Australia's jobseeker system fails workers and enriches millionaires, report says
Australia's system of privatised employment services is structurally broken and its prized federal contracts are being used to enrich millionaires and private equity firms, a new report argues.
An investigation by the Centre for International Corporate Tax Accountability and Research (CICTAR) has found an "alarming lack of transparency" from major government contractors operating inside the privatised employment services system.
It has also raised concerns about the potential for conflicts of interest arising from for-profit companies in the system making large donations to Australia's major political parties.
The employment services industry is supposed to help unemployed Australians find work by providing them with tailored job search support.
Employment services are the federal government's single largest procurement outside Defence, with contracts worth $5.5 billion underpinning the system's for-profit and not-for-profit contractors, provided under the banner of Workforce Australia Services.
Participation in Workforce Australia Services is compulsory for many people who receive Centrelink's JobSeeker payments.
But the CICTAR report argues that the system has become a lucrative vehicle for private equity-controlled multinationals and wealthy executives to extract massive profits from taxpayer funds, with some providers developing a near-total dependence on lucrative government contracts.
It shows how for-profit "employment services providers" can use aggressive tax minimisation, large dividend payouts, offshore-related party payments, tax havens, and opaque financial reporting to extract profits from the system, without breaking any laws.
And it questions if the system is meeting the public's expectations.
"It's no secret that Australia's system of privatised employment services has failed," the report argues.
"The Howard-era system fills the pockets of private equity and millionaires, while leaving jobseekers without work."
The CICTAR report
The report, 'Who's rorting who? The failure of outsourced job services', was released today.
It says AusTender data shows employment services contracts currently total $5.5 billion, shared between 45 providers.
The Department of Employment and Workplace Relations (DEWR) grants the licences to deliver generalist or specialist employment services (such as to Indigenous Australians, refugees, and ex-offenders). Each licence is designated for a geographic region in Australia.
Just nine for-profit providers — APM, atWork Australia, MAX, Asuria, Teldraw, Sureway, Sarina Russo, RNTT and Jobfind Centres — hold more than a third of the total employment services contract value, at $2.1 billion. A single provider, APM, holds 23 licences and a contract worth $590.7 million.
Many of those providers are recipients of government contracts in other areas, such as aged and disability care.
As the report shows, private-equity-controlled for-profit companies play a significant role in Australia's system (the two largest for-profit providers, APM and atWork, are both controlled by private equity). Top employment services providers have become notable as sources of wealth for high-profile Australians.
The report looks in greater detail at four of Australia's for-profit employment services providers — APM, atWork, Sarina Russo Job Access and Jobs Statewide — which hold contracts worth a collective total of $1.24 billion.
It uses those four case studies to show how difficult it is to analyse the complicated corporate ownership structure of private-equity-controlled multinationals and for-profit businesses to find out what types of tax arrangements they are using and how much tax they are paying, to see if Australians are getting value for money.
"All four corporations are heavily dependent on government contracts," the report notes.
"When individual or corporate empires are built on the back of government funding to support the unemployed, it is appropriate to ask: is this an efficient and effective use of government resources?"
In response to questions from CICTAR, both APM and the operator of Jobs Statewide said their programs were long-standing and successful in helping people into work.
The 'biggest shake-up in 30 years'?
In 2023, a Labor-dominated parliamentary committee reviewed Australia's multi-decade experiment with privatisation and an outsourced quasi-market system for employment services, and it called for the system to be completely rebuilt.
It found that after decades of outsourcing, the Australian public service now had little corporate memory or experience of the complexities of employment service delivery, so it could not even judge if the billion-dollar contracts it was awarding to private sector job agencies were buying value for money.
"We have an inefficient, outsourced, fragmented social security compliance management system that sometimes gets someone a job against all odds," it said.
"Every country that has experimented with extensive outsourcing has eventually realised that it does not work without a public sector core, as some companies will profiteer."
In May this year, the Albanese government announced the biggest shake-up to Australia's employment services system in 30 years.
At the time, Amanda Rishworth, the federal employment minister, said she wanted to build a "new employment service" to fix the problems that had plagued the industry for decades.
However, she said contracted for-profit service providers would still play a major role in her new system.
The CICTAR report challenges the idea that for-profit service providers should be part of the new system.
CICTAR is funded by grants from trusts and foundations, and by trade unions from overseas and in Australia, including the Community and Public Sector Union (CPSU) and the New South Wales Nurses and Midwifery Association (NSWNMF).
Recommendations for a new public model
The CICTAR report makes four recommendations.
First, it says employment services should be entirely returned to public sector delivery for both online and in-person services because the privatised model has failed in Australia.
It argues that the public sector would lower costs by removing the profit motive from employment service delivery, eliminate offshore profit-shifting and dividend payouts to shareholders, and provide higher-quality and more accountable services for jobseekers and employers.
It says non-profit organisations could still deliver specialist services in the new system.
Second, it says the procurement of services must be strengthened in the meantime. It says the government must enforce stricter transparency standards for contractors in the current system.
It says that should include publishing the full text of all service delivery contracts, banning entities that use aggressive tax minimisation or fail to file timely financial statements, requiring full Tier 1 financial disclosures for any entity receiving over $10 million in funding, and subjecting private equity acquisitions of government-funded firms to intense scrutiny regarding their corporate structures and ultimate owners.
Third, it says providers need to be properly scrutinised across all funding streams.
It says since many employment services providers operate across multiple government sectors — such as aged care, disability, and childcare — Australia's procurement rules must be unified so that if a provider is screened out or disqualified from one government service area then it should be automatically barred from receiving contracts in other areas.
Fourth, it says political donations by government contractors are a risk to the integrity, or perceived integrity, of Australia's political system and the practice should be prohibited.
"Entities that hold government contracts above a certain threshold, together with their shareholders and key management personnel, should be prohibited from making political donations," it says.
"This would be most appropriately achieved by reforming the Commonwealth Electoral Act."