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Speech to the National Employment Services Association National Conference, Cairns.



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The Hon Brendan O'Connor

Minister for Employment Participation 15 August, 2008

Speech

National Employment Services Association National Conference

National Employment Services Association National Conference Cairns Convention Centre, Corner Wharf and

Sheridan Street, Cairns,

Acknowledgments

z I acknowledge the traditional owners of the land on which we meet, the Gimuy [Gim-why] Yidinji

people. z Ms Sally Sinclair, NESA CEO

z Mr Xavier Crimmins, NESA Chair (and expectant father)

z International and distinguished guests

It’s my pleasure to be here today at this important industry gathering. I am assured that the past few days

have provided for a great exchange of ideas about the future for Australian employment services.

This is a time of significant change for the sector and a great opportunity to do even more to tackle social and

economic disadvantage in this country.

We have developed this plan for the future of Australian employment services with you. Over the past six or

so months, I have criss-crossed the country discussing options and getting feedback.

The details of this plan will be fine tuned with your input throughout August, with the $3.9 billion tender

process set to get underway in late September.

It has been a highly consultative process because we believe that you are best placed to advise us. And I want

to take this opportunity to thank all of you for your considered input.

Of course, you have not all spoken with one voice, but many common themes have emerged and we have come

up with a blueprint for the future. A blueprint that has something—actually quite a lot—in it for everyone.

Today I would like to take a moment to talk through the thinking behind the decisions that have been taken to

date, and to update you on the progress of some important policy work still underway.

But before I do, I’d like to touch on the issue of leadership starting with last night’s Awards dinner which—

depending on how hard you "celebrated"—is hopefully still fresh in your minds!

I was told about the Industry Excellence Awards, which recognise our employment services leaders—indeed

our heroes—and what a truly remarkable contribution this industry makes to the lives of so many Australians.

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With Olympic fever gripping the world right now, many people would say a hero is an athlete who’s just won

gold. But you don’t need to win gold medals or break records to be a hero.

A hero for many of us is simply someone who makes a positive and lasting difference to the lives of others.

Yesterday afternoon many of you heard from Jonathon Welch, the inspirational Director of the Choir of Hard

Knocks. Earlier this year Jonathon most deservedly received the Australian of the Year: Local Hero award.

Every day Jonathon’s choir members come face to face with struggles and setbacks that most of us can’t

imagine. Yet they still manage to turn up to weekly rehearsals to get ready to perform at places like the Sydney

Opera House.

Our industry has its own share of home grown heroes and many of you have become leaders in the global

employment services industry.

Supporting job-seekers to tackle multiple barriers; to break the cycle of unemployment and poverty - making

a positive difference to lives is at the heart of what employment service providers do.

And because of the work that you and your colleagues do every day as a matter of course, you have helped to

turn around the lives of countless job seekers and their families. That’s a good day’s work in anyone’s book.

Government mandate and leadership

Like you, we are a government that doesn’t wish to put anything or anyone in the too hard basket.

It’s not by accident that we’re here today discussing the biggest shakeup of employment services in Australia

for years.

There were many reasons why the Rudd Government was elected last November. But underlying the decisions

of millions of Australians’ was a mood for change. People were looking for something more. They were looking

for socially and economically responsible leadership with a clear vision and direction for the future.

Nothing demonstrates this more than the Prime Minister’s recently announced groundbreaking partnership

with Andrew Forrest to get 50 000 Indigenous Australians into work through the Australian Employment

Covenant. This follows the apology to the stolen generations at the first possible opportunity, and action to

close the gap in health, education and employment.

This is the kind of approach that underpins the design of the new employment services.

Services that focus on job seekers as individuals, with more flexibility to address vocational and non-vocational barriers to employment. And which will shift resources to help the most disadvantaged job seekers.

Employment services that will encourage innovation and partnership.

The system we have designed together will promote the social and economic inclusion of the most

disadvantaged Australians.

Key reasons for change

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While 17 years of economic growth has transformed the job prospects of thousands of Australians, for many

other’s the employment outlook has grown more and more bleak.

Ten years ago, the unemployment rate was 7.7 per cent. While it has now come down to 4.3 per cent, a

significantly higher proportion of job seekers today are highly disadvantaged and long-term unemployed.

As I have said before, in 1997 one in ten job-seekers was

very long-term unemployed. Today it is one in four.

Against this background, Australia is looking at a shortfall of up to 240 000 workers by 2016.

We want the new employment services to deliver to employers more of the skilled workers they so desperately

need.

The employment services system obviously hasn’t been working as well as it should for some time.

Problems with the current system

As you all know, the Job Network has been in place for over 10 years. It’s been a long, difficult and for some, a

frustrating 10 years. You’ve told us so, employers have told us so, and job seekers have told us so.

Job seekers

told us that they were to often forced into ‘stop gap’ temporary jobs with little or no prospect of ongoing

employment. Some said there seemed to be little or no help available to ‘skill them up’. Many felt as though

they were ‘bounced around’ between Centrelink and providers of different programs.

Employers

told us it wasn’t easy to find out what assistance was available. They didn’t understand how the Job Network

worked. What they saw, fairly or unfairly, was a Job Network that forced a myriad of organisations into

playing a numbers game; just trying to get people off their books with insufficient consideration as to how well

suited the job was or how well the proposed placement would suit the employer.

For providers

a common issue raised was that the system is too complex, too laden with time consuming administration;

that the strict rules and guidelines serve to inhibit innovation and make it difficult to tailor services to meet an

individual job seeker’s needs.

…it all adds up to a compelling argument for change.

Key features of the new system

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The new system reflects these concerns and addresses them in a range of ways. Let me just recap some of the

key features.

First and foremost, there will no longer be a one size fits all approach. A tailored Employment Pathway Plan

will enable provider and job seeker to agree on the best combination of skills development, work experience

and personal support to help the job seeker to find employment.

Innovation will be encouraged - both through greater flexibility and the $41 million Innovation Fund that

will enable and encourage partnerships with the community and private sector and training organisations in

developing solutions for the most disadvantaged job seekers.

The new system is about participating, not waiting. We will remove waiting lists for services because making

already disadvantaged job seekers wait for assistance goes against the grain of a socially inclusive employment

service - just as making a job seeker ‘wait out’ an 8 week non-payment period, with no opportunity for them to

explain or re-engage, leads to greater exclusion not inclusion.

The $6 million Employer Broker Fund will better direct employment services to address skill shortage areas

and to fill the vacancies that employers so desperately need to fill.

And, for the first time, providers will not only be able to engage actively with employers, they will have

incentives to understand employer needs.

And they will have opportunities to ensure that job seekers are skilled up so that they are best placed to meet

those needs. Our commitment to boost the skills and productive capacity of the workforce will be supported by

$880 million over five years for 238, 000 training places for people returning to the workforce, including

job seekers. These places provide a great additional resource for employment service providers.

Cutting Red Tape

Importantly for providers, we’re also committed to reducing the amount of time spent on administration - to

enable more time to be spent focussing on job seekers.

After three Ministers who promised reduced red tape, but didn’t deliver, I can appreciate your cynicism, but

this is about more than rhetoric for me.

It’s about more than just the single contract, the simplified fee and outcome structure, and the single

performance management framework.

There are further, specific administrative reductions for providers.

Service fees will be calculated and paid in advance for each job seeker, which means providers will not need to

acquit or return payment to DEEWR for job seekers that have exited their caseload during the quarter.

When using the employment pathway fund for purchases of up to $300, providers will generally only be

required to keep a simple invoice as proof of purchase. Based on Job Seeker Account expenditure, this should

account for over 85 per cent of all transactions.

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The number of outcome fee claims which require manual processing will also be reduced.

But we’ve also flagged that we will do more if it can be done responsibly. That’s why the Exposure Draft asks

you to tell us how we can ensure the contract itself better balances flexibility and accountability.

We know it’s also about how my Department administers the contract, which is why we’re introducing a

Charter of Contract Management.

Charter of Contract Management

We want to establish a new and far more positive way for employment service providers and the Department

to work together to achieve shared goals.

The charter will re-define the relationship between providers and the Department, and will include

mechanisms for regular two-way feedback and a new approach to resolving problems and complaints.

We want your input in drafting the charter and I look forward to hearing the feedback you provided at the

charter workshops held here this week.

Changes in response to feedback

I’ve talked a lot about consultation today. But it is not empty talk. We have made further changes to the overall

design of the system as a result of comments responding to the Discussion Paper.

Let me mention just a few of the changes:

We’re reducing the differential between provider brokered and provider assisted outcomes in streams 3 and 4,

to better reflect the provider’s investment in developing and mentoring the job seeker to enable them to find

and remain in a job.

Self-employment will remain a clear pathway to employment, with up to 18,900 dedicated Productivity

Places Program training places and $28 million over 3 years from the EPF for support and mentoring.

Providers will be able to work with a wider range of organisations in Innovation Fund partnerships, to address

and combat barriers to employment in areas of high disadvantage.

The track record of organisations that have been delivering services to the most disadvantaged job seekers will

be taken into account when assessing the tenders. Demonstrated connections with local services will also be

very important.

Providers will have flexibility in how they deliver services - whether in partnership with other providers or on

their own. We do not have a preference for how providers choose to deliver the services and indeed would

expect to see a range of different provider configurations under the new contract. What is important is that

providers demonstrate their capacity to deliver all of the services required.

Social outcomes for homeless job seekers will be considered further as part of the homelessness white paper

process. We are also proposing to measure social outcomes through the performance management system.

We are developing a new performance management framework

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that supports the best possible employment services and maximises lasting results—especially for the most

disadvantaged job seekers. Key performance indicators will take into account training, employer engagement,

and the sustainability of employment outcomes.

We are getting rid of the fixed distribution of star ratings and looking at alternate means of star ratings

recognising exceptional performance.

Although feedback from the Discussion Paper showed strong support for performance benchmarking, the

complexities involved—like differences in the labour market and caseload sizes—and the lack of data relevant

to the new service means we cannot set meaningful benchmarks prior to the commencement of the contract.

That said, the Expert Reference Group charged with taking the framework forward, is currently looking at how

benchmarks might be developed over the life of the contract. Any such benchmarks would not be binding

during the 2009-2012 Contract.

Performance management is not the only area where policy work continues.

Other areas of reform

There are also a number of significant reviews underway. And a new taskforce.

Parents and mature age job seekers

The Participation Taskforce - Chaired by Patricia Faulkner who significantly is also the Chair of the

Governments’ Social Inclusion Board - has been established to explore options for parents to better allow

them to balance participation requirements with family and community responsibilities.

The Taskforce is also looking at the best ways to achieve sustainable employment outcomes for parents, as

well as mature age people aged 55 and over—like flexible participation requirements; alternative pathways to

employment; and opportunities for skills development and training.

The Taskforce will provide me with advice by the end of the month, in time for incorporation in the

employment services tender process, if that is required.

JSCI

We are also reviewing the Job Seeker Classification Instrument—to make sure job seekers are appropriately

streamed. Because of the complexity of the work involved, we will not be in a position to share the final tool

until later this year, but we are aware of the critical importance of the JSCI in the new employment service.

Job seekers with disability

As many of you know, Parliamentary Secretary Shorten and I have been working on the development of a

National Mental Health and Disability Employment Strategy to ensure a coordinated, national approach to

dealing with the barriers that people with disability and/or mental illness face in finding and keeping work.

This will feed into the review of disability employment services.

Australia-wide consultation sessions and more than 300 written submissions have told us about the need:

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z For a connected ‘whole of life’ approach to service provision, including emphasis on school to work

transition; z For employment services to respond flexibly to the needs of individuals and to support the range of

pathways to employment; z For employers to be better supported through service provision that is ongoing, simple and easy to

access; z And for a reduction in red tape to enable providers to focus on service delivery.

The consultations also highlighted one key way to improve services for job seekers with disability. That’s why

from the 8th September this year, Disability Support Pension recipients who wish to find employment will

undertake a simpler assessment process or a ‘pre-employment referral’ which will only collect information to

determine the most appropriate employment services for them. It will not affect their pension and related

benefits.

Indigenous job seekers

Finally, in the crucial area of indigenous policy we are considering how to reform the CDEP and Indigenous

Employment Programs as part of a broader Indigenous Economic Development Strategy.

An announcement on the outcomes of the CDEP/IEP consultation process is expected in the next couple of

months. Whatever the outcomes, it is vital in this challenging area that the next steps are highly consultative

and inclusive of indigenous Australians.

I mentioned earlier the Australian Employment Covenant. This is a truly exciting opportunity for real change, to make a real difference. I encourage you to get behind this initiative and give us your views on how we might

collectively realise the ambitious goal of getting Indigenous job seekers into 50 000 guaranteed jobs over the

next two years.

Conclusion

I have appreciated the opportunity this morning to talk to you about our exciting new employment services.

There are many reasons for wanting to make this system work better. Without wishing to sound grandiose, it

is in the country’s interest that we make many of these changes. But there are the individual stories that

humanise what we are doing and motivate us as well.

I am sure we will all continue to draw inspiration from our Olympic heroes this month, but closer to home, we

should also remember to be inspired by many of the people we meet with every day.

I look forward to overcoming the challenges and celebrating the success with you as we work together to get

more Australians into meaningful and productive employment.

Thank you. I will now, as Minister Ludwig promised, take any questions you might have. Although, I may be

constrained by probity in how fully I can answer you.

Media Contact:

media@deewr.gov.au

Non-media queries: 1300 363 079

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