broken.

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<v Speaker 2>When the Albernesi government won the federal election in twenty

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<v Speaker 2>twenty two, it initiated an inquiry into the system. The

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<v Speaker 2>final report of that inquiry was delivered in late twenty

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<v Speaker 2>twenty three and it pointed to all of these problems

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<v Speaker 2>that have played the system for days and said it

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<v Speaker 2>needed an overhaul now. Earlier this year, Amanda Rishworth, who

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<v Speaker 2>is the Federal Employment Minister, she said she wanted to

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<v Speaker 2>build a new employment service to fix the problems that

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<v Speaker 2>have plagued the system for decades. She said it's letting

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<v Speaker 2>too many people fall through the tracks.

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<v Speaker 4>Under Workforce Australia, most participants access support through third party

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<v Speaker 4>employment service providers. These providers should be delivering flexible, personalized support,

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<v Speaker 4>but the overwhelming evidence shows us that for too many

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<v Speaker 4>people this is simply not the case.

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<v Speaker 3>She said.

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<v Speaker 2>These private job agencies are too focused on getting people

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<v Speaker 2>into work who are pretty easy to get into work,

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<v Speaker 2>and it's parking the long term unemployed, the ones with

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<v Speaker 2>more complex needs. It's parking them on their books because

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<v Speaker 2>they just can't churn them through the system and make

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<v Speaker 2>money from them. So we have to find a way

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<v Speaker 2>to really help the people who have been let down

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<v Speaker 2>by the system. But when you look closely at the detail,

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<v Speaker 2>it doesn't look like the suggestion she's making to change

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<v Speaker 2>your system will be that big.

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<v Speaker 1>So what is labor actually promising to change.

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<v Speaker 2>Well, they want to introduce a three tier system for

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<v Speaker 2>people who are newly unemployed. They will say, in this

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<v Speaker 2>system there will be online and brief intervention services provided

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<v Speaker 2>by government website. But then for the second tier of people,

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<v Speaker 2>this is for people who are mildly disconnected from the

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<v Speaker 2>lab force, maybe they have a bit of a hole

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<v Speaker 2>in their employment history. This is where private providers will

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<v Speaker 2>still play a role. And then Tier three will be

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<v Speaker 2>for the long term unemployed, and that's where a lot

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<v Speaker 2>of resources will be poured into not for profits mental

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<v Speaker 2>health services, real intensive care to really get people back

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<v Speaker 2>and ready into the workforce. So you have that three

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<v Speaker 2>tiered system. It's just that when you go, okay, well,

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<v Speaker 2>how different are the incentives that are going to be

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<v Speaker 2>in the system compared to the one that has been

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<v Speaker 2>there for twenty years. I mean, they're still going to

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<v Speaker 2>have mutublications despite what experts see. They're still going to

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<v Speaker 2>have work for the doll despite what experts say, and

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<v Speaker 2>the role for the for profit systems is still going

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<v Speaker 2>to be big.

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<v Speaker 4>But what I'm focused on in this new system and

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<v Speaker 4>making sure the incentives are right underneath this system is

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<v Speaker 4>delivering high quality services, and we need the people that

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<v Speaker 4>can do that best delivering.

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<v Speaker 2>That, so those providers aren't up to scratch.

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<v Speaker 9>Well that tier.

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<v Speaker 4>Well, what I'm saying is that we need to get

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<v Speaker 4>the incentives right first and how we pay providers, but secondly,

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<v Speaker 4>we want to see the best people doing the job.

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<v Speaker 2>I'm not going and you say, okay, well, how are

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<v Speaker 2>you going to get the for profit providers to find

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<v Speaker 2>work for the unemployee? She says, oh, well, we can

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<v Speaker 2>use some incentive payments, bonus payments, progress payments, outcome payments,

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<v Speaker 2>build these incentives into the contracts. But those incentives have

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<v Speaker 2>been there from the beginning, so just it's essentially going

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<v Speaker 2>to become a matter of trying to come up with

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<v Speaker 2>the right combination of incentives to get private providers to

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<v Speaker 2>start really looking out for the welfare of the unemployed

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<v Speaker 2>and not really be so profit focused.

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<v Speaker 1>I mean, this report was very clear in its recommendations

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<v Speaker 1>around this, around no longer having private providers at the

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<v Speaker 1>center of this system. There was also a parliamentary inquiry

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<v Speaker 1>back in twenty twenty three that said that employment services

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<v Speaker 1>should be fundamentally rebuilt with a strong public provider at

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<v Speaker 1>its core. So without changing the foundations of the system,

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<v Speaker 1>how much can the government really fix the problem?

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<v Speaker 2>Well, that's a great question. I mean, it's the million

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<v Speaker 2>dollar question. The thought of tearing down the system and

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<v Speaker 2>rebuilding another publicly run service like the old Commonwealth Employment Service,

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<v Speaker 2>that task probably seems far too big, too expensive, and

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<v Speaker 2>too risky. So they'd rather persist with the current system,

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<v Speaker 2>try to make it better somehow. So, I mean, they've

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<v Speaker 2>been trying to make it better for decades by tinkering

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<v Speaker 2>with this type of stuff. If they're going to still

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<v Speaker 2>be keeping so many of the core elements of the

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<v Speaker 2>system in place, then you can only wish them well.

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<v Speaker 1>Yeah, I mean, what would they have to do differently

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<v Speaker 1>to avoid the same outcomes.

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<v Speaker 2>Well, in this Sectar report, it made four recommendations. Firstly,

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<v Speaker 2>it said that employment services should be entirely returned to

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<v Speaker 2>the public sector, So get rid of for profit agencies.

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<v Speaker 2>The chances of this government doing that are pretty low,

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<v Speaker 2>but let's just assume that it does so. Sigtar says,

0:13:40.640 --> 0:13:43.520
<v Speaker 2>get rid of all profit agencies, bring it back in house.

0:13:43.640 --> 0:13:46.320
<v Speaker 2>It should be entirely returned to the public sector. In

0:13:46.360 --> 0:13:50.760
<v Speaker 2>the meantime, it says the procurement of these services must

0:13:50.800 --> 0:13:55.920
<v Speaker 2>be strengthened so that government must enforce stricter transparency standards

0:13:55.920 --> 0:14:00.840
<v Speaker 2>for contractors in the current system. Because these contracts not transparent,

0:14:01.240 --> 0:14:04.440
<v Speaker 2>what's happening inside some of these for profit companies is

0:14:04.559 --> 0:14:07.360
<v Speaker 2>very hard to find out. SIKTA spent a lot of

0:14:07.400 --> 0:14:10.240
<v Speaker 2>time trying to figure out how profits were potentially being

0:14:10.240 --> 0:14:13.520
<v Speaker 2>shifted overseas or how tax heavens were being used. It

0:14:13.640 --> 0:14:17.600
<v Speaker 2>found some of the famous for profit agencies hadn't even

0:14:17.679 --> 0:14:21.120
<v Speaker 2>filed the last few years of financial reports with asik

0:14:21.320 --> 0:14:23.880
<v Speaker 2>So the transparency of the sector needs to be improved

0:14:23.920 --> 0:14:28.200
<v Speaker 2>and the procurement needs to be improved. But in the

0:14:28.280 --> 0:14:32.000
<v Speaker 2>third recommendation, it's said that the providers need to be

0:14:32.040 --> 0:14:36.280
<v Speaker 2>properly scrutinized across all funding streams. And what that means

0:14:36.440 --> 0:14:39.640
<v Speaker 2>is that some of these providers, they're not only contracted

0:14:39.680 --> 0:14:43.760
<v Speaker 2>to provide employment services, they're also contracted to provide age

0:14:43.760 --> 0:14:47.880
<v Speaker 2>care services or disability care services, and if they have

0:14:48.000 --> 0:14:52.080
<v Speaker 2>been found to be behaving poorly in one of those sectors,

0:14:52.360 --> 0:14:54.360
<v Speaker 2>then they shouldn't be getting contracts in any of them.

0:14:54.960 --> 0:14:59.680
<v Speaker 2>And its fourth recommendation was that political donations by government

0:14:59.680 --> 0:15:03.120
<v Speaker 2>contras actors should be banned because it's just the risk.

0:15:03.000 --> 0:15:05.360
<v Speaker 3>To integrity or perceived integrity of the system.

0:15:05.440 --> 0:15:09.040
<v Speaker 1>It's too high, right, And that last recommendation that is

0:15:09.080 --> 0:15:13.880
<v Speaker 1>an attempt to stop these companies using the profits they're

0:15:13.920 --> 0:15:19.440
<v Speaker 1>making from these contracts to donate to political parties. Tell

0:15:19.480 --> 0:15:20.400
<v Speaker 1>me more about that.

0:15:20.400 --> 0:15:20.840
<v Speaker 3>That's right.

0:15:20.920 --> 0:15:23.920
<v Speaker 2>Well, as we really like to do in Australia, we've

0:15:23.920 --> 0:15:27.240
<v Speaker 2>privatized a lot of these public services and now these

0:15:27.360 --> 0:15:30.800
<v Speaker 2>huge billion dollar contracts are awarded to private companies to

0:15:30.840 --> 0:15:34.440
<v Speaker 2>deliver what are essential services which used to be publicly funded.

0:15:35.320 --> 0:15:39.479
<v Speaker 2>Those private companies are very reliant on those government contracts

0:15:40.320 --> 0:15:43.040
<v Speaker 2>for their revenues and for their profits for their shareholders,

0:15:43.520 --> 0:15:46.200
<v Speaker 2>and they would like to keep winning contracts, and so

0:15:46.320 --> 0:15:48.400
<v Speaker 2>part of the thing is you start seeing a lot

0:15:48.400 --> 0:15:52.120
<v Speaker 2>of large political donations from these for profit companies to

0:15:52.200 --> 0:15:56.640
<v Speaker 2>the major political parties in Australia Labor, Liberal, LMP and Queensland.

0:15:56.960 --> 0:15:58.160
<v Speaker 3>It's just part of the system.

0:15:58.200 --> 0:16:00.120
<v Speaker 2>I mean, we see it everywhere, especially where they're that

0:16:00.160 --> 0:16:02.560
<v Speaker 2>where all these industries are dominated by a couple of

0:16:02.600 --> 0:16:03.280
<v Speaker 2>big players.

0:16:03.800 --> 0:16:05.160
<v Speaker 3>Political donations of life.

0:16:09.040 --> 0:16:12.000
<v Speaker 2>I mean, I don't know if you remember Eddie Groves

0:16:12.040 --> 0:16:14.720
<v Speaker 2>and the childcare industry back at the turn of the century.

0:16:15.360 --> 0:16:17.040
<v Speaker 3>But he famously.

0:16:16.760 --> 0:16:20.520
<v Speaker 2>Joined Australia's rich list for under forties because he had

0:16:20.560 --> 0:16:25.760
<v Speaker 2>become incredibly wealthy from getting government contracts of childcare services.

0:16:26.280 --> 0:16:30.160
<v Speaker 2>And he was one of the original guys who figured

0:16:30.200 --> 0:16:35.120
<v Speaker 2>out that under these privatized scheme for essential services, government

0:16:35.160 --> 0:16:38.880
<v Speaker 2>contracts can be very lucrative. You lock them down and

0:16:38.920 --> 0:16:43.280
<v Speaker 2>then you pursue a system of really aggressive expansion and

0:16:43.400 --> 0:16:46.760
<v Speaker 2>absorption of other countries, eating up the smaller players, and

0:16:46.800 --> 0:16:49.040
<v Speaker 2>pretty soon you'll have a multi billion dollar company and

0:16:49.080 --> 0:16:52.560
<v Speaker 2>you'll be on the rich list. That all came crashing down,

0:16:53.240 --> 0:16:56.640
<v Speaker 2>but the lessons from that time for some of these

0:16:56.680 --> 0:17:00.280
<v Speaker 2>other private equity providers, they saw that if you're a

0:17:00.280 --> 0:17:03.280
<v Speaker 2>smarter with it, then government contracts can be a lucrative

0:17:03.360 --> 0:17:07.880
<v Speaker 2>revenue stream.

0:17:07.960 --> 0:17:09.840
<v Speaker 1>Welgar, I thank you so much for your time.

0:17:10.040 --> 0:17:10.920
<v Speaker 3>Norries, thank you.

0:17:27.040 --> 0:17:30.719
<v Speaker 9>Also in the news, Labor MP Ed Husick has been

0:17:30.760 --> 0:17:33.960
<v Speaker 9>taken to hospital with fractures and concussion after his car

0:17:34.080 --> 0:17:36.320
<v Speaker 9>was involved in an accident with a truck at another

0:17:36.359 --> 0:17:39.159
<v Speaker 9>car in Sydney. Usick was treated and later released from

0:17:39.160 --> 0:17:41.879
<v Speaker 9>Westmeat Hospital. He'll take a short period of leave from

0:17:41.920 --> 0:17:46.040
<v Speaker 9>his parliamentary duties while he recovers and out of the

0:17:46.040 --> 0:17:49.240
<v Speaker 9>world's biggest doll companies have collected more than ninety billion

0:17:49.280 --> 0:17:52.000
<v Speaker 9>dollars in the month since the Iran war began. That's

0:17:52.040 --> 0:17:53.720
<v Speaker 9>almost seven hundred thousand dollars.

0:17:53.800 --> 0:17:54.320
<v Speaker 2>A minute.

0:17:54.960 --> 0:17:58.080
<v Speaker 9>Guardian analysis found the companies have used the disruption to

0:17:58.119 --> 0:18:01.560
<v Speaker 9>fossil fuel supplies to all my double their combined profits.

0:18:02.000 --> 0:18:04.600
<v Speaker 9>Campaigners have warned their households have been left paying the

0:18:04.640 --> 0:18:07.880
<v Speaker 9>price in the form of high bills and climate chaos.

0:18:08.920 --> 0:18:11.840
<v Speaker 9>I'm Daniel James. Thanks for listening to seven AM. We'll

0:18:11.840 --> 0:18:12.560
<v Speaker 9>be back tomorrow.