Employment Services 2015-2020 Response to Exposure Draft (Employment Providers) Jobs Australia
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Employment Services 2015-2020 Response to Exposure Draft (Employment Providers) Jobs Australia
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CONTENTS
1. FLEXIBILITY OF SERVICE ARRANGEMENTS ....................................................................................... 3
1.1 GREATER FLEXIBILITY IN THE SERVICE MODEL ............................................................................................. 3
1.2 INFLEXIBILITY OF WORK FOR THE DOLE ......................................................................................................... 3
2. THE PAYMENT MODEL ..................................................................................................................... 3
2.1 BALANCE OF UPFRONT FEES TO OUTCOMES AND THE OVERALL ENVELOPE ........................................... 3
2.2 THE EMPLOYMENT FUND AND TRAINING RESTRICTIONS ............................................................................. 5
2.3 EDUCATIONAL OUTCOMES ............................................................................................................................... 7
2.4 REGIONAL LOADING........................................................................................................................................... 7
2.5 WAGE SUBSIDIES ............................................................................................................................................... 8
3. CONTRACT AREAS ............................................................................................................................ 9
3.1 REGIONAL LOADING........................................................................................................................................... 9
3.2 BIGGER AREAS ................................................................................................................................................... 9
3.3 SPECIFIC ISSUES WITH REGION BOUNDARIES............................................................................................. 10
3.4 NO ROOM FOR SPECIALISTS .......................................................................................................................... 11
4. JOB SEEKERSERVICING, MUTUAL OBLIGATION AND COMPLIANCE............................................... 11
4.1 GOVERNMENT POLICY FOR YOUNG JOB SEEKERS ..................................................................................... 11
4.2 BENEFIT SANCTIONS ....................................................................................................................................... 12
4.3 MUTUAL OBLIGATION – 40 JOB SEARCHES A MONTH.................................................................................. 13
4.4 THE ACCURACY OF THE JSCI ......................................................................................................................... 13
5. OTHER PURCHASING ARRANGEMENTS ......................................................................................... 13
5.1 IT SYSTEMS ....................................................................................................................................................... 14
5.2 QUALITY ASSURANCE FRAMEWORK.............................................................................................................. 14
5.3 LIQUIDATED DAMAGES .................................................................................................................................... 14
5.4 SERVICE DELIVERY PLANS ............................................................................................................................. 15
5.5 NATIONAL BROKER .......................................................................................................................................... 15
5.6 THE DRAFT RFT – MARKET SHARE BIDDING ................................................................................................. 16
5.7 THE DRAFT RFT – SELECTION CRITERIA ....................................................................................................... 16
5.8 THE DRAFT RFT – INFORMATION ABOUT AUDITS ......................................................................................... 16Page 3 1. FLEXIBILITY OF SERVICE ARRANGEMENTS 1.1 GREATER FLEXIBILITY IN THE SERVICE MODEL The exposure draft provides that Employment Providers will be required to design their own service models, and “will not be bound by a list of prescribed meetings or activities” (ED 2.9.1, p18). This is a welcome shift from the arrangements in JSA, which are too prescriptive and restrict the scope for providers to innovate in their service models. Jobs Australia fully supports this approach and, indeed, believes that it could be extended further. 1.2 INFLEXIBILITY OF WORK FOR THE DOLE The flexibility in the service delivery is constrained, however, by the rigid requirements associated with the expansion of Work for the Dole (ED 2.10.3, p 27). All Job Seekers under 50 will be required to undertake Work for the Dole for 6 months in every year. Applying a single intervention mandatorily across all job seekers clearly removes flexibility. This causes Jobs Australia some concern for severely disadvantaged and long-term unemployed job seekers, for whom flexible, tailored services are much more important. Some flexibility is accommodated in that job seekers will be able to meet part of their requirements through part-time work and part-time study, provided that they have already commenced in those activities prior to their Work for the Dole period (ED 2.10.3, p 27). This is welcome – it would not make sense to require people to abandon a course part-way or quite a part-time job to participate in Work for the Dole. It would be better, however, if job seekers could meet their obligations by commencing in these activities at any time. There are also some limitations around the type of study that can be undertaken to meet Work for the Dole requirements. According to Table 2.4 (ED 2.10.3, p31), only study that leads to a Certificate III qualification in a skills in demand area is permissible. For some job seekers, such as those who have exited school early, a Certificate III level course may be beyond them and a lower level course is likely to be appropriate. Recommendation 1. There should be greater flexibility in relation to Work for the Dole, so that job seekers may meet at least part of their obligation by commencing in part-time work or study during their Work for the Dole period. In addition to Certificate III level courses, lower level courses should be allowed to meet a Work for the Dole commitment in certain circumstances, such as where the job seeker has not completed high school and does not have another Certificate I or II qualification. 2. THE PAYMENT MODEL 2.1 BALANCE OF UPFRONT FEES TO OUTCOMES AND THE OVERALL ENVELOPE Jobs Australia believes and understands a shift in the payment model towards outcomes is a necessary trade-off for increased flexibility in the service delivery model. If providers have greater freedom to determine the process by which they move people into jobs, then it is reasonable to expect providers to take on greater risk through a shift in the payment model towards outcomes.
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The extent of that shift and the overall size of the funding pool, as well as the availability of separate
funding through other programs, all have a bearing on whether or not the shift is reasonable.
Based on feedback from our members, we believe that the proposed payment model results in a
ratio of upfront fees (including, for this purpose, the Employment Fund) to outcomes of around 45%
upfront / 55% outcomes. That is a significant shift from present arrangements, which have been
tracking at around 75% upfront (including the Employment Pathway Fund) / 25% outcomes in recent
years. That is, in part, a reflection of a tight labour market in which employment outcomes have been
harder for providers to obtain, reducing proportionately that component of the funding model.
Jobs Australia believes that a 45% upfront / 55% outcomes funding ratio could be managed by the
sector, if there was genuine flexibility in the service arrangements and a similar level of funding,
overall, to that provided in Job Services Australia. Neither of those conditions is satisfied.
Firstly, the imposition of Work for the Dole as a mandatory program reduces the flexibility that
providers have to tailor services to their clients’ needs. Reviews of previous Work for the Dole
programs show that Work for the Dole is less effective than other, more tailored, interventions at
moving people into work1. Requiring providers to use the least effective intervention in the toolkit
undermines their capacity to obtain outcomes, and in such circumstances it is inappropriate to shift
funding towards outcomes and leave providers to bear greater risk.
In addition, it appears that the funding envelope has diminished somewhat shrunk. Feedback from
Jobs Australia members suggests that the new payment model would result in around a 15% - 25%
reduction in revenue, based on caseload data from 2012-13. The Exposure Draft also makes
reference to an investment of $5.1 billion in the new system (ED 1.1, p2), whereas figures from the
2014-15 Employment Portfolio Budget Statement indicate that the Job Services Australia model
would have required $5.7 billion over the same period (Employment PBS, 2014, p35). Those figures
suggest a reduction in the funding envelope of some $616 million, or around 11%.
The model proposed in the Exposure Draft reduces some costs and improves flexibility in some
respects, but increases some other costs and reduces flexibility in some other respects. In these
circumstances, Jobs Australia believes there is no room for the system to experience a reduction in
funding or as significant a shift towards outcomes as has been proposed.
Recommendation 2.
The funding envelope for the new model should be maintained consistently with the funding
envelope for Job Services Australia – or, indeed, increased. If funding is restored, it should be
allocated to Administration Fees or a combination of Administration Fees and Employment Fund
credits, reflecting the incapacity of providers to absorb an increased level of risk in a model that
include specific interventions on a mandatory basis.
1
Department of Employment and Workplace Relations 2006, Customised Assistance, Job Search Training, Work for the Dole and Mutual
Obligation - A Net Impact Study, shows that Work for the Dole had a net impact of 7.3%, the lowest of all programs included in the
evaluation, while Customised Assistance achieved a Net Impact of 10.1%.Page 5
2.2 THE EMPLOYMENT FUND AND TRAINING RESTRICTIONS
Jobs Australia has previously argued for provider services that are part of the process of obtaining an
outcome to be removed from the Employment Pathway Fund, and the new arrangements in many
ways reflect that approach. Services such as reverse marketing are an essential part of the process of
connecting employers and job seekers – an additional fee for doing it should not be required, and
providing an additional fee can create an incentive for providers to reverse market job seekers to
employers even if there is no likelihood of an outcome. It makes sense for such provider services to
be disallowed from the EPF (or Employment Fund, in the new model).
Restrictions on training, however, may be problematic. Jobs Australia understands that there have
been criticisms of JSA and ‘training for training’s sake’, but there is strong evidence that lifting
educational attainment improves an individual’s chances of employment. According to the
Productivity Commission:
“There is strong evidence to show that education is the key to improving life chances.
Education not only provides skills and the capacity to learn, it improves a person’s
employment prospects and earning capacity. The evidence also points to a relationship
between education and better health and social cohesion and reduced crime. In contrast,
poor educational achievement increases the probability of poorer employment
prospects, lower lifetime earnings and reduced ability to participate in society.”2
This is evident from labour market data collected by the Australian Bureau of Statistics. The following
chart shows the strong link between low levels of education and unemployment and non-
participation in the labour force.
Chart 1: Education Levels and Work
Yr 10 or below and no post-school…
No post-school qualification
Certificate I/II
Certificate III/IV
Advanced Diploma/Diploma
Bachelor Degree
Graduate Diploma/Graduate…
Postgraduate Degree
0% 20% 40% 60% 80% 100%
Not in labour force Unemployed Employed part time Employed full time
Source: ABS 2013, Education and Work, Australia, Cat No.: 6227.0
2
Productivity Commission 2013, Deep and Persistent Disadvantage in Australia, p17Page 6
Although Certificate III qualifications and above appear to have a more significant effect on labour
force participation, participation is still higher for those with Certificate I and II level qualifications.
Moreover, for some job seekers, a Certificate I or II level qualification will be a necessary step
towards a higher qualification – particularly if they left school early.
In addition, jobs growth in low-skill occupations is significantly lower than the growth in professional
services, managerial and other occupations that require higher levels of education. This is an ongoing
trend and part of the economic transition that is affecting the Australian economy.
The impact of transitions is exacerbated in a downturn, when firms either lay off staff or hold back on
recruiting new staff, and unemployment rises. Without training, people who become unemployed at
the beginning of a downturn can become long term unemployed, losing their skills.
Referring again to the Productivity Commission:
“People not only ‘learn by doing’, they also ‘unlearn’ by ‘not doing’, that is, by being out
of work and out of practice. Also, in addition to the depreciation of skill through
nonpractice, unemployment may generate loss of cognitive abilities as a result of the
unemployed person’s loss of confidence and sense of control. In so far as this leads to the
emergence of a less skilled group — with merely a memory of good skill — there is a
phenomenon here that can lead to a future social exclusion from the job market.”3
For these reasons, the preclusion of training that is not directly related to a specific job (ED, 2.9.7, p
p23) seems ill founded and could result in poorer outcomes.
It could mean, for example, that Employment Providers will be unable to ever offer employers
candidates that are ready to start a skilled role immediately – rather, they will have to advise the
employer that the candidates will need to be trained before they start or trained on the job. For
instance, providers often train job seekers in retail qualifications in October and November knowing
that employers will have high demand for staff over the Christmas period. It would appear that this
type of strategy –which benefits employers and job seekers alike – would fall foul of the new
requirement.
Information provided in the Q and A’s suggests that the requirements may ultimately be somewhat
more flexible than the ED suggests. While that is welcome, unfortunately the attempt at clarification
only makes the situation less clear. A clear, definitive indication that the Employment Fund can be
used to provide training that improves a job seeker’s prospects of employment – even if that training
is not linked to a specific vacancy –would be welcome.
Recommendation 3.
Requirements in relation to training funded from the Employment Fund should be sufficiently flexible
to allow providers to use training to improve the employability of job seekers, even if the training
does not directly relate to a specific vacancy.
3
Sen, 2000, Social exclusion: Concept, application and scrutiny, Social Development Papers No. 1, Office of Environment and Social
Development, Asian Development Bank, June, as quoted in Productivity Commission 2013, Deep and Persistent Disadvantage in Australia,
p129Page 7 2.3 EDUCATIONAL OUTCOMES As per 1.4, Jobs Australia believes that training is a legitimate tool for improving employability. Evidence clearly shows that Certificate III and above qualifications significantly improve connection with the labour market – people with such qualifications have significantly higher participation rates and lower unemployment than those who do not. Education is also a useful tool for keeping job seekers engaged and maintaining skills during an economic downturn. In a downturn, fewer jobs are available and employment outcomes are fewer. Sometimes, this is due to economic shifts where one industry winds down while other industries pick up. It makes sense for job seekers to re-train for new jobs in new sectors during a spell of unemployment if the industry that they have worked in previously will have fewer jobs in the future. Employment Providers presently play a role in smoothing economic transitions by encouraging some job seekers to retrain. But, in the new model, educational outcomes will be limited to school leavers (aged 15-17) and will not be available for other job seekers. This limitation could also undermine the viability of providers. When unemployment is rising, employment outcomes are more difficult to achieve. Educational outcomes, paid at a lower rate, help ensure providers remain viable and have the funds to continue servicing the new job seekers entering the system. Without educational outcomes, they will be forced to cut costs in periods of rising unemployment, which will mean providers reduce investment in services right at the time that an increased investment is required. Considering both the economic factors and the viability of the model for providers, Jobs Australia believes that educational outcomes should be reintroduced in the model. In the past, the definition of educational outcomes has been problematic and may have contributed to the perception that providers were providing ‘training for training’s sake’. That is because the outcome was paid for attendance in education – rather than attainment. The incentive therefore drove providers to place people in education whether they thought it was likely that the job seeker would achieve the qualification or not, and whether it was likely to lead to a job or not. By defining the educational outcome in terms of attainment of the qualification, providers will be encouraged to ensure that education fits with the skills and interests of the job seeker and, ideally, provides line of sight to a job to keep the job seeker motivated. Recommendation 4. Educational outcomes, paid at a significantly lower rate compared with payments for employment outcomes and paid on the attainment of a qualification, should be available for all job seekers. 2.4 REGIONAL LOADING The regional loading is a very welcome measure that will help Employment Providers meet the greater cost of service delivery in some regional locations. There are some issues around the mapping of the regions that the loading will be applied to, but the introduction of a loading is nonetheless a welcome shift.
Page 8 The issues are in the details. The basis on which regions that the loading will apply to were selected is not entirely clear and there appear to be some inconsistencies. For example, the regional loading applies to Hobart, the capital city of Tasmania, but does not apply to Alice Springs. In Victoria, Ballarat and Bendigo have a regional loading, but Geelong does not. In South Australia, Kangaroo Island is included in the same area as South Adelaide and consequently does not have a regional loading. Other examples could be identified in other states. For other very compelling reasons (detailed later in this document), Jobs Australia believes that Employment Service Areas (ESAs) should be maintained at least for the time being, which would also help to alleviate these inconsistencies. It would allow the regional loading to be applied to appropriate ESAs with fewer inconsistencies than appear when the loading is applied to larger Employment Regions. Recommendation 5. Employment Services Areas (ESAs) should be maintained as the main contract areas for the time being, with the regional loading applied to relevant regional ESAs. The basis for the determination of regional (loading) ESAs should be transparent, with reasoning publicly available. 2.5 WAGE SUBSIDIES A significant portion of the funding in the model is allocated to wage subsidies. This again gives providers reduced flexibility in how they achieve outcomes: while wage subsidies are an effective intervention, by funding them separately they become effectively a default intervention for the job seekers who qualify for them. More flexible arrangements, that could allow other things to be funded other than just a wage subsidy, would be preferable. It is also not clear whether each subsidy is expected to be paid at the amount specified. The amounts of the subsidies are expressed as “up to” the given amount, which may suggest that providers can ration the subsidies and negotiate a lower subsidy to allow subsidies to be attached to more job seekers. This would be preferable to an arrangement where the subsidy amount was fixed. The final Request for Tender should make the situation clear, and preferably provide (at least) flexibility around the amount of the subsidy. The way in which the subsidies are to be paid also cause us some concern. The arrangements in the Exposure Draft indicate that payment will be made to employers in instalments, the first after six months of employment and then a second after 12 months (ED Table 2.3, section 2.9.9, pp24-25). This type of approach has not, to our knowledge, been tried previously in Australia or anywhere else. Normally, wage subsidies are paid when the employee’s wages fall due – such that they actually operate to subsidise those wages, compensating for any lost productivity or other risks that the employer may perceive in taking on a disadvantaged job seeker. By delaying payment until after six months of employment, the wage subsidy ceases to operate as a wage subsidy and operates more as an outcome payment for the employer. Jobs Australia doubts that this will be an effective strategy, as it effectively leaves the employer bearing either perceived risk of or actual risk of lost productivity. If the employment does not work out and, for whatever reason, the employment relationship ends within six months, then the employer is not compensated. The aim of a wage subsidy is to make it
Page 9 easier to convince employers to take on disadvantaged job seekers – by structuring the subsidy in the way proposed, the subsidy may not achieve its purpose. There are also questions about the administration of the wage subsidy that is paid at twelve months. Providers receive an outcome payment at 26 weeks, but have no payments after that. It appears that Providers will be expected to administer a payment to the employer at 12 months, but will not receive any payment for their effort and have no incentive to keep track of the employment past the six month outcome payment. If an incentive is provided to employers but not to providers, then difficulties in the administration may arise. Recommendation 6. There should be greater flexibility with the wage subsidy arrangements. More flexibility could mean that providers could fund other interventions with those funds; or it could mean that providers could negotiate the specific terms of the wage subsidy with each employer (both with respect to the amount and the timing of payments). Serious consideration should be given to payment of wage subsidies progressively and in advance to employers to maximise their take-up and increase outcomes. 3. CONTRACT AREAS 3.1 REGIONAL LOADING We have already made some remarks above (see 2.4) 3.2 BIGGER AREAS The new arrangements provide for 51 regions, replacing the 110 Employment Service Areas (ESAs) as the contract areas, with generally four to six Providers per area (ED 2.4, p8). The present ESAs have as few as one provider, up to as many as nine providers. Clearly the new arrangements – which squeeze the funding model, particularly the amount that is provided up-front, and require coverage of larger areas at the same time – will encourage a degree of consolidation. The shift from 110 areas to 51 will occur overnight in the middle of next year. Providers need to tender, however, in just a few weeks. That timeframe is nowhere nearly adequate to allow for the existing provider market to adapt: some smaller providers may need to exit, some will need to expand; some will need to become sub-contractors to a larger provider; and others may need to establish partnerships and bid together. All of these arrangements are complex. The contracts are large and the sums of money involved are substantial. The contractual and other legal requirements are detailed and onerous. In this context, the time required for negotiations is more likely to be at least six months. The timeframe is simply unworkable and unrealistic and poses a significant risk to the Federal Government. Providers will still bid – they will put together enough of an agreement with partner organisations to put together a tender – but with little time to negotiate the partnerships properly, many of the arrangements will fall over within the first year of the new contract.
Page 10 This is especially so given that the ED provides in 6.4.6 (pp. 83-84) that when providers tender as a group, they will be ‘joint and severally’ liable. This means that each organisation in a group tender has to be absolutely sure of the credentials of the organisations they partner with. The misdeeds of one partner in a group tender could bring down all of the organisations involved. It is appropriate for liability to be joint and several, but the risk that this introduces for providers in partnership arrangements means that taking the time to get it right is essential. If the regions had been released earlier as part of a more inclusive consultation process, then the new and existing provider industry may have had the time to prepare properly for the tender. As it is, that time has not been made available and the risk of key players in the market forming poor partnerships, which later disintegrate, is high. That risk ultimately falls upon the Government. There is no particular impediment to retaining the present ESAs. While the ESAs are peculiar to employment services, and therefore do not line up neatly with statistical divisions used by the ABS and others, simple concordance tables that show which ABS areas are in each ESA can provide an interim solution – as they have done since July 2011, when the ABS changed some of its statistical collection boundaries and the Department used mesh blocks and concordance tables to make the necessary adjustments for performance management purposes. The arrangements have operated satisfactorily since that time and we argue it would be prudent, in the face of the risks associated with a radical shift to a much smaller number of larger regions, to preserve that status quo while the “market” comes to grips with the other major shock being contemplated – the changes in the payment model. The only other advantage in larger contract areas is fewer providers with which to contract, making the Department’s task somewhat easier. This could, however, be achieved within the existing ESA structure by requiring tenderers to bid for a greater market share each. At the moment, there are around 82 organisations that hold JSA contracts (according to the June 2014 Star Ratings) – in the new model, with 51 contracts and four to six providers in each, there is the potential for the number of organisations contracting with the Government to actually increase. If the new model results in fewer contractors, then that is a direct consequence of purchasing decisions, not the contract areas, and similar decisions could be made with the current ESA structure. Recommendation 7. Jobs Australia recommends that the existing ESA structure be maintained, at least for the time being. The new regions could be introduced at a later date, in consultation with the sector, to allow sufficient time for providers to form partnerships or negotiate transfers of business to adapt to the new contract areas. There is simply not sufficient time to do this before the tender in a few weeks’ time. 3.3 SPECIFIC ISSUES WITH REGION BOUNDARIES We have already alluded to certain issues with some region boundaries in our comments on the Regional Loading (see 2.4, above). There will, no doubt, be many more. Jobs Australia has not thoroughly reviewed each of the maps but issues can arise where boundaries split communities of interest, or do not account for geographical barriers (such as a mountain range or river dividing an area) or other man-made structures such as large roads or railway lines. It makes sense to group
Page 11 areas together around natural labour markets and to accord, as far as is reasonably possible, with ABS statistical units. But sufficient detail on the proposed regions and sufficient time to examine any issues that could arise has not been afforded. Providers also need more detailed information on job seeker numbers and flows to be able to properly model their anticipated costs and income in each region, which is yet to be made available. Consistent with our other recommendations on the Regions, we believe that delaying the introduction of the larger regions would allow greater time to consult with the employment services providers industry and other stakeholders to ensure that the regional boundaries are workable and appropriate. Recommendation 8. Jobs Australia recommends that the introduction of Regions be delayed, to allow consultation around the Regional boundaries. 3.4 NO ROOM FOR SPECIALISTS The Exposure Draft makes clear that tenderers must bid for a whole region and cannot specialise. Jobs Australia has previously advocated for specialists to be allowed to hold a contract in their own right, and not be forced to accept a generalist caseload or to bid as a sub-contractor to a generalist provider. Specialists often develop specialised networks and tap into other programs to add value or create a ‘wrap-around’ service offering. If there is no room for specialists, then these benefits may be lost. Recommendation 9. Jobs Australia recommends that provision be made for some categories of specialist contracts. 4. JOB SEEKERSERVICING, MUTUAL OBLIGATION AND COMPLIANCE 4.1 GOVERNMENT POLICY FOR YOUNG JOB SEEKERS The social security changes that apply to job seekers under 30 years of age which were announced in the 2014-15 Federal Budget cause Jobs Australia and its members a great deal of concern. The complete denial of income support to an entire group of job seekers is unprecedented and will cause incredible harm to the individuals affected and the communities in which they live. Jobs Australia is opposed to those changes. The services specified in the ED also reflect this new, punitive approach to job seekers under 30 years of age. Rather than meet their clients for case management, which involves supportive discussions about the best path for an individual to move into sustainable employment, Providers will be
Page 12 required to meet only to check up on the job seeker’s compliance with mutual obligation requirements. Inevitably, job seekers with no income support will ask what support their provider can offer, including charitable support, housing and other emergency aid – but Providers are generally not equipped to offer that support. In short, the arrangements require providers to become agents of the Government in implementing its harsh and unfair policies – a role that is not appropriate and which may conflict with the organisational purposes in many non-profit constitutions. If the Government wishes to implement policies that fundamentally do not support job seekers, then it should implement them via its own agencies and not outsource implementation of a punitive regime to organisations that are established to provide support to disadvantaged Australians. Recommendation 10. Employment Providers should not be required to provide services to job seekers who are not receiving income support. 4.2 BENEFIT SANCTIONS Associated changes to the way that sanctions are administered place Providers in the position of decision-maker with respect to the non-payment of benefits to individuals who miss their appointment. This is a role that has previously been reserved for officials within the Department of Human Services. It is a role that is contrary to the role that providers usually hold, in that they generally provide support to job seekers and not punishment. It will affect their ability to maintain a positive relationship with their clients. Jobs Australia has received strong feedback from its members that they are uncomfortable implementing this change. There could be a range of consequences for providers. Firstly, there is additional cost in administering the sanctioning regime, for which they will not be compensated. There is the cost of providing evidence and defending any appeals against their decisions (through the SSAT, other tribunals, or even through the courts), which could be costly. Again, they will not be compensated for any associated costs. Staff will need to be trained in exercising the discretion they hold as decision makers acting on behalf of the Secretary of the Department – again, the cost of training will not be compensated. And finally, the resentment that cutting people off from their income support can may cause some angry reactions, increasing the risks to staff and potentially requiring new security arrangements. Most providers aim to provide a welcoming environment and do not currently have staff sitting behind security glass or have security guards monitoring their reception areas – but this may change. Again, security costs are not provided for. While the speedy implementation of a benefit sanction is generally desirable to achieve the greatest impact on job seeker behaviour, placing control of sanctions in the hands of Providers creates more problems than it solves. Recommendation 11.
Page 13 The role of making decisions in relation to the payment or non-payment of income support benefits should be held only by officers of the Department of Human Services, and should not be outsourced to Employment Providers. Rather, Employment Providers should continue to provide Participation Reports to the Department, on which they may then decide whether or not to act on. 4.3 MUTUAL OBLIGATION – 40 JOB SEARCHES A MONTH The ED indicates that most job seekers will be subject to a blunt requirement that they apply for at least 40 jobs per month. This is ill-conceived. Job seekers will apply randomly for whatever jobs they see advertised just to meet the requirement – inundating employers with useless, disingenuous applications. It means job seekers will receive numerous, frequent rejections – which is likely to have a negative impact on their self-esteem and motivation. Employment Providers should be able to negotiate a more appropriate requirement with the job seeker, with no minimum threshold applying. Recommendation 12. Arbitrary job search requirements should be removed from the mutual obligation arrangements. 4.4 THE ACCURACY OF THE JSCI The JSCI is a sophisticated tool for identifying factors that indicate the risk of a job seeker experiencing long-term unemployment. The way that it is conducted, however, results in risk factors being missed more often than should be the case. Generally, the JSCI is conducted over the phone – a setting in which many job seekers are uncomfortable about fully disclosing their personal information. Frequently, case managers find that when they sit down face-to-face with a job seeker, they tend to be more open and disclose barriers that have not been identified by the phone survey. At present, the case managers can update the JSCI to rectify anything that has been missed, but the ED indicates that Providers will no longer be able to do this within the first six months. This would be reasonable if the accuracy of the JSCI were improved, so that it could be relied upon to consistently pick up all of the relevant factors without missing any. If the JSCI is not to be improved, then providers ought to retain a capacity to update the JSCI. Recommendation 13. The JSCI and the way that information for the JSCI is collected should be reviewed with a view to increasing accuracy. If the accuracy is not to be improved, then Providers should retain some capacity to rectify the JSCI by adding any information that has been missed. 5. OTHER PURCHASING ARRANGEMENTS
Page 14 5.1 IT SYSTEMS It is clear that IT solutions will play a key role in the new model. It is difficult, however, for Providers to give a high level of detail on their service model without knowing at least the functionality of the systems that the Department will be developing. Providers developing their own software and systems and their 3rd party providers also require this information to inform their own IT development plans and strategies and to maximise the benefits to be gained from the Departments own system. Greater detail around the Department’s plans for IT development are therefore required as a matter of some priority. Recommendation 14. The Department should provide detailed information about the specification and functionality of software, apps and other IT solutions that it is developing so that tenderers may account for them in their proposed service models and in their own (and 3rd party provider) IT development plans and strategies . 5.2 QUALITY ASSURANCE FRAMEWORK The ED makes clear that all providers will need to be accredited against the Quality Assurance Framework (ED 2.16.2, p47) and it seems likely that those providers that have already been accredited will not need to re-do the accreditation. It is not, however, explicitly made clear in the ED. A number of providers participated in the Department’s Quality Pilot voluntarily, and it would not make sense to make them go through the process again. If they are required to re-do the accreditation, then it is unlikely that any provider will participate in any similar pilot in the future. Recommendation 15. The RFT should make clear that providers who have recently been accredited to the Quality Assurance Framework will not need to repeat the accreditation process. 5.3 LIQUIDATED DAMAGES The draft deed released by the Department includes new provisions for liquidated damages, payable by providers to the Department in certain circumstances (Draft Deed, clause 55, p36). Jobs Australia believes these provisions are inappropriate. They are disproportionate and unfair. Providers have no similar redress against the Department if, for example, the deed is amended and their profitability is impacted. The provisions do not take into account the provider’s intention, such that claims that are the result of a genuine mistake will still be penalised just as harshly as deliberate non-compliance. It is impossible to determine whether they truly relate to the actual damage or cost incurred by the Department, or are merely arbitrary penalties. Moreover, there are already numerous other remedies that the Department has at its disposal and providers have almost no ability to challenge or appeal against the Department’s determinations. The provisions are unwarranted; they are draconian and they should be removed.
Page 15 Recommendation 16. The Department should not proceed with provisions for liquidated damages. 5.4 SERVICE DELIVERY PLANS The ED makes clear that providers are to develop their own Service Delivery Plans, including Service Guarantees, and that providers will be held to the commitments they make in these plans as part of their tender (ED 2.16.6, p50). It is not clear from the ED, however, whether there is any scope to alter Service Delivery Plans through the term of the contract. Given that the contract is to run for five years, the chances of circumstances changing within the term are quite high. Providers may find that an approach that works now is less effective in the future, and that their service model needs to change to maintain performance; or new research may point to new approaches; or new technology may introduce opportunities for more efficient delivery. Providers will need to be able to alter their approaches from time to time, with the Department’s approval. An appropriate process and set of requirements may need to be developed. Recommendation 17. An appropriate process and relevant requirements should be developed to enable providers to update their service models from time to time, through the life of the contract and with the prior approval of the Department where it can be established that relevant changes are warranted. 5.5 NATIONAL BROKER The ED does not include any facility for a broker to service national employers. Some employer bodies and some providers have previously called for such a service. Jobs Australia believes the most efficient and most equitable way for this to be operated would be for a single, centralised service to act as a broker. The Department of Employment could provide this service directly, or contract it out. In the absence of a Government-led solution, it is likely that multiple solutions will be pursued by the industry. Jobs Australia believes that competition for a national brokerage service is undesirable, as competitive brokers will advantage (and disadvantage) different providers, who are competing in a managed market where Government must measure performance and reallocate business accordingly. Competing national brokers could distort the performance of providers by, for example, referring a greater number of vacancies to certain providers rather than others. Given the Government’s clear preference to maintain a managed market for employment services, the best approach to a national brokerage arrangement is a centralised, non-competitive approach where vacancies are distributed equitably. Recommendation 18.
Page 16 The Department should pursue the establishment of a national brokerage service to provide a central clearing house for vacancies from large, national employers. 5.6 THE DRAFT RFT – MARKET SHARE BIDDING The ED indicates that tenderers will need to specify a market share in their bid. The overall market share for a region does not, however, have any real bearing on the market share at each site and providers have found in the past that the market share can vary at each site. This creates difficulties, because, for example, a provider might lease premises with floors-space to service the share they bid for, but then find that they receive a lower or higher business share at that site. Once a lease is locked-in, however, it can be hard to negotiate any changes.to accommodation. Recommendation 19. Some indication of site level market share should be included in the tender, or it should be made clear that the market share at contract level is the market share that will be provided at site level as well. 5.7 THE DRAFT RFT – SELECTION CRITERIA The draft selection criteria (ED 7.10.4, pp. 115-117) provide that tenderers should address Criterion 2 and Criterion 3 at both the organisational level and at the region level, and that a 25,000 character limit applies to each Criterion. It is not entirely clear, however, whether that means that there is 25,000 characters to address each Criterion at the organisational level, and then an additional 25,000 to address each Criterion at the regional level; or whether both the organisational level and the regional should be addressed in one response of up to 25,000 characters. Jobs Australia believes it is the latter that is the correct interpretation, but the situation ought to be clarified. Recommendation 20. That it be made absolutely clear how the character limits will apply to each Criterion in the RFT. 5.8 THE DRAFT RFT – INFORMATION ABOUT AUDITS The Draft RFT includes requests for information about all audits undertaken by any local / state / federal / overseas government since 2012 (ED 7.10.4, p116). Organisations that deliver a variety of programs across multiple levels of government may have many audits to list. It may be preferable for organisations to be able to address this particular aspect of the Criterion in an attachment, rather than in the text of their response to the Criterion. Recommendation 21.
Page 17 Organisations should be able to provide details of any audits in an attachment, rather than in the text of their RFT response.
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