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Govt has "no idea" on Job Network profits.

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Senator John Cherry Employment Spokesperson Australian Democrats

June 4, 2002 MEDIA RELEASE 02287

Govt has “no idea” on Job Network profits The Department of Employment has admitted it has “no idea” how much profit Job Network providers are making on Intensive Assistance contracts, even though the Government is about to start renegotiating the third round of contracts.

Democrats Employment spokesperson Senator John Cherry, questioning departmental officials in Senate Estimates Committee today, asked whether the Department had any idea of the profit levels or the costs incurred by Job Network providers.

Senator Cherry said, “I am amazed that the Government has no idea of how much profit is being made out of the unemployed, even though this is crucial in pricing the third round tender.

“The stories I am hearing are that many Intensive Assistance providers are making quite substantial profits out of the misery of the long term unemployed and I am astounded that the Government has no idea of the profit margins.

“The Productivity Commission revealed that providers have been able to maximise profits by focusing on collecting outcome fees for easier to place jobseekers and by ‘parking’ more disadvantaged jobseekers without any assistance.

“Despite this, the Government has made no effort to find out what profits are being made out of its $1 billion Job Network contracts, or to determine where the squeeze could be placed to funnel excessive profits back into services and assistance for jobseekers,” he said.

Senator Cherry also quizzed officials about whether Job Network providers were making revenue out of referring clients to their own in-house training programs.

“I was surprised to discover that there is no monitoring of whether in-house training is in the interests of job seekers first and foremost, rather than in the financial interests of the provider,” he said.

“While the Government is initially claiming that it will refuse to let Job Network providers spend Job Seeker Accounts in-house, this exemption will not apply to Training Accounts.

“With no idea of profit levels, no idea of the cost effectiveness of in-house training, very little monitoring of the Code of Conduct, and minimal Service Guarantees, Job Network Contract III will remain a licence to print money for providers, at the expense of the disadvantaged in our community,” he said.

“This needs to be sorted out before Job Network providers are given access to Training Accounts worth $36 million a year,” concluded Senator Cherry.

For further information: Pam Hose 07 3252 9129 or 0408 752 750