# Our job system is broken: Are private providers to blame?

An episode of [7am](https://invisiblenetwork.ai/podcast/1461999702), 6 Aug 2026, 19 min.

Audio: https://p.podderapp.com/2544644999/traffic.omny.fm/d/clips/2fb3740d-3436-44af-8cc0-a91900716aa5/62723a1f-3e96-4fc4-882c-b25e0181da4d/f7a6ba96-05f2-4973-8a00-b49e0068a2cb/audio.mp3?utm_source=Podcast&in_playlist=70f29d90-2a63-48aa-bf8f-b25e0181da70

Almost 30 years ago the Howard government shut down Australia’s public employment service and privatised the system that helps unemployed people find work. Since then, repeated inquiries have found the system is failing the people who need it, while the companies paid to run it rake in huge profits. Now, the Albanese government has admitted the system isn’t working and promised its biggest overhaul in decades. But Labor says these private providers will still remain part of the system, even as a new report has followed the billions of dollars flowing through the industry Today, ABC business and economics reporter Gareth Hutchens, on how helping unemployed Australians became a massive money spinner, and whether Labor can fix the system while leaving private companies at its centre. If you enjoy 7am, the best way you can support us is by making a contribution at 7ampodcast.com.au/support. Socials: Stay in touch with us on Instagram Guest: ABC business and economics reporter Gareth Hutchens Photo: AAP Image/Dan Peled See omnystudio.com/listener for privacy information.

## Transcript

[0:01] Speaker 1: I'm Ruby Jones and you're listening to seven AM. Almost
[0:09] Speaker 1: thirty years ago, the Howard government shut down Australia's public
[0:12] Speaker 1: Employment Service and privatized the system that helps unemployed people
[0:17] Speaker 1: find work. Since then, repeat inquiries have found the system
[0:21] Speaker 1: is failing the people who need it, while the company's
[0:23] Speaker 1: paid to run it raking huge profits. Now the Abaneze
[0:28] Speaker 1: government has admitted the system isn't working and promised its
[0:31] Speaker 1: biggest overhaul in decades, but Labour says these private providers
[0:35] Speaker 1: will remain part of the system, even as a new
[0:38] Speaker 1: report has followed the billions of dollars flowing through the industry. Today,
[0:43] Speaker 1: ABC Business and Economics reporter Gareth Hutchins on how helping
[0:47] Speaker 1: unemployed Australians became a massive money spinner and whether Labour
[0:51] Speaker 1: can fix the system while leaving private companies at its center.
[1:01] Speaker 1: It's Friday, August seven, so Gareth, let's begin with this
[1:10] Speaker 1: new report from Siktar, the global corporate tax research firm.
[1:14] Speaker 1: It examined the private companies that are paid to help
[1:17] Speaker 1: people on job seeker to find work. To begin with,
[1:21] Speaker 1: just how profitable is this entire industry?
[1:24] Speaker 2: So os tender data shows that the value of the
[1:27] Speaker 2: contracts that are out there at the moment for employment services,
[1:30] Speaker 2: it's worth five point five billion dollars. Forty five providers
[1:34] Speaker 2: have been awarded those contracts. Now, the top twenty five
[1:38] Speaker 2: of those providers take the line share of those contracts,
[1:42] Speaker 2: pretty much all of it. When you dig a little
[1:45] Speaker 2: deeper into it, you'll find that nine for profit providers
[1:49] Speaker 2: have been awarded contracts worth two point one billion, so
[1:51] Speaker 2: it's about forty percent of that five point five billion
[1:54] Speaker 2: is going to nine for profit providers. The two largest
[1:59] Speaker 2: of those are private equity controlled multinationals. The two others
[2:04] Speaker 2: are quite famous.
[2:07] Speaker 3: I'm Tangent, the national apperatious manager for Job Straight Wide.
[2:09] Speaker 4: I'm so excited now as today our success and we
[2:12] Speaker 4: need twenty six sides under the Australia contract.
[2:16] Speaker 3: They've made their owners multimillionaires in Australia.
[2:19] Speaker 5: Serena Russell Institute is a strange leading provider of the
[2:23] Speaker 5: Career Transition Systems program. Our program mentors up skills and
[2:29] Speaker 5: supports you back into the workforce.
[2:32] Speaker 2: So it's a pretty lucrative, profitable venture for some of
[2:36] Speaker 2: these companies. But they're also using things like offshore profit
[2:41] Speaker 2: shifting they have domiciled in tax havens, say over in Jersey.
[2:46] Speaker 2: In the US, you have dividend payouts to shareholders, big
[2:50] Speaker 2: profits sent to the executives.
[2:52] Speaker 3: Of the companies that own it.
[2:54] Speaker 2: So they have really developed ways of extracting more profits
[2:57] Speaker 2: from the system. So it's hugely football in that way.
[3:01] Speaker 2: And the SIGTAR report asks the question are we really
[3:05] Speaker 2: getting value for money given its government money which is
[3:09] Speaker 2: paid for by tax payers. So Australians getting value for money?
[3:12] Speaker 2: And is the system serving the job seekers themselves? Is
[3:16] Speaker 2: helping them find employment?
[3:17] Speaker 1: Okay, so could you explain to me how the business
[3:20] Speaker 1: model works and what it is that these private providers
[3:23] Speaker 1: are supposed to be delivering for that money.
[3:26] Speaker 2: The business model is that you're awarded a contract to
[3:29] Speaker 2: find work for unemployed Australians. Now, within the system, there
[3:35] Speaker 2: are for profit agencies that are not for profit agencies
[3:38] Speaker 2: and there are a few government run job hubs. But
[3:41] Speaker 2: for the for profit agencies think about what their actual
[3:44] Speaker 2: product is. Their product is unemployed people. So when unemployment
[3:51] Speaker 2: is high, it's actually good for business because they'll get
[3:54] Speaker 2: more unemployed.
[3:54] Speaker 3: People on their books.
[3:56] Speaker 2: And when someone comes on your books, you'll get a
[3:59] Speaker 2: payment you can get of progress payments, you can get
[4:02] Speaker 2: job placement payments, you can get bonuses. These things are
[4:05] Speaker 2: all there to incentivize you to find work. For these people,
[4:09] Speaker 2: so they're meant to be there to get unemployed Australians
[4:13] Speaker 2: into work, but they're also there to enforce mutual obligations.
[4:19] Speaker 2: So some of those mutual obligations could be things like
[4:22] Speaker 2: you have to submit a certain number of job applications
[4:25] Speaker 2: every week, you have to go to a certain number
[4:27] Speaker 2: of job interviews a week. You may have to go
[4:29] Speaker 2: to a skills and training program to become more employable
[4:33] Speaker 2: and more presentable. Now, the problem is that these are
[4:36] Speaker 2: private companies that have the power to say yes, you
[4:40] Speaker 2: have met your mutual obligations or no, you haven't, and
[4:44] Speaker 2: there are numerous reports of them using this to punish people.
[4:49] Speaker 2: So if they say that you have not met your
[4:51] Speaker 2: mutual obligations, they can trigger a suspension of your unemployment benefits,
[4:55] Speaker 2: which can be disastrous for people that really should not
[4:59] Speaker 2: be in the power of these for profit companies. It's
[5:03] Speaker 2: been a major tension in the system, and it's been
[5:05] Speaker 2: there from the beginning.
[5:06] Speaker 1: Let's talk a little more about the impact that we
[5:09] Speaker 1: know this has had because there's been investigations over the
[5:12] Speaker 1: years that have uncovered false payment claims. There's been inquiries
[5:17] Speaker 1: that have shown how people are pushed through these pointless
[5:21] Speaker 1: activities or left without meaningful help. So what do we
[5:25] Speaker 1: already know about the flaws in the way this operates.
[5:29] Speaker 2: Well, you could go back into any year and pull
[5:32] Speaker 2: up the news stories from that year and there'd inevitably
[5:34] Speaker 2: be some scandal involved with the system.
[5:37] Speaker 6: There are credible claims of widespread rauting by some agencies,
[5:41] Speaker 6: but the relevant minister has declined to discuss the problems
[5:44] Speaker 6: with us. We have now completed an investigation with the
[5:47] Speaker 6: help of whistleblowers, which suggests that significant fraud criminality is
[5:52] Speaker 6: going on.
[5:53] Speaker 2: So back in twenty fifteen, the federal government had to
[5:56] Speaker 2: claw back forty one million dollars worth of false clas
[6:00] Speaker 2: aims that some private job agencies had been submitting over
[6:03] Speaker 2: a three year period forgery, manipulation of records and the
[6:08] Speaker 2: lodgment of inflated claims for fees were really widespread.
[6:12] Speaker 7: Dozens of ors claims have been examined by four Corners,
[6:15] Speaker 7: and more than seventy percent of them relied on suspect paperwork,
[6:19] Speaker 7: with clients repeatedly disputing the company's records. Hours were bumped up,
[6:24] Speaker 7: wages were inflated, and in several cases their claim forms
[6:28] Speaker 7: appeared to have been forged.
[6:29] Speaker 2: Also, there is the work for the doll scheme that's
[6:32] Speaker 2: also had massive problems. Ten years ago, an eighteen year
[6:36] Speaker 2: old boy in Queensland died on a work for the
[6:39] Speaker 2: doll site. He had fallen off the tray of a
[6:44] Speaker 2: tractor who went over speed bump and he fell off
[6:47] Speaker 2: and hid.
[6:47] Speaker 8: His had a young job seeker, mister Joshua park Thing,
[6:50] Speaker 8: who was a participant. Any workplace accident is a tragedy. Unfortunately,
[6:56] Speaker 8: they occur usually through the entire accident and no fault
[7:00] Speaker 8: of any particular person. And I think in the case
[7:03] Speaker 8: of this accident, it was a situation that could have
[7:07] Speaker 8: easily been avoided but wasn't avoided on this occasion, and
[7:10] Speaker 8: this man's life has been taken, which is a great tragedy.
[7:12] Speaker 3: Now.
[7:13] Speaker 2: The investigation into this death then led to this massive
[7:17] Speaker 2: public discussion about how unsupervised a lot of these work
[7:21] Speaker 2: for the doll sites are, how little training is given
[7:24] Speaker 2: to the kids. Many of them are kids, they're only
[7:27] Speaker 2: just leaving school and getting into the workforce, people in
[7:29] Speaker 2: their late twenties and early thirties. They're given very little
[7:32] Speaker 2: training before entering these job sites, and that job sites themselves,
[7:35] Speaker 2: not only are they unsupervised, but they're in pretty.
[7:38] Speaker 3: Dangerous conditions under the hot sun.
[7:39] Speaker 2: All of these types of things, I mean, the more
[7:42] Speaker 2: you look into it, you will find those types of examples.
[7:45] Speaker 1: Everywhere coming up are political donations from these companies muddying
[7:52] Speaker 1: the waters.
[8:03] Speaker 4: Today, I'm announcing that the Albanese Labor government is embarking
[8:08] Speaker 4: on the biggest reform in employment services in over thirty years.
[8:14] Speaker 4: This is a major positive step for the over one
[8:17] Speaker 4: million Australians who access this system each year by ensuring
[8:21] Speaker 4: that they get the right support at the right time.
[8:26] Speaker 1: So Garetha Labor government has promised now that we'll see
[8:30] Speaker 1: the biggest overhaul to the unemployment system in three decades.
[8:35] Speaker 1: What is the minister said about the system about how
[8:39] Speaker 1: broken they think it is?
[8:40] Speaker 2: Right now, they've been frank they say the system is broken.
[8:45] Speaker 2: When the Albernesi government won the federal election in twenty
[8:48] Speaker 2: twenty two, it initiated an inquiry into the system. The
[8:52] Speaker 2: final report of that inquiry was delivered in late twenty
[8:55] Speaker 2: twenty three and it pointed to all of these problems
[8:58] Speaker 2: that have played the system for days and said it
[9:00] Speaker 2: needed an overhaul now. Earlier this year, Amanda Rishworth, who
[9:04] Speaker 2: is the Federal Employment Minister, she said she wanted to
[9:08] Speaker 2: build a new employment service to fix the problems that
[9:11] Speaker 2: have plagued the system for decades. She said it's letting
[9:14] Speaker 2: too many people fall through the tracks.
[9:16] Speaker 4: Under Workforce Australia, most participants access support through third party
[9:22] Speaker 4: employment service providers. These providers should be delivering flexible, personalized support,
[9:29] Speaker 4: but the overwhelming evidence shows us that for too many
[9:33] Speaker 4: people this is simply not the case.
[9:36] Speaker 3: She said.
[9:36] Speaker 2: These private job agencies are too focused on getting people
[9:41] Speaker 2: into work who are pretty easy to get into work,
[9:44] Speaker 2: and it's parking the long term unemployed, the ones with
[9:47] Speaker 2: more complex needs. It's parking them on their books because
[9:50] Speaker 2: they just can't churn them through the system and make
[9:52] Speaker 2: money from them. So we have to find a way
[9:55] Speaker 2: to really help the people who have been let down
[9:57] Speaker 2: by the system. But when you look closely at the detail,
[10:00] Speaker 2: it doesn't look like the suggestion she's making to change
[10:03] Speaker 2: your system will be that big.
[10:05] Speaker 1: So what is labor actually promising to change.
[10:07] Speaker 2: Well, they want to introduce a three tier system for
[10:12] Speaker 2: people who are newly unemployed. They will say, in this
[10:15] Speaker 2: system there will be online and brief intervention services provided
[10:19] Speaker 2: by government website. But then for the second tier of people,
[10:24] Speaker 2: this is for people who are mildly disconnected from the
[10:26] Speaker 2: lab force, maybe they have a bit of a hole
[10:29] Speaker 2: in their employment history. This is where private providers will
[10:33] Speaker 2: still play a role. And then Tier three will be
[10:36] Speaker 2: for the long term unemployed, and that's where a lot
[10:40] Speaker 2: of resources will be poured into not for profits mental
[10:44] Speaker 2: health services, real intensive care to really get people back
[10:48] Speaker 2: and ready into the workforce. So you have that three
[10:49] Speaker 2: tiered system. It's just that when you go, okay, well,
[10:53] Speaker 2: how different are the incentives that are going to be
[10:55] Speaker 2: in the system compared to the one that has been
[10:57] Speaker 2: there for twenty years. I mean, they're still going to
[10:59] Speaker 2: have mutublications despite what experts see. They're still going to
[11:03] Speaker 2: have work for the doll despite what experts say, and
[11:07] Speaker 2: the role for the for profit systems is still going
[11:09] Speaker 2: to be big.
[11:10] Speaker 4: But what I'm focused on in this new system and
[11:13] Speaker 4: making sure the incentives are right underneath this system is
[11:17] Speaker 4: delivering high quality services, and we need the people that
[11:22] Speaker 4: can do that best delivering.
[11:24] Speaker 2: That, so those providers aren't up to scratch.
[11:27] Speaker 9: Well that tier.
[11:29] Speaker 4: Well, what I'm saying is that we need to get
[11:32] Speaker 4: the incentives right first and how we pay providers, but secondly,
[11:37] Speaker 4: we want to see the best people doing the job.
[11:39] Speaker 2: I'm not going and you say, okay, well, how are
[11:41] Speaker 2: you going to get the for profit providers to find
[11:44] Speaker 2: work for the unemployee? She says, oh, well, we can
[11:47] Speaker 2: use some incentive payments, bonus payments, progress payments, outcome payments,
[11:53] Speaker 2: build these incentives into the contracts. But those incentives have
[11:56] Speaker 2: been there from the beginning, so just it's essentially going
[11:59] Speaker 2: to become a matter of trying to come up with
[12:03] Speaker 2: the right combination of incentives to get private providers to
[12:07] Speaker 2: start really looking out for the welfare of the unemployed
[12:10] Speaker 2: and not really be so profit focused.
[12:13] Speaker 1: I mean, this report was very clear in its recommendations
[12:17] Speaker 1: around this, around no longer having private providers at the
[12:22] Speaker 1: center of this system. There was also a parliamentary inquiry
[12:25] Speaker 1: back in twenty twenty three that said that employment services
[12:29] Speaker 1: should be fundamentally rebuilt with a strong public provider at
[12:33] Speaker 1: its core. So without changing the foundations of the system,
[12:40] Speaker 1: how much can the government really fix the problem?
[12:43] Speaker 2: Well, that's a great question. I mean, it's the million
[12:45] Speaker 2: dollar question. The thought of tearing down the system and
[12:48] Speaker 2: rebuilding another publicly run service like the old Commonwealth Employment Service,
[12:52] Speaker 2: that task probably seems far too big, too expensive, and
[12:55] Speaker 2: too risky. So they'd rather persist with the current system,
[13:00] Speaker 2: try to make it better somehow. So, I mean, they've
[13:03] Speaker 2: been trying to make it better for decades by tinkering
[13:06] Speaker 2: with this type of stuff. If they're going to still
[13:08] Speaker 2: be keeping so many of the core elements of the
[13:11] Speaker 2: system in place, then you can only wish them well.
[13:15] Speaker 1: Yeah, I mean, what would they have to do differently
[13:18] Speaker 1: to avoid the same outcomes.
[13:20] Speaker 2: Well, in this Sectar report, it made four recommendations. Firstly,
[13:24] Speaker 2: it said that employment services should be entirely returned to
[13:28] Speaker 2: the public sector, So get rid of for profit agencies.
[13:32] Speaker 2: The chances of this government doing that are pretty low,
[13:37] Speaker 2: but let's just assume that it does so. Sigtar says,
[13:40] Speaker 2: get rid of all profit agencies, bring it back in house.
[13:43] Speaker 2: It should be entirely returned to the public sector. In
[13:46] Speaker 2: the meantime, it says the procurement of these services must
[13:50] Speaker 2: be strengthened so that government must enforce stricter transparency standards
[13:55] Speaker 2: for contractors in the current system. Because these contracts not transparent,
[14:01] Speaker 2: what's happening inside some of these for profit companies is
[14:04] Speaker 2: very hard to find out. SIKTA spent a lot of
[14:07] Speaker 2: time trying to figure out how profits were potentially being
[14:10] Speaker 2: shifted overseas or how tax heavens were being used. It
[14:13] Speaker 2: found some of the famous for profit agencies hadn't even
[14:17] Speaker 2: filed the last few years of financial reports with asik
[14:21] Speaker 2: So the transparency of the sector needs to be improved
[14:23] Speaker 2: and the procurement needs to be improved. But in the
[14:28] Speaker 2: third recommendation, it's said that the providers need to be
[14:32] Speaker 2: properly scrutinized across all funding streams. And what that means
[14:36] Speaker 2: is that some of these providers, they're not only contracted
[14:39] Speaker 2: to provide employment services, they're also contracted to provide age
[14:43] Speaker 2: care services or disability care services, and if they have
[14:48] Speaker 2: been found to be behaving poorly in one of those sectors,
[14:52] Speaker 2: then they shouldn't be getting contracts in any of them.
[14:54] Speaker 2: And its fourth recommendation was that political donations by government
[14:59] Speaker 2: contras actors should be banned because it's just the risk.
[15:03] Speaker 3: To integrity or perceived integrity of the system.
[15:05] Speaker 1: It's too high, right, And that last recommendation that is
[15:09] Speaker 1: an attempt to stop these companies using the profits they're
[15:13] Speaker 1: making from these contracts to donate to political parties. Tell
[15:19] Speaker 1: me more about that.
[15:20] Speaker 3: That's right.
[15:20] Speaker 2: Well, as we really like to do in Australia, we've
[15:23] Speaker 2: privatized a lot of these public services and now these
[15:27] Speaker 2: huge billion dollar contracts are awarded to private companies to
[15:30] Speaker 2: deliver what are essential services which used to be publicly funded.
[15:35] Speaker 2: Those private companies are very reliant on those government contracts
[15:40] Speaker 2: for their revenues and for their profits for their shareholders,
[15:43] Speaker 2: and they would like to keep winning contracts, and so
[15:46] Speaker 2: part of the thing is you start seeing a lot
[15:48] Speaker 2: of large political donations from these for profit companies to
[15:52] Speaker 2: the major political parties in Australia Labor, Liberal, LMP and Queensland.
[15:56] Speaker 3: It's just part of the system.
[15:58] Speaker 2: I mean, we see it everywhere, especially where they're that
[16:00] Speaker 2: where all these industries are dominated by a couple of
[16:02] Speaker 2: big players.
[16:03] Speaker 3: Political donations of life.
[16:09] Speaker 2: I mean, I don't know if you remember Eddie Groves
[16:12] Speaker 2: and the childcare industry back at the turn of the century.
[16:15] Speaker 3: But he famously.
[16:16] Speaker 2: Joined Australia's rich list for under forties because he had
[16:20] Speaker 2: become incredibly wealthy from getting government contracts of childcare services.
[16:26] Speaker 2: And he was one of the original guys who figured
[16:30] Speaker 2: out that under these privatized scheme for essential services, government
[16:35] Speaker 2: contracts can be very lucrative. You lock them down and
[16:38] Speaker 2: then you pursue a system of really aggressive expansion and
[16:43] Speaker 2: absorption of other countries, eating up the smaller players, and
[16:46] Speaker 2: pretty soon you'll have a multi billion dollar company and
[16:49] Speaker 2: you'll be on the rich list. That all came crashing down,
[16:53] Speaker 2: but the lessons from that time for some of these
[16:56] Speaker 2: other private equity providers, they saw that if you're a
[17:00] Speaker 2: smarter with it, then government contracts can be a lucrative
[17:03] Speaker 2: revenue stream.
[17:07] Speaker 1: Welgar, I thank you so much for your time.
[17:10] Speaker 3: Norries, thank you.
[17:27] Speaker 9: Also in the news, Labor MP Ed Husick has been
[17:30] Speaker 9: taken to hospital with fractures and concussion after his car
[17:34] Speaker 9: was involved in an accident with a truck at another
[17:36] Speaker 9: car in Sydney. Usick was treated and later released from
[17:39] Speaker 9: Westmeat Hospital. He'll take a short period of leave from
[17:41] Speaker 9: his parliamentary duties while he recovers and out of the
[17:46] Speaker 9: world's biggest doll companies have collected more than ninety billion
[17:49] Speaker 9: dollars in the month since the Iran war began. That's
[17:52] Speaker 9: almost seven hundred thousand dollars.
[17:53] Speaker 2: A minute.
[17:54] Speaker 9: Guardian analysis found the companies have used the disruption to
[17:58] Speaker 9: fossil fuel supplies to all my double their combined profits.
[18:02] Speaker 9: Campaigners have warned their households have been left paying the
[18:04] Speaker 9: price in the form of high bills and climate chaos.
[18:08] Speaker 9: I'm Daniel James. Thanks for listening to seven AM. We'll
[18:11] Speaker 9: be back tomorrow.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.