Fewer jobseekers will have face-to-face meetings with employment services providers when the jobactive program is scrapped next year, in a digital overhaul that will cut government spending on employment services by $860.4m.
Despite the pandemic pushing more people into the employment services system, the four-year savings continue the trend of cutting spending in the area, after last year’s budget also banked about $1.4bn.
The budget papers show the flagship jobactive program will be replaced by a so-called “New Employment Services Model” from July 2022 that will allow the “most job-ready jobseekers to manage their job search requirements online”.
The government says this would “allow more resources to be directed to providing personal, tailored help to disadvantaged Australians who need access to vital skills and training to break into the workforce”.
Welfare groups and the peak body for employment service providers lashed the decision, given the pandemic has pushed hundreds of thousands more people into the system, with one saying it represented “budget savings off the poorest people in society”.
The overhaul comes after a government-commissioned report warned the jobactive system was inefficient and follows constant criticism from experts and welfare groups that it allowed outsourced job agencies to profit despite poor outcomes.
The change is likely aimed at combating a known phenomenon in the system – known as “parking” and “creaming” – where job agencies focus their efforts on those easiest to place into work to garner bonuses, known as “outcome payments”, while more disadvantaged jobseekers are neglected.
The government has already directed about 350,000 new jobseekers to the interim online system and the new model solidifies this shift towards digital services for most “job ready” seekers.
Only disadvantaged jobseekers and those who opt-in will be required to attend face-to-face appointments with a job agency. From January, the government will also extend this option to people within the smaller disability employment services program.
All jobseekers will still have to meet the terms of a job plan, including applying for a set number of positions each month, and report their efforts.
Kristin O’Connell, a spokesperson for the Australian Unemployed Workers’ Union, said banking savings from employment services ultimately meant making “budget savings off the poorest people in society”.
“As we expected, this is exactly the opposite of what unemployed people have been begging the government to give them for years and years now,” she said.
“People want meaningful support. And we know that at the moment, they get absolutely nothing useful from a job agency. So it’s great to see the demise of job agencies.
“But replacing it with an online program just divides unemployed people into two different classes and is going to do nothing to help.”
O’Connell said effective employment services should be available to those who wanted to access them and, in this sense, cutting overall funding would do nothing to achieve this.
The Greens senator Rachel Siewert, who chaired a Senate inquiry into jobactive, said Australia was already “one of the lowest spenders in the OECD on employment services”.
The government was “banking the savings off of the ‘new’ digital employment services model rather than reinvesting them to support the 1.4 million people on jobseeker and youth allowance”, she said.
“We should be investing more to properly reform our employment services so that services meet peoples’ individual needs and stop massive for-profit operators making millions and millions out of people without work,” Siewert said.
Sally Sinclair, chief executive of the National Employment Services Association, welcomed the focus on “reducing unemployment and upskilling”.
The budget includes $258.6m to extend local jobs program and boost wage subsidies paid to employers who take on jobseekers through job agencies.
But Sinclair said the peak body was “concerned” that scaling back face-to-face support when it was needed more than ever would leave some people “further disadvantaged”.
A government statement says the new system allows for “increased investment in disadvantaged jobseekers who need extra help to find a job through providing personal, tailored assistance delivered by providers”.
But Sinclair said initial indications suggested there would be less money overall directed to job agencies to support disadvantaged jobseekers under the new system compared with jobactive.
Cassandra Goldie, chief executive of the Australian Council of Social Services, said she was also concerned about the cut to employment services spending.
The government’s statement also says the new model would include safeguards to ensure people who needed face-to-face services receive it.
O’Connell said she was worried the “algorithm” used to classify jobseekers was flawed, a concern that has also previously been expressed by employment services providers.
The government will also save $192m by delaying the date at which some jobseekers start receiving unemployment benefits. Those using online digital employment service will now only be paid after they have signed a job plan.
O’Connell said the change would simply punish people who are unable to use the government’s “confusing” online systems.
The government’s much-maligned employer reporting line to businesses to dob in jobseekers who refuse to take up work will cost $2.5m to set up, the budget papers show.
Further changes, initially flagged in February, will see some jobseekers referred to work for the dole after six months, rather than after a year.