Address to the 2014 National Conference of the National Employment Services Association

It’s a great pleasure to be with you today at the NESA National Conference in Melbourne. I am sure that the next two days will be very thought provoking and helpful for you. I was interested to note the theme of your conference is powering the future of employment. This is something I can certainly relate to. Since becoming the Assistant Minister for Employment just over 10 months ago, I’ve given a great deal of thought to the future of employment and, more specifically, to the future of employment services.

During that time, I have met Sally Sinclair and the team from NESA on a number of occasions to hear your ideas for the future of the industry. I have appreciated Sally’s honest and practical advice on how the Government could better inject new energy into employment services for the benefit of job seekers and employers. I have also had the pleasure of meeting with many of you and seeing your services in action. Your feedback and ideas have certainly informed the Government’s thinking about the future of employment and employment services.

This morning, the Minister for Employment, Eric Abetz, and I announced the new employment services model for 2015-2020 and the proposed purchasing arrangements. I am delighted to join you here today to explain, in person, the Government’s approach and our expectations for employment services into the future. I trust you will recognise in the new model many of the suggestions that NESA has made over the years.

Let me say at the outset that the Government recognises that your work is difficult. Job seekers may not always be as keen and cooperative as they could be, and employers may be somewhat reluctant to engage and give you some of your job seekers a chance at a job. Your job takes skill, perseverance and commitment.

However, during my consultations I have been repeatedly told the current model is broken and it is time for a change. The current arrangements are acting as a handbrake to your efforts in achieving stronger performance. Job seekers have told me that they’re not receiving the right sort of support and are often sent to training for training’s sake. Employers complain that many of the candidates coming forward lack the basic skills and behaviours that they need in their staff. And you, the employment service providers, report that you are so bogged down in red tape that you have little time to do what you do best, and that is helping people find and keep a job.

The Government has made a start in lifting your red-tape burden, in particular, by changing the rules around documentary evidence required for employment outcomes. However, there is still more work to be done on that front. The current system quite clearly is not meeting the expectations of this nation and not delivering. It’s time for a fresh approach that reinvigorates employment services and sets new expectations and standards for the benefit of job seekers and employers. The new model quite deliberately includes new opportunities, incentives and rewards so you can power on in your work.

This morning, I’d like to talk you about what the Government is looking for from the employment service providers and the key features of the new model.

The Australian Government is committed to building a strong and prosperous economy for a safe and secure Australia. As part of our Economic Action Plan, the Government is committed to helping people into work and increasing workforce participation. As a nation, we need as many people as possible in work and contributing to our economy so we can afford the types of public services that we need and want into the future.

Apart from the economic imperative, there is also a social imperative. We cannot let people of working age who have the capacity to work drift into the despair of a life on welfare. As you well know, work offers both financial and emotional rewards. It is important that as many Australians as possible are sharing in these rewards and building the life they would like for themselves and their families.

For these reasons, Australia needs a world-class employment services system that delivers high-quality services to job seekers and which meets the needs of employers. Our employment services system needs to be more responsive, more flexible and focused on results. That’s why the Government is investing $5.1 billion over the next three years to reinvigorate employment services.

The key objective of the new model is simple: to help more job seekers into work. To achieve this goal, the Government is offering a new mix of incentives and services for job seekers, better support for employers, and improved operating environments for job service providers. The reforms seek to make the employment services system the first choice for recruitment for more employers.

Our reforms are based on the following overarching principles. Firstly, the Government believes it is vitally important that job seekers remain active, engaged and accountable whilst looking for work. Passive welfare is not an option for job seekers who can work. It is also essential that the system rewards performance rather than process, and the key to stronger performance is better meeting the needs of employers.

Payments need to reward and reinforce a demand-led approach. Additionally, the system needs to represent value for taxpayers’ money. Resources must be well targeted and directed to those job seekers who need the most support to find and keep a job. And, finally, the new contract should better balance flexibility and accountability so that you, our providers, can deliver on the ground.

Let me elaborate. The Government is not prepared to let job seekers drift into a life of welfare dependency. It is important that job seekers remain active and engaged while looking for work and for this reason the mutual obligation framework has been simplified and extended. Job seekers will be required to actively look for work and do all they can to improve their chances of getting a job.

Most job seekers will be required to look for up to 40 jobs per month. Job seekers will be encouraged to look beyond their local area if needed, and take advantage of the Government’s Relocation Assistance if jobs are not available in their local area. New online and self-help services will also assist job seekers with these tasks. Most job seekers under 50 years of age will also be required to participate in Work for the Dole. Work for the Dole provides job seekers with the opportunity to learn new skills and to demonstrate to future employers that they are keen and willing to work.

Most job seekers will participate in Work for the Dole for between 15 and 25 hours per week for six months each year. As a rule, participation requirements are higher for younger and more able job seekers. Work for the Dole will involve a mix of individual and group-based activities. A new Work for the Dole Coordinator will be created in each employment region to source places for participants and work with host organisations and employment providers.

The Government does not believe that mature-aged job seekers should be left to slide into welfare dependency ahead of retirement. For this reason, job seekers aged between 50 and 59 will also have to look for work and undertake appropriate activities for up to 15 hours per week. However, Work for the Dole will not be mandatory for this group.

And, as I recently announced, there will be changes to the job seeker compliance framework to ensure that more job seekers attend their appointments, as you rightly expect. Changes will allow you to more quickly reconnect with those job seekers who fail to keep an appointment and provide a stronger deterrent into the future. This will save you time and effort and promote a more positive behaviour amongst job seekers.

These changes to mutual obligation will ensure that job seekers are provided with appropriate structure and support while they are looking for work and are also more accountable for their actions. There are also clear incentives for employment service providers to deliver high-quality services to job seekers and supply job seekers who better meet the needs of employers.

Overall, there will be less prescription and red tape, so you will have more freedom to tailor services to the unique needs of job seekers and employers. There will be minimum services that you will need to deliver, but also scope for you to define in your tender how you wish to service job seekers and how you wish to deliver outcomes to employers.

Innovative approaches to the delivery of services will be well regarded. You know what will work best on the ground in your labour market and, the Government is prepared to contract with you on that basis. But you will also be accountable for delivering on those commitments. Fees and payments have been constructed to promote a stronger customer focus amongst providers. The current arrangements have distorted perceptions about what is important and led to the rise of ineffective business practices.

There will be a flat administration fee that will be paid in advance each six months to reduce red tape and, as I said earlier and I can’t stress this enough, providers will be rewarded by performance, rather than for process. There is more than $1.1 billion in funding for outcome payments in the new model, and there will be a sliding scale of four-, 12- and 26-week outcome payments.

Those job seekers with the greatest barriers to employment will continue to attract higher levels of outcome payment. It will, however, be more clearly in your financial interest to ensure that you are delivering appropriate post-placement support to all job seekers to better meet the needs of employers.

There are also a new range of wage subsidies to encourage employers to hire, train and retain job seekers. This includes the Restart wage subsidy to support mature-age employment, a subsidy to support young job seekers under 30 and a new subsidy to assist the long-term unemployed. The Employment Pathway Fund has been redesigned to ensure that taxpayer funding is spent on items that directly enhance a job seeker’s prospects of finding and keeping a job. Job seekers who need greater support will continue to receive higher credits from the Employment Pathway Fund.

The rules around training have also been tightened to ensure that job seekers are not being sent to training for training’s sake. There is still funding to help job seekers with appropriate training to become job ready, however, the emphasis is on using new wage subsidies to more tightly link training to a real job. There are new targets for providers with regard to Indigenous job seekers to ensure that more Indigenous Australians are in work and reaping the benefits of work.

These changes will ensure that providers have the tools and flexibility and incentives to deliver a higher standard of service to job seekers, and better prepared job seekers will mean that employers are more likely to turn to your organisation to fill their vacancies time and time again.

The reforms I have outlined are significant and challenging, however, there is no point making these changes if we do not have a vibrant and viable employment services market that has the capability to deliver.

The Government recognises that you are running a business and that the purchasing arrangements need to acknowledge the commercial realities and pressures that you face. For this reason there are a number of reforms that will help you run your own operations more efficiently and more effectively. The Government is committed to reducing red tape and understands the time and cost that goes into a tender bid.

The new employment services contract will be for five years, instead of for three that has been offered in the past. A longer period will provide you with more flexibility in terms of leases and accommodation, encourage staff retention and development and reduce your operating costs over the life of the contract.

The Government also wants a stable employment services market that can deliver for the full term of the contract. In recognition of this longer contract period, there will be a new mid-term price adjustment of 7.8 per cent to ensure that services can be sustained at a standard expected over the full five years.

The Government is also committed to a national network of providers. A new regional loading for providers in selected regions will be introduced in recognition that local labour market conditions vary across Australia. This will help regional providers with some of the additional cost pressures they face in servicing larger areas and achieving outcomes in those markets.

The Government also wants the employment services market to remain commercially viable into the future. For this reason, there are changes to promote economies of scale and encourage joint ventures. There will be 51 new employment regions that are more closely aligned with natural labour markets. These regions have been developed taking into account job seeker populations, employment hubs and transport corridors and (are) more closely aligned to ABS data. This will provide you with more useful labour market information to help you manage your business.

The Government considers that it is important that job seekers are able to access appropriate services no matter where they reside. For this reason, the new model requires providers to service all job seekers in their region. If an organisation does not want to scale up its existing operations or wishes to remain a specialist, subcontracting, partnerships and consortia arrangements will be actively encouraged.

I wish to stress this: the Government is committed to a national network of providers and ensuring job seekers receive the services they need no matter where they live. However, there is definitely scope for joint ventures amongst the providers to achieve this goal. The changes I have outlined will reduce overheads and costs for providers so that you are free to focus on quality servicing and better rewarded for the work that you do.

Ladies and gentlemen, the exposure draft of the new tender for new employment services has been released today and is available on the AusTender website. The draft tender includes details on the purchasing arrangements of five services, for Employment Service Providers, Work for the Dole Coordinators, the NEIS Scheme, Harvest Labour Services and the National Harvest Labour Information Service.

The Department of Employment will be holding information sessions around Australia in coming weeks and the Government is seeking comment on the exposure draft by Monday, 25 August. It is expected that the final tender will be released late in September and the tender will close early in November.

Ladies and gentlemen, the changes I have outlined today represent a major reform to Australia’s employment services system to help more people into work. The new model has been designed with your feedback and ideas in mind. Whilst not every idea can be taken on board, I trust that you will recognise many of the suggestions that you have made over the years to improve employment services in this country.

The model builds on and complements other Government initiatives, including the Job Commitment Bonus, the Green Army programme and trade-support loans. I am confident that this model, in tandem with other programmes that the other Government is implementing to drive a stronger economy, will help achieve our objective of getting more Australians into work.

I wish you all the very best for your conference over the next two days and looking forward to working with you into the future. I would also like to thank Jennifer Taylor and her team at the Department for the huge amount of effort that she has put in, and the team has put in, in bringing this new programme together, and I wish you all the best for your conference and trust that there’ll be some great deliberations over the coming two days.

Thank you very much.