Speaker 1: I'm Ruby Jones and you're listening to seven AM. Almost
Speaker 1: thirty years ago, the Howard government shut down Australia's public
Speaker 1: Employment Service and privatized the system that helps unemployed people
Speaker 1: find work. Since then, repeat inquiries have found the system
Speaker 1: is failing the people who need it, while the company's
Speaker 1: paid to run it raking huge profits. Now the Abaneze
Speaker 1: government has admitted the system isn't working and promised its
Speaker 1: biggest overhaul in decades, but Labour says these private providers
Speaker 1: will remain part of the system, even as a new
Speaker 1: report has followed the billions of dollars flowing through the industry. Today,
Speaker 1: ABC Business and Economics reporter Gareth Hutchins on how helping
Speaker 1: unemployed Australians became a massive money spinner and whether Labour
Speaker 1: can fix the system while leaving private companies at its center.
Speaker 1: It's Friday, August seven, so Gareth, let's begin with this
Speaker 1: new report from Siktar, the global corporate tax research firm.
Speaker 1: It examined the private companies that are paid to help
Speaker 1: people on job seeker to find work. To begin with,
Speaker 1: just how profitable is this entire industry?
Speaker 2: So os tender data shows that the value of the
Speaker 2: contracts that are out there at the moment for employment services,
Speaker 2: it's worth five point five billion dollars. Forty five providers
Speaker 2: have been awarded those contracts. Now, the top twenty five
Speaker 2: of those providers take the line share of those contracts,
Speaker 2: pretty much all of it. When you dig a little
Speaker 2: deeper into it, you'll find that nine for profit providers
Speaker 2: have been awarded contracts worth two point one billion, so
Speaker 2: it's about forty percent of that five point five billion
Speaker 2: is going to nine for profit providers. The two largest
Speaker 2: of those are private equity controlled multinationals. The two others
Speaker 2: are quite famous.
Speaker 3: I'm Tangent, the national apperatious manager for Job Straight Wide.
Speaker 4: I'm so excited now as today our success and we
Speaker 4: need twenty six sides under the Australia contract.
Speaker 3: They've made their owners multimillionaires in Australia.
Speaker 5: Serena Russell Institute is a strange leading provider of the
Speaker 5: Career Transition Systems program. Our program mentors up skills and
Speaker 5: supports you back into the workforce.
Speaker 2: So it's a pretty lucrative, profitable venture for some of
Speaker 2: these companies. But they're also using things like offshore profit
Speaker 2: shifting they have domiciled in tax havens, say over in Jersey.
Speaker 2: In the US, you have dividend payouts to shareholders, big
Speaker 2: profits sent to the executives.
Speaker 3: Of the companies that own it.
Speaker 2: So they have really developed ways of extracting more profits
Speaker 2: from the system. So it's hugely football in that way.
Speaker 2: And the SIGTAR report asks the question are we really
Speaker 2: getting value for money given its government money which is
Speaker 2: paid for by tax payers. So Australians getting value for money?
Speaker 2: And is the system serving the job seekers themselves? Is
Speaker 2: helping them find employment?
Speaker 1: Okay, so could you explain to me how the business
Speaker 1: model works and what it is that these private providers
Speaker 1: are supposed to be delivering for that money.
Speaker 2: The business model is that you're awarded a contract to
Speaker 2: find work for unemployed Australians. Now, within the system, there
Speaker 2: are for profit agencies that are not for profit agencies
Speaker 2: and there are a few government run job hubs. But
Speaker 2: for the for profit agencies think about what their actual
Speaker 2: product is. Their product is unemployed people. So when unemployment
Speaker 2: is high, it's actually good for business because they'll get
Speaker 2: more unemployed.
Speaker 3: People on their books.
Speaker 2: And when someone comes on your books, you'll get a
Speaker 2: payment you can get of progress payments, you can get
Speaker 2: job placement payments, you can get bonuses. These things are
Speaker 2: all there to incentivize you to find work. For these people,
Speaker 2: so they're meant to be there to get unemployed Australians
Speaker 2: into work, but they're also there to enforce mutual obligations.
Speaker 2: So some of those mutual obligations could be things like
Speaker 2: you have to submit a certain number of job applications
Speaker 2: every week, you have to go to a certain number
Speaker 2: of job interviews a week. You may have to go
Speaker 2: to a skills and training program to become more employable
Speaker 2: and more presentable. Now, the problem is that these are
Speaker 2: private companies that have the power to say yes, you
Speaker 2: have met your mutual obligations or no, you haven't, and
Speaker 2: there are numerous reports of them using this to punish people.
Speaker 2: So if they say that you have not met your
Speaker 2: mutual obligations, they can trigger a suspension of your unemployment benefits,
Speaker 2: which can be disastrous for people that really should not
Speaker 2: be in the power of these for profit companies. It's
Speaker 2: been a major tension in the system, and it's been
Speaker 2: there from the beginning.
Speaker 1: Let's talk a little more about the impact that we
Speaker 1: know this has had because there's been investigations over the
Speaker 1: years that have uncovered false payment claims. There's been inquiries
Speaker 1: that have shown how people are pushed through these pointless
Speaker 1: activities or left without meaningful help. So what do we
Speaker 1: already know about the flaws in the way this operates.
Speaker 2: Well, you could go back into any year and pull
Speaker 2: up the news stories from that year and there'd inevitably
Speaker 2: be some scandal involved with the system.
Speaker 6: There are credible claims of widespread rauting by some agencies,
Speaker 6: but the relevant minister has declined to discuss the problems
Speaker 6: with us. We have now completed an investigation with the
Speaker 6: help of whistleblowers, which suggests that significant fraud criminality is
Speaker 6: going on.
Speaker 2: So back in twenty fifteen, the federal government had to
Speaker 2: claw back forty one million dollars worth of false clas
Speaker 2: aims that some private job agencies had been submitting over
Speaker 2: a three year period forgery, manipulation of records and the
Speaker 2: lodgment of inflated claims for fees were really widespread.
Speaker 7: Dozens of ors claims have been examined by four Corners,
Speaker 7: and more than seventy percent of them relied on suspect paperwork,
Speaker 7: with clients repeatedly disputing the company's records. Hours were bumped up,
Speaker 7: wages were inflated, and in several cases their claim forms
Speaker 7: appeared to have been forged.
Speaker 2: Also, there is the work for the doll scheme that's
Speaker 2: also had massive problems. Ten years ago, an eighteen year
Speaker 2: old boy in Queensland died on a work for the
Speaker 2: doll site. He had fallen off the tray of a
Speaker 2: tractor who went over speed bump and he fell off
Speaker 2: and hid.
Speaker 8: His had a young job seeker, mister Joshua park Thing,
Speaker 8: who was a participant. Any workplace accident is a tragedy. Unfortunately,
Speaker 8: they occur usually through the entire accident and no fault
Speaker 8: of any particular person. And I think in the case
Speaker 8: of this accident, it was a situation that could have
Speaker 8: easily been avoided but wasn't avoided on this occasion, and
Speaker 8: this man's life has been taken, which is a great tragedy.
Speaker 3: Now.
Speaker 2: The investigation into this death then led to this massive
Speaker 2: public discussion about how unsupervised a lot of these work
Speaker 2: for the doll sites are, how little training is given
Speaker 2: to the kids. Many of them are kids, they're only
Speaker 2: just leaving school and getting into the workforce, people in
Speaker 2: their late twenties and early thirties. They're given very little
Speaker 2: training before entering these job sites, and that job sites themselves,
Speaker 2: not only are they unsupervised, but they're in pretty.
Speaker 3: Dangerous conditions under the hot sun.
Speaker 2: All of these types of things, I mean, the more
Speaker 2: you look into it, you will find those types of examples.
Speaker 1: Everywhere coming up are political donations from these companies muddying
Speaker 1: the waters.
Speaker 4: Today, I'm announcing that the Albanese Labor government is embarking
Speaker 4: on the biggest reform in employment services in over thirty years.
Speaker 4: This is a major positive step for the over one
Speaker 4: million Australians who access this system each year by ensuring
Speaker 4: that they get the right support at the right time.
Speaker 1: So Garetha Labor government has promised now that we'll see
Speaker 1: the biggest overhaul to the unemployment system in three decades.
Speaker 1: What is the minister said about the system about how
Speaker 1: broken they think it is?
Speaker 2: Right now, they've been frank they say the system is broken.
Speaker 2: When the Albernesi government won the federal election in twenty
Speaker 2: twenty two, it initiated an inquiry into the system. The
Speaker 2: final report of that inquiry was delivered in late twenty
Speaker 2: twenty three and it pointed to all of these problems
Speaker 2: that have played the system for days and said it
Speaker 2: needed an overhaul now. Earlier this year, Amanda Rishworth, who
Speaker 2: is the Federal Employment Minister, she said she wanted to
Speaker 2: build a new employment service to fix the problems that
Speaker 2: have plagued the system for decades. She said it's letting
Speaker 2: too many people fall through the tracks.
Speaker 4: Under Workforce Australia, most participants access support through third party
Speaker 4: employment service providers. These providers should be delivering flexible, personalized support,
Speaker 4: but the overwhelming evidence shows us that for too many
Speaker 4: people this is simply not the case.
Speaker 3: She said.
Speaker 2: These private job agencies are too focused on getting people
Speaker 2: into work who are pretty easy to get into work,
Speaker 2: and it's parking the long term unemployed, the ones with
Speaker 2: more complex needs. It's parking them on their books because
Speaker 2: they just can't churn them through the system and make
Speaker 2: money from them. So we have to find a way
Speaker 2: to really help the people who have been let down
Speaker 2: by the system. But when you look closely at the detail,
Speaker 2: it doesn't look like the suggestion she's making to change
Speaker 2: your system will be that big.
Speaker 1: So what is labor actually promising to change.
Speaker 2: Well, they want to introduce a three tier system for
Speaker 2: people who are newly unemployed. They will say, in this
Speaker 2: system there will be online and brief intervention services provided
Speaker 2: by government website. But then for the second tier of people,
Speaker 2: this is for people who are mildly disconnected from the
Speaker 2: lab force, maybe they have a bit of a hole
Speaker 2: in their employment history. This is where private providers will
Speaker 2: still play a role. And then Tier three will be
Speaker 2: for the long term unemployed, and that's where a lot
Speaker 2: of resources will be poured into not for profits mental
Speaker 2: health services, real intensive care to really get people back
Speaker 2: and ready into the workforce. So you have that three
Speaker 2: tiered system. It's just that when you go, okay, well,
Speaker 2: how different are the incentives that are going to be
Speaker 2: in the system compared to the one that has been
Speaker 2: there for twenty years. I mean, they're still going to
Speaker 2: have mutublications despite what experts see. They're still going to
Speaker 2: have work for the doll despite what experts say, and
Speaker 2: the role for the for profit systems is still going
Speaker 2: to be big.
Speaker 4: But what I'm focused on in this new system and
Speaker 4: making sure the incentives are right underneath this system is
Speaker 4: delivering high quality services, and we need the people that
Speaker 4: can do that best delivering.
Speaker 2: That, so those providers aren't up to scratch.
Speaker 9: Well that tier.
Speaker 4: Well, what I'm saying is that we need to get
Speaker 4: the incentives right first and how we pay providers, but secondly,
Speaker 4: we want to see the best people doing the job.
Speaker 2: I'm not going and you say, okay, well, how are
Speaker 2: you going to get the for profit providers to find
Speaker 2: work for the unemployee? She says, oh, well, we can
Speaker 2: use some incentive payments, bonus payments, progress payments, outcome payments,
Speaker 2: build these incentives into the contracts. But those incentives have
Speaker 2: been there from the beginning, so just it's essentially going
Speaker 2: to become a matter of trying to come up with
Speaker 2: the right combination of incentives to get private providers to
Speaker 2: start really looking out for the welfare of the unemployed
Speaker 2: and not really be so profit focused.
Speaker 1: I mean, this report was very clear in its recommendations
Speaker 1: around this, around no longer having private providers at the
Speaker 1: center of this system. There was also a parliamentary inquiry
Speaker 1: back in twenty twenty three that said that employment services
Speaker 1: should be fundamentally rebuilt with a strong public provider at
Speaker 1: its core. So without changing the foundations of the system,
Speaker 1: how much can the government really fix the problem?
Speaker 2: Well, that's a great question. I mean, it's the million
Speaker 2: dollar question. The thought of tearing down the system and
Speaker 2: rebuilding another publicly run service like the old Commonwealth Employment Service,
Speaker 2: that task probably seems far too big, too expensive, and
Speaker 2: too risky. So they'd rather persist with the current system,
Speaker 2: try to make it better somehow. So, I mean, they've
Speaker 2: been trying to make it better for decades by tinkering
Speaker 2: with this type of stuff. If they're going to still
Speaker 2: be keeping so many of the core elements of the
Speaker 2: system in place, then you can only wish them well.
Speaker 1: Yeah, I mean, what would they have to do differently
Speaker 1: to avoid the same outcomes.
Speaker 2: Well, in this Sectar report, it made four recommendations. Firstly,
Speaker 2: it said that employment services should be entirely returned to
Speaker 2: the public sector, So get rid of for profit agencies.
Speaker 2: The chances of this government doing that are pretty low,
Speaker 2: but let's just assume that it does so. Sigtar says,
Speaker 2: get rid of all profit agencies, bring it back in house.
Speaker 2: It should be entirely returned to the public sector. In
Speaker 2: the meantime, it says the procurement of these services must
Speaker 2: be strengthened so that government must enforce stricter transparency standards
Speaker 2: for contractors in the current system. Because these contracts not transparent,
Speaker 2: what's happening inside some of these for profit companies is
Speaker 2: very hard to find out. SIKTA spent a lot of
Speaker 2: time trying to figure out how profits were potentially being
Speaker 2: shifted overseas or how tax heavens were being used. It
Speaker 2: found some of the famous for profit agencies hadn't even
Speaker 2: filed the last few years of financial reports with asik
Speaker 2: So the transparency of the sector needs to be improved
Speaker 2: and the procurement needs to be improved. But in the
Speaker 2: third recommendation, it's said that the providers need to be
Speaker 2: properly scrutinized across all funding streams. And what that means
Speaker 2: is that some of these providers, they're not only contracted
Speaker 2: to provide employment services, they're also contracted to provide age
Speaker 2: care services or disability care services, and if they have
Speaker 2: been found to be behaving poorly in one of those sectors,
Speaker 2: then they shouldn't be getting contracts in any of them.
Speaker 2: And its fourth recommendation was that political donations by government
Speaker 2: contras actors should be banned because it's just the risk.
Speaker 3: To integrity or perceived integrity of the system.
Speaker 1: It's too high, right, And that last recommendation that is
Speaker 1: an attempt to stop these companies using the profits they're
Speaker 1: making from these contracts to donate to political parties. Tell
Speaker 1: me more about that.
Speaker 3: That's right.
Speaker 2: Well, as we really like to do in Australia, we've
Speaker 2: privatized a lot of these public services and now these
Speaker 2: huge billion dollar contracts are awarded to private companies to
Speaker 2: deliver what are essential services which used to be publicly funded.
Speaker 2: Those private companies are very reliant on those government contracts
Speaker 2: for their revenues and for their profits for their shareholders,
Speaker 2: and they would like to keep winning contracts, and so
Speaker 2: part of the thing is you start seeing a lot
Speaker 2: of large political donations from these for profit companies to
Speaker 2: the major political parties in Australia Labor, Liberal, LMP and Queensland.
Speaker 3: It's just part of the system.
Speaker 2: I mean, we see it everywhere, especially where they're that
Speaker 2: where all these industries are dominated by a couple of
Speaker 2: big players.
Speaker 3: Political donations of life.
Speaker 2: I mean, I don't know if you remember Eddie Groves
Speaker 2: and the childcare industry back at the turn of the century.
Speaker 3: But he famously.
Speaker 2: Joined Australia's rich list for under forties because he had
Speaker 2: become incredibly wealthy from getting government contracts of childcare services.
Speaker 2: And he was one of the original guys who figured
Speaker 2: out that under these privatized scheme for essential services, government
Speaker 2: contracts can be very lucrative. You lock them down and
Speaker 2: then you pursue a system of really aggressive expansion and
Speaker 2: absorption of other countries, eating up the smaller players, and
Speaker 2: pretty soon you'll have a multi billion dollar company and
Speaker 2: you'll be on the rich list. That all came crashing down,
Speaker 2: but the lessons from that time for some of these
Speaker 2: other private equity providers, they saw that if you're a
Speaker 2: smarter with it, then government contracts can be a lucrative
Speaker 2: revenue stream.
Speaker 1: Welgar, I thank you so much for your time.
Speaker 3: Norries, thank you.
Speaker 9: Also in the news, Labor MP Ed Husick has been
Speaker 9: taken to hospital with fractures and concussion after his car
Speaker 9: was involved in an accident with a truck at another
Speaker 9: car in Sydney. Usick was treated and later released from
Speaker 9: Westmeat Hospital. He'll take a short period of leave from
Speaker 9: his parliamentary duties while he recovers and out of the
Speaker 9: world's biggest doll companies have collected more than ninety billion
Speaker 9: dollars in the month since the Iran war began. That's
Speaker 9: almost seven hundred thousand dollars.
Speaker 2: A minute.
Speaker 9: Guardian analysis found the companies have used the disruption to
Speaker 9: fossil fuel supplies to all my double their combined profits.
Speaker 9: Campaigners have warned their households have been left paying the
Speaker 9: price in the form of high bills and climate chaos.
Speaker 9: I'm Daniel James. Thanks for listening to seven AM. We'll
Speaker 9: be back tomorrow.