Employment services providers bludging off government

2 March 2015
Kim Doyle

Private job service providers have been caught once again defrauding the welfare to work scheme, cashing in on the government’s privatisation of employment services while the unemployment is at a 12-year high.

Unemployment is big business in Australia. Every year the government ploughs roughly $1.3 billion into its “welfare-to-work” scheme, called “Jobs Services Australia”. In total the scheme has cost taxpayers more than $18 billion since 1998, when the Howard Liberal government privatised the Commonwealth Employment Service.

Through this scheme, the government essentially bankrolls a lucrative racket, which defrauds … the government.

Job agencies make money by claiming government funds for “brokering” jobs for Centrelink recipients. The theory is that, if job network providers have an incentive to find unemployed people a job, then they will be more efficient at finding them a job. It’s market economics 101.

But an agency whistle-blower quoted in a recent Four Corners report, “The Job Game”, said: “I would say about 80 percent of claims that come through have some sort of manipulation on them.”

This generally entails taking credit – and cash – for jobs that individuals secured for themselves.

Four Corners discovered evidence of falsified paperwork, including one former jobseeker who said that her paperwork appeared to have been completely forged.

Other businesses have been getting in on the racket through the practice of recycling the unemployed through temporary jobs. Here’s how it works: the government provides money to subsidise the wages of newly-hired unemployed people so that businesses will employ them. Naturally, when subsidised trial period is over companies often sack the worker and put their hand out for more cheap labour from the job providers.

An external audit of Job Services Australia in 2012, conducted by former public servant Robert Butterworth, uncovered more than $100 million in fees that had been incorrectly claimed in just two years. The review provoked fraud investigations into an unknown number of agencies.

And it’s not just the for-profits getting in on the game.

In 2005, a government investigation into the Salvation Army in Victoria found that job seekers were fraudulently upgraded to a “highly disadvantage classification”, which increased the payments the organisation was able to claim.

After CatholicCare was exposed rorting its contract in 2011, the government undertook an industry-wide inquiry. Despite the limited nature and scope of this inquiry, it still managed to claw back $6 million of public money. In the last three years, the government has retrieved more than $41 million in false claims from agencies. Few are sanctioned.

There no such leniency for welfare recipients who are cut off or “breached” – in industry jargon – for the slightest aberration or simply at the vicissitudes of Centrelink bureaucracy.

Some argue that beaching is the real purpose of the scheme. Professor Bill Mitchell, an economist at the University of Newcastle, told Four Corners: “There’s a whole industry of punishment and coercion and monitoring of the unemployed when there’s not enough jobs anyway.”

In Australia, there are close to 800,000 unemployed people competing for only 150,000 job vacancies. And this doesn’t reveal the full extent of underemployment.

But people are still made to feel worthless by the mainstream media and the government if they’re not able to find a job.

Read More

Red Flag
Red Flag is published by Socialist Alternative, a revolutionary socialist group with branches across Australia.
Find out more about us, get involved, or subscribe.

Original Red Flag content is subject to a Creative Commons licence and may be republished under the terms listed here.