New Job Foundation Set On Shaky Political Ground
Sydney Morning Herald
Monday February 7, 2000
Many questions remain unanswered over the Government's handling of Job Network.
PITTWATER Road in Brookvale in the heart of the electorate of the Employment Services Minister, Tony Abbott is a perfect microcosm of the upheaval Canberra is creating with its controversial overhaul of the Job Network
At 517a Pittwater Road, the future of the local branch of the Government's job agency, Employment National, is uncertain. In the Government's $3 billion Job Network tender, the branch lost its contract to provide intensive services to the unemployed.
But at 699 Pittwater Road, Job Futures Ltd (an alliance of community, church and local government organisations) will dramatically increase its operations. It will provide not only simple job-matching services but assist the long-term unemployed through intensive assistance contracts which offer up-front payments to service providers.
At 477 Pittwater Road, the Christian charity job-based Mission Employment will also keep operating, while two new operators the Uniting Church-based Wesley Uniting Employment and the private-sector agency IPA Pty Ltd will also enter the area .
It is widely expected that when Federal Cabinet meets this week it may move to completely close Employment National (so one of the new operators in Brookvale could take over its offices at 517a).
Events on Pittwater Road illustrate the complicated story that is Job Network in the wake of last year's second tender for Job Network contracts.
In late 1996, the Howard Government announced a radical restructuring of the job placement market and plans to replace the old Commonwealth Employment Service with a ``contestable and fully competitive market in which private, community and public-sector agencies would be contracted to place unemployed people into jobs".
In 1997 it let, by tender, contracts to serve the market for 18 months. But the tender proved a debacle as many would-be service providers put themselves into contention but eventually out of business with unrealistically low bids.
A second tender last year sought to avoid such problems by awarding contracts primarily on the basis of the quality of service that contractors had been providing in the first tender. But the second tender has produced new questions evident in Pittwater Road.
According to a rating system run by the Department of Employment, which administers the Job Network and ran the tenders, both Employment National and Mission Employment had 21/2-star ratings for services to the long-term unemployed in the North Sydney/Central Coast area. Yet Employment National did not have its intensive assistance contract renewed at Brookvale, and Mission Employment did.
None of the other three operators had a track record of intensive assistance in the region. And there are plenty of other examples which raise the question of why if track record and quality of service were the criteria the tender produced the results that it did?
The Prime Minister and Abbott frequently claim the Job Network has outperformed the CES by 50 per cent. But those figures apply to the Job Network as it operated after the first tender when the market was dominated by Employment National with 30 per cent of the market and the private firm Drake Jobsearch.
Employment National got off to a notoriously bad start in terms of service delivery in 1998 but, based on the Government's own records, improved markedly. And its dominance in the market must have been at least partly responsible for the improved figures which Howard and Abbott so frequently quote.
But in the second tender both big national firms have been virtually cut out altogether. So, the second tender has produced a very different market from the one that emerged from the first tender and from the one described by the Coalition back in 1996 and one which may yet come to reveal its own set of problems.
It is dominated by church- and charity-based agencies which have established national consortia to bid for business and by a number of private-sector organisations which will have to double or even quadruple in size to meet the contracts they have won.
The result will be a much more fragmented and perhaps unstable market, and one built on very shaky legal and administrative foundations.
The entire Job Network rests on an uneasy constitutional framework. Because of opposition in Parliament, the Government set up the Job Network by executive powers, rather than legislative powers. It also never got around to repealing the Employment Services Act 1994 which established the Commonwealth Employment Service.
This has resulted in some dubious legal fictions and very carefully worded descriptions of what the Job Network does, so that it does not appear to be duplicating the services the Government has been instructed by Parliament to provide via the 1994 legislation.
Further, if ever there was a case where the benefits to taxpayers of contracting out services might be outweighed by the contracting out process, this it.
On the one side of the equation, the Government tenders out contracts to have a third party deliver services to the unemployed. It argues the results of the tender are out of its control, having been done at arm's length by bureaucrats watched over by probity advisers.
But this ignores the way the Government can determine the outcome by designing the criteria for the successful bidders.
On the other hand, the major player in the market leading up to the tender was the Government's own job agency, Employment National, into which hundreds of millions of taxpayers' dollars have been poured in start-up costs and working capital.
When it failed to win a viable share of contracts jeopardising its future and the taxpayers' massive investment the Government said this, too, was beyond its control and the fault of Employment Network.
Nothing, it seems, is the fault of the Government even though the Department of Employment is effectively the seller and buyer of services, and also its regulator.
Despite the Government's general claims of success for its new scheme, there is little reliable information available about whether Job Network is doing a good job for the unemployed who seem to have been forgotten in much of the debate thanks largely to commercial-in-confidence rules and a Government with a scant regard for accountability.
And as the market goes into its third manifestation in as many years with the public sector out for the count, there is also a lingering question over whether, in the medium term, the market will be whittled down to church and community groups.
It may well be that all but volunteer organisations are ultimately cut out of the market because the relative cost advantages of charities with their multiple tax exemptions will sorely test private-sector organisations' capacity to compete. The lingering question which may be addressed when senators quiz officials in Estimates Committee hearings this week is whether Employment Network's inglorious end was a deliberate move by the Government or just a stupendous mistake.
That may become clear once Cabinet's intentions are known and we find out whether other providers gain closing Employment Network sites, its $100 million of contracts and at what price.
© 2000 Sydney Morning Herald