Report says Australia's $5.5B job system enriches millionaires

"Every country that has experimented with extensive outsourcing has eventually realised that it does not work without a public sector core, as some companies will profiteer," the CICTAR report argues.

In May, the Albanese government announced the biggest shake-up to Australia's employment services system in 30 years. Federal Employment Minister Amanda Rishworth said she wanted to build a "new employment service" to fix problems that had plagued the industry for decades. She said contracted for-profit providers would still play a major role.

CICTAR challenges that approach. The report, funded by grants from trusts, foundations, and trade unions including the Community and Public Sector Union and the New South Wales Nurses and Midwifery Association, makes four recommendations.

First, it says employment services should be entirely returned to public sector delivery for both online and in-person services. The public sector would lower costs by removing the profit motive and eliminating offshore profit-shifting, the report argues. Non-profit organisations could still deliver specialist services.

Second, it calls for strengthened procurement standards in the meantime: publishing full contract texts, banning entities that use aggressive tax minimisation or fail to file timely financial statements, requiring full Tier 1 financial disclosures for any entity receiving over $10 million in funding, and subjecting private equity acquisitions of government-funded firms to intense scrutiny.

Third, it says providers need to be scrutinised across all funding streams. Many employment services providers also operate in aged care, disability, and childcare. Procurement rules should be unified so that disqualification from one area triggers automatic barring from others.

Fourth, it says political donations by government contractors should be prohibited. "Entities that hold government contracts above a certain threshold, together with their shareholders and key management personnel, should be prohibited from making political donations," the report states, recommending reform of the Commonwealth Electoral Act.