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

Summary

Podcast Summary:

Podcast: 7am (Solstice Media)
Title: Our job system is broken: Are private providers to blame?
Date: August 6, 2026
Host: Ruby Jones
Guest: Gareth Hutchens (ABC business and economics reporter)

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Episode Overview

This episode takes a deep dive into the privatisation of Australia’s employment services system and why, after nearly 30 years, both experts and government agree the system is broken. ABC reporter Gareth Hutchens discusses the findings of a new global corporate tax research (SIKTAR) report, exploring how private employment providers profit from unemployment, why scandals keep emerging, and whether the Albanese government’s promised overhaul will make any real difference.

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Key Discussion Points & Insights

1. The Scale and Profitability of Private Employment Services

Timestamps: 01:24–03:17

• Industry Value: Current contracts for employment services are worth $5.5 billion, spread across 45 providers.
• For-Profit Dominance: Nine for-profit providers, mostly multinational or private equity-controlled, account for about 40% ($2.1 billion) of the total value.
• Profit Tactics: Many of these companies use tax havens, offshore profit shifting, and large shareholder dividends to maximise profit from taxpayer-funded contracts.
• Question Raised: As Gareth summarizes, “So it's a pretty lucrative, profitable venture for some of these companies.” [02:32] and poses, “Are we really getting value for money? And is the system serving the job seekers themselves?” [03:15]

2. How the Business Model Works—and Its Risks

Timestamps: 03:26–05:06

• Incentive Structure: Providers receive payments at various milestones: when a job seeker signs up, progresses, and gains employment.
• Misaligned Interests: "Their product is unemployed people. So when unemployment is high, it's actually good for business because they'll get more unemployed people on their books." [03:41]
• Mutual Obligations: Providers have power to approve or deny Jobseeker obligations, which can result in people losing benefits.
• Potential for Harm: Gareth notes the “major tension,” that for-profit agencies wield significant power over vulnerable people, sometimes leading to punitive outcomes.

3. Systemic Failures and Repeated Scandals

Timestamps: 05:06–07:48

• Historic Rorting & Fraud: The sector has a history of inflating claims, falsifying records, and widespread rorting. E.g., government clawed back $41 million in 2015 for false claims.
  • "Forgery, manipulation of records and the lodgement of inflated claims for fees were really widespread." [05:53]
• Serious Harm: The Work for the Dole scheme has faced major criticism after a teenager's death exposed unsafe and unsupervised work conditions.
  • "The investigation into this death then led to this massive public discussion about how unsupervised a lot of these work for the doll sites are..." [07:10]

4. Labor’s Proposed Overhaul—and Its Limitations

Timestamps: 08:33–12:43

• Government Acknowledgement: Amanda Rishworth, Employment Minister, says the system “is broken” and “letting too many people fall through the cracks.” [09:11]
• Three-Tier Reform Proposal:
  1. First tier—online/brief government services for the newly unemployed
  2. Second tier—private providers for people mildly disconnected from work
  3. Third tier—intensive not-for-profit and mental health support for long-term unemployed
• What’s Not Changing:
  • For-profit providers will remain central for a huge segment of job seekers.
  • Core features like “mutual obligations” and “work for the dole” not being scrapped, despite evidence and expert opinion.
  • “Those incentives have been there from the beginning. So it's essentially going to become a matter of trying to come up with the right combination of incentives...” [12:10]

5. Root Causes—Is Real Reform Possible?

Timestamps: 12:43–13:50

• Calls for a Public System: Both the SIKTAR report and a 2023 parliamentary inquiry recommended a strong public provider be reinstated at the centre.
• Political Reluctance: Gareth observes, “The thought of...rebuilding another publicly run service...probably seems far too big, too expensive and too risky. So they'd rather persist with the current system, but just try to make it better somehow." [13:13]

6. SIKTAR Recommendations for True Change

Timestamps: 13:50–15:36

• 1) Return to Public Sector: Employment services should be publicly run; discontinue for-profit agencies (unlikely under current government).
• 2) Enforce Transparency: Stricter standards for contractors, including transparency on profits and overseas tax strategies.
• 3) Cross-Sector Accountability: Providers must be scrutinised across all funding streams—if they behave poorly in one (e.g., aged care), they shouldn’t be trusted in another.
• 4) Ban Political Donations: Stop government contractors (including for-profit employment services) from donating to political parties to prevent real or perceived corruption.

7. The Influence of Political Donations

Timestamps: 15:36–17:37

• Revolving Door: Private providers rely on government contracts and use part of their profits to donate to political parties, maintaining influence and securing future contracts.
• Historical Context: Gareth brings up childcare mogul Eddie Groves as an early example of fortunes built on privatised government contracts:
  • “Under these privatised schemes...government contracts can be very lucrative. You lock them down and then you pursue a system of really aggressive expansion and absorption...” [16:41]
• Risks: This cycle, if unchecked, incentivises profit-seeking over public good and undermines trust in vital public services.

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Notable Quotes & Memorable Moments

• "Their product is unemployed people. So when unemployment is high, it's actually good for business."
  – Gareth Hutchens [03:41]

• "Forgery, manipulation of records and the lodgement of inflated claims for fees were really widespread."
  – Gareth Hutchens [05:53]

• “She said these private job agencies are too focused on getting people into work who are pretty easy to get into work. And it's parking the long term unemployed…on their books because they just can't churn them through the system and make money from them.”
  – Gareth Hutchens [10:06]

• "If they're going to still be keeping so many of the core elements of the system in place, then you can only wish them well."
  – Gareth Hutchens, on limited future reforms [13:35]

• "Those private companies are very reliant on those government contracts for their revenues and for their profits, for their shareholders and they would like to keep winning contracts. And so part of the thing is you start seeing a lot of large political donations from these for profit companies to the major political parties in Australia."
  – Gareth Hutchens [15:51]

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Conclusion

The episode offers a comprehensive and critical look at the privatised employment services sector in Australia, revealing its deep-rooted problems, perverse incentives, and recurring scandals. While the government recognises the system's failures and promises reform, the changes proposed leave private, for-profit providers at the core, raising doubts about whether this time will be any different. The conversation closes with a spotlight on political donations, profit-motivated incentives, and the ongoing debate over who should control Australia's system for supporting the unemployed.

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For listeners seeking a deeper understanding of Australia’s welfare-to-work system, this episode is essential for unpacking the current crisis and the uphill task of meaningful reform.

Transcript

[A]

Ruby. I'm Ruby Jones and you're listening to 7am. 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, repeat 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 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 Hutchins on how helping unemployed Australians became a massive money spinner and whether labor can fix the system while leaving private companies at its centre. It's Friday, august 17th. So, Gareth, let's begin with this new report from siktar, the global corporate tax research firm. It examined the private companies that are paid to help people on Jobseeker to find work to begin with. Just how profitable is this entire industry?

[B]

So Austenda data shows that the value of the contracts that are out there at the moment for employment services, it's worth $5.5 billion. 45 providers have been awarded those contracts. Now the top 25 of those providers take the lion's share of those contracts, pretty much all of it. When you dig a little deeper into it, you'll find that nine for profit providers have been awarded contracts worth 2.1 billion. So it's about 40% of that 5.5 billion is going to nine for profit providers. The two largest of those are private equity controlled multinationals. The two others are quite famous.

[C]

Hi, I'm Tanya, the national operations manager for Job Statewide. I'm so excited to announce today our success in bringing 26 sites under the new Workforce Australia contract.

[B]

They've made their owners multimillionaires in Australia.

[C]

Serena Russell Institute is Australia's leading provider of the Career Transition Assistance Program. Our program mentors, upskills and supports you back into the workforce.

[B]

So it's a pretty lucrative, profitable venture for some of these companies. But they're also using things like offshore profit shifting. They have domiciled in tax havens, say over in Jersey in the US you have dividend payouts to shareholders, big profits sent to the executives of the companies that own it. So they have really developed ways of extracting more profits from the system. So it's hugely profitable in that way. And the Siktar report asks the question, are we really getting value for money? Given its government money, which is paid for by taxpayers. So are Australians getting value for money? And is the system serving the job seekers themselves? Is it helping them find employment?

[A]

Okay, so could you explain to me how the business model works and what it is that these private providers are supposed to be delivering for that money?

[B]

The business model is that you're awarded a contract to find work for unemployed Australians. Now, within the system, there are for profit agencies, there are not for profit agencies, and there are a few government run job hubs. But for the for profit agencies, think about what their actual product is. Their product is unemployed people. So when unemployment is high, it's actually good for business because they'll get more unemployed people on their books. And when someone comes on your books, you'll get a payment. You can get a payment of progress payments, you can get job placement payments, you can get bonuses. These things are all there to incentivise you to find work for these people. So they're meant to be there to get unemployed Australians into work, but they're also there to enforce mutual obligations. So some of those mutual obligations could be things like you have to submit a certain number of job applications every week, you have to go to a certain number of job interviews a week, you may have to go to a skills and training program to become more employable and more presentable. Now, the problem is that these are private companies that have the power to say, yes, you have met your mutual obligations or no, you haven't. And there are numerous reports of them using this to punish people. So if they say that you have not met your mutual obligations, they can trigger a suspension of your unemployment benefits, which can be disastrous for people that really should not be in the power of these for profit companies. It's been a major tension in the system and it's been there from the beginning.

[A]

Let's talk a little more about the impact that we know this has had because there's been investigations over the years that have uncovered false payment claims. There's been inquiries that have shown how people are, are pushed through these pointless activities or left without meaningful help. So what do we already know about the flaws in the way this operates?

[B]

Well, you could go back into any year and pull up the news stories from that year and there'd inevitably be some scandal involved with the system.

[D]

There are credible claims of widespread rorting by some agencies, but the relevant minister has declined to discuss the problems with us.

[B]

We've now completed an investigation with the

[D]

help of whistleblowers, which suggests that significant

[B]

fraud criminality is going on. So back in 2015, the federal government had to claw back $41 million worth of false claims that some private job agencies had been submitting over a three year period. Forgery, manipulation of records and the lodgement of inflated claims for fees were really widespread.

[D]

Dozens of ORS claims have been examined by Four Corners and more than 70% of them relied on suspect paperwork with clients repeatedly disputing the company's records. Hours were bumped up, wages were inflated and in several cases their claim forms appeared to have been forged.

[B]

Also there is the work for the dole scheme that's also had massive problems. 10 years ago an 18 year old boy in Queensland died on a work for the dole site. He had fallen off the tray of a tractor, it went over a speed bump and he fell off and hit his head. A young job seeker, Mr. Joshua park thing, who was a participant. Any workplace accident is a tragedy. Unfortunately they occur usually through entire accidents and no fault of any particular person. And I think in the case of this accident it was a situation that could have easily been avoided but wasn't avoided on this occasion. And this man's life has been taken, which is great tragedy. Now the investigation into this death then led to this massive public discussion about how unsupervised a lot of these work for the doll sites are, how little training is given to the kids. Many of them are kids, they're only just leaving school and getting into the workforce. People in their late 20s and early 30s, they're given very little training before entering these job sites and the job sites themselves. Not only are they unsupervised, but they're in pretty dangerous conditions under the hot sun and all of these types of things. I mean the more you look into it you will find those types of examples everywhere.

[A]

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[B]

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[C]

Today I'm announcing that the Albanese labor government is embarking on the biggest reform in employment services in over 30 years. This is a major positive step for the over 1 million Australians who access this system each year. By ensuring that they get the right support at the right time.

[A]

So Gareth, the Labor government has promised now that we'll see the biggest overhaul to the unemployment system in three decades. What has the minister said about the system, about how broken they think it is right now?

[B]

They've been frank. They say the system is broken. When the Albanese government won the federal election in 2022, it initiated an inquiry into the system. The final report of that inquiry was delivered in late 2023 and it pointed to all of these problems that have plagued the system for decades and said it needed an overhaul. Now, earlier this year, Amanda Rishworth, who is the federal Employment minister, she said she wanted to build a new employment service to fix the problems that have plagued the system for decades. She said it's letting too many people fall through the tracks.

[C]

Under Workforce Australia, most participants access support through third party employment service providers. These providers should be delivering flexible, personalised support. But the overwhelming evidence shows us that for too many people this is simply not the case.

[B]

She said these private job agencies are too focused on getting people into work who are pretty easy to get into work. And it's parking the long term unemployed, the ones with more complex needs, it's parking them on their books because they just can't churn them through the system and make money from them. So we have to find a way to really help the people who have been let down by the system. But when you look closely at the detail, it doesn't look like the suggestions she's making to change the system will be that big.

[A]

So what is labor actually promising to change?

[B]

Well, they want to introduce a three tier system for people who are newly unemployed. They will say in this system there will be online and brief intervention services provided by government website. But then for the second tier of people, this is for people who are mildly disconnected from the labor force. Maybe they have a bit of a hole in their employment history. This is where private providers will still play a role. And then tier three will be for the long term unemployed. And that's where a lot of resources will be poured into. Not for profits, mental health services, real intensive care to really get people back and ready into the workforce. So you have that three tiered system. It's just that when you go, okay, well how different are the incentives that are going to be in the system compared to the one that has been there for 20 years? I mean, they're still going to have mutual obligations despite what experts say, they're still going to have work for the dole despite what experts say and the role for the for profit systems is still going to be big.

[C]

But what I'm focused on in this new system and making sure the incentives are right underneath this system is delivering high quality services. And we need the people that can do that best delivering that so those

[B]

providers aren't up to scratch to that tier.

[C]

Well, what I'm saying is that we need to get the incentives right first and how we pay providers. But secondly, we want to see the best people doing the job. I'm not going to.

[B]

And you say, okay, well how are you going to get the for profit providers to find work for the unemployed? She says, oh, well, we can use incentive payments, bonus payments, progress payments, outcome payments, build these incentives into the contracts. But those incentives have been there from the beginning. So it's essentially going to become a matter of trying to come up with the right combination of incentives to get private providers to start really looking out for the welfare of the unemployed and not really be so profit focused.

[A]

I mean, this report was very clear in its recommendations around this, around no longer having private providers at the centre of this system. There was also a parliamentary inquiry back in 2023 that said that employment services should be fundamentally rebuilt with a strong public provider at its core. So without changing the foundations of the system, how much can the government really fix the problem?

[B]

Well, that's a great question. I mean, it's the million dollar question. The thought of tearing down the system and rebuilding another publicly run service like the old Commonwealth Employment Service, that task probably seems far too big, too expensive and too risky. So they'd rather persist with the current system, but just try to make it better somehow. So, I mean, they've been trying to make it better for decades by tinkering with this type of stuff. If they're going to still be keeping so many of the core elements of the system in place, then you can only wish them well.

[A]

Yeah, I mean, what would they have to do differently to avoid the same outcomes?

[B]

Well, in this SIKTAR report, it made four recommendations. Firstly, it said that employment services should be entirely returned to the public sector. So get rid of for profit agencies. The chances of this government doing that are pretty low, but let's just assume that it does. So SIKTAR says get rid of for profit agencies, bring it back in house. It should be entirely returned to the public sector. In the meantime, it says the procurement of these services must be strengthened, so the government must enforce stricter transparency standards for contractors in the current system because these contracts are not transparent. What's happening inside some of these for profit companies is very hard to find out. Siktar spent a lot of time trying to figure out how profits were potentially being shifted overseas or how tax havens were being used. It found some of the famous for profit agencies hadn't even filed last few years of financial reports with asic. So the transparency of the sector needs to be improved and the procurement needs to be improved. But in the third recommendation, it said that the providers need to be properly scrutinised across all funding streams. And what that means is that some of these providers, they're not only contracted to provide employment services, they're also contracted to provide aged care services or disability care services. And if they have been found to be behaving poorly in one of those sectors, then they shouldn't be getting contracts in any of them. And its fourth recommendation was that political donations by government contractors should be banned because it's just the risk to integrity or perceived integrity of the system is too high.

[A]

Right. And that last recommendation, that is an attempt to stop these companies using the profits they're making from these contracts to donate to political parties. Tell me more about that.

[B]

That's right. Well, as we really like to do in Australia, we've privatised a lot of these public services and now these huge billion dollar contracts are awarded to private companies to deliver what are essential services which used to be publicly funded. Those private companies are very reliant on those government contracts for their revenues and for their profits, for their shareholders and they would like to keep winning contracts. And so part of the thing is you start seeing a lot of large political donations from these for profit companies to the major political parties in Australia. Labor, Liberal, LNP in Queensland. It's just part of the system. I mean, we see it everywhere, especially where all these industries are dominated by a couple of big players. Political donations arrive. I mean, I don't know if you remember Eddie Groves and the childcare industry back at the turn of the century, but he famously joined Australia's rich list for under 40s because he had become incredibly wealthy from getting government contracts of childcare services. And he was one of the original guys who figured out that under these privatised schemes for essential services, government contracts can be very lucrative. You lock them down and then you pursue a system of really aggressive expansion and absorption of other countries, eating up the smaller players. And pretty soon you'll have a multi billion dollar company and you'll be on the rich list that all came crashing down. But the lessons from that time for some of these other private equity providers, they saw that if you're a smarter with it, then government contracts can be a lucrative revenue stream.

[A]

Well, Gareth, thank you so much for your time.

[B]

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[D]

No.

[B]

How many scratchers did you hit to get that? I hit a button on Carvana.com once. Okay, that's fair. It's like the lottery, except you always win. Not like the lottery at all, actually. Exactly. Inexplicably good offers worth bragging about. Sell your car today on Carvana. Pickup fees may apply.

[D]

Also in the news, Labor MP Ed Husick has been taken to hospital with fractures and concussion after his car was involved in an accident with a truck and another car in Sydney. Cusick was treated and later released from Westmead Hospital. He'll take a short period of leave from his parliamentary duties while he recovers. And eight of the world's biggest oil companies have collected more than $90 billion in the months since the Iran war began. That's almost $700,000aminute. Guardian analysis found the companies have used the disruption to fossil fuel supplies to almost double their combined profits. Campaigners have warned that households have been left paying the price in the form of high bills and climate chaos. I'm Daniel James. Thanks for listening to 7am we'll be back tomorrow.