Sharp fall in jobless rate? Centrelink may be the answer

It reflects a strong economy and an extremely tight labour market, both of which contributed to the Reserve Bank's decision to raise official interest rates two weeks ago.

Mr Howard says it is a blow to those who argued that the WorkChoices laws would mean dramatic job losses.

More spin, more hype... and completely ignoring the changes made to the Centrelink system on 1 July 2006.

"Helping people move into work" - an overview (Centrelink, 22 June 2006)

The system is truly an interesting place. It is managed by the Department of Employment and Workplace Relations, whose minister is Kevin Andrews. DEWR manages both Centrelink and the Job Network. Centrelink has had its ability to investigate actions by Job Network agencies curtailed by various Federal Government legislation since 1997-98 - when the ALP's "job compact", introduced four years earlier, was abolished and the Job Network was launched to replace the supposedly ineffective CES (Commonwealth Employment Service).

The idea behind it was that a competitive tendering system could do better than the government - fundamental to Liberal Party ideology. Job Network providers were given long-term unemployment cases formerly handled by the CES. They were rewarded for finding such jobseekers work, and were able to provide intensive assistance programs to them. Peter Davidson, social policy officer at ACOSS, said that "the theory behind the Job Network funding model is appealing: employment assistance providers are best placed to judge what assistance each job-seeker requires, and appropriate, cost effective assistance will be offered if funding is tied to employment outcomes rather than "programs"."[1] Another reason for the Job Network was to transfer the costs the Government was incurring onto somebody else - the providers in this case.

The first version of the Job Network failed, with nearly 75% of the providers leaving the network within the first year of operation. Quite simply, the money and incentive wasn't there for them to stay. The initial system limited Job Network jobs to Job Network providers, which caused many companies to stop offering jobs through the system due to the perceived low quality of applicants. The system was revamped after a year, giving Job Network providers considerably more autonomy. Curiously, a large number of new Job Network providers were faith-based agencies.

Many providers within the Job Network operate for profit, and they get money every time they pull someone into intensive assistance, even if the person clearly doesn't need it. A sure sign of a government system which makes profit are signs of corruption to make more money out of the system. Here's some examples:

• Service providers are being paid $4,500 - $8,000 to offer intensive assistance to disadvantaged people - so the idea is they classify anyone they can as disadvantaged. In some cases, job seekers may be called in for intensive assistance after just 2 weeks of unemployment, even if their employment prospects are strong elsewhere. The incentive for them to sign off Centrelink completely if they have the funds to do so is fairly high.
• Service providers are paid when they find someone work. I have heard allegations that some providers claim this money for jobs found by the jobseekers under their watch by themselves or through other agencies.
• There is a near-guarantee that they'll find work through the intensive assistance, but some jobs are known problem cases which frequently recycle people, have health and/or abuse risks and the employer can't find employees through normal channels. The providers may know this, but the incentive for them to turn a blind eye is high. For jobseekers, not accepting the job means getting breached, and risking losing one's payments for 8 weeks. If the person gets injured in such a job, they get transferred onto Disability Support Pension and off the unemployment queue. This is ultimately harming Australia's competitiveness on the world market.

A system which encourages and rewards corruption, maintained by a Government fearful of the very system collapsing with considerable electoral collateral? Never.

As an aside, Work For The Dole cases are, as far as I can ascertain, not counted under official unemployment statistics, which incidentally require that a person do just one hour of work a fortnight to be considered "employed". Few of these jobs have any merit or contribution to society, or improve the jobseeker's prospect for employment in their own field (indeed it may hinder them).

So when I see claims about the unemployment rate falling, don't blame me for being sceptical.

Links:
* "Howard hails falling jobless figures", ABC Online, 9 August 2006.
* "Job Network burnout? - ABC Counterpoint - interviewing a Job Network agency spokesman and a social work academic, 31 July 2006.
* Seems this sort of thing isn't by any means limited to Australia - Howard's good friend George Bush has been up to no good as well.