Wednesday, 18 March 2015

Australia Today, Britain Tomorrow - how government-funded corporates and charities are getting rich off the unemployed

'THE JOBS GAME' was aired on Monday 23rd February at 8.30pm on ABC in a programme called 'Four Corners' in Australia. Linton Besser was the reporter. 

Below are the notes I made from the programme as the UK government looks to Australia (as well as the US) for models on how to remove the unemployed from their books:

Each year the federal govt pays private agencies about one billion pounds to help people find a job.

As unemployment rises so to does the amount of money the govt pays to private agencies, ostensibly to help people find work. One fundamental problem – there are many more unemployed people than there are available jobs.  National Employment Service was privatised 17 years ago and spawned a big industry run by commercial and not-for-profit agencies. Some people have become very wealthy off fees charged for various retraining and job search programmes.  Ministers declined to take part in programme but whistleblowers have stated that fraud and criminality is going on. This shouldn’t surprise govts as only 40 per cent of fees were found to be verifiable.  It is a multi-million tax-payer funded industry.

The first person to be featured in the programme is Kim, from Elizabeth Adelaide, home to the most extreme unemployment in the country – almost 1 in 3 people. Unemployment hasn’t been this high in Australia for 12 years and the govt has a programme to get people back into work. It’s called Job Services Australia and it costs 1.3 billion dollars a year. Four Corners reveals corruption at the heart of a scheme designed to help the most vulnerable and how it’s turning the unemployed into a commodity.

No businesses have been sanctioned even when systemic fraud has been found.

In 1998 the Commonwealth Employment Service (CES) was effectively privatised during the Howard years. Described as a mixture of government, private and community organizations competing to connect the right person to the right job.

It’s now called Job Services Australia and when you’re unemployed it’s compulsory to report to a Jobs Agency run by charities as well as four profit operators. When you arrive you’re classified by your level of disadvantage: if you didn’t finish school, don’t have access to transport, have a mental illness or substance abuse problem or if you’re indigenous, you’re deemed harder to place in work. The worse off you are the more your agency makes. When you walk in the door, the agency is paid up to $587, find a job and the agency claims up to $385, stay in the job for 3 months and the agency claims up to $2900 hit the 6 month mark and up to $2900 more. Along the way the government allocates up to $1100 to help improve your chances of getting a job, this covers things like learning to drive a car, new clothes for a job interview or even wage subsidies to make you more attractive to an employer. They have funds for marketing and training. All in all the programme has cost the taxpayer almost 18 billion dollars since 1998.

There are just not enough jobs in Australia so companies become opportunist.  In Australia there are about 780,000 unemployed people competing for 150,000 job vacancies.

Kim Devlin has been obligated to sign on with Max Employment (Maximus) every fortnight for two and half years but has never been put forwards for a job interview.

Max Employment is actually one arm of a giant multinational traded on the US stockmarket despite a controversial history in the welfare sector in America it has come to dominate Australia’s jobs programme. In her meeting with Max Kim discovered that the resume that Max sends out on her behalf is riddled with errors eg name spelt wrong, her grandmother who’d died was listed as a referee and Maximus hadn’t included the training that they’d helped her with.

Kim has actually been ‘parked’. In employment parlance this is what happens to thousands of jobseekers when agencies put them in the ‘too-hard basket’. Prof Bill Mitchell says: ‘They would take their first fee from the govt for taking them on and they quickly worked out it would cost them too much in resources to get them skilled so they’d just park them and forget about them’.

Rupert Taylor-Price, a software provider to many agencies has access to vast amount of data that flows between the govt and its contractors. He would say that about 1 in 10 people have a significant interaction with the system that results in them having a better chance of employment. “It’s a bit of luck really..if you get the right service provider at the right time…sometimes someone will feel very passionate about a jobseeker and will put a lot of energy in..”

If an unemployed person fails to attend a meeting at Max or fulfil other obligations, their payments are suspended. It’s what they call ‘breaching’ and some argue that this is the scheme’s true purpose.

Bill Mitchell goes on: ‘That’s been a scandal in Australia history, the breaching where an unemployed person is fined, that is they lose their income support if they don’t satisfy certain attendance rules, documentation rules and record-keeping…there’s a whole industry of punishment and coercion and monitoring of the unemployed when there’s not enough jobs anyway.’

This is what’s happened to Kim. She says she’s been breached unfairly many times including when her consultant failed to turn up for their scheduled appointment. Sometimes it’s because the secretary hasn’t handed in the signing sheet.

Four Corners requested an interview with the minister who oversees the scheme – Luke Hartsuyker– he declined. But the public servant who ushered in the programme 16 years ago Peter Shergold says that despite its flaws he believes the programme is working. (NB – is this where IDS gets his ‘I-believe-it-ergo-it-must-be-true’ idea from? – Moggy.

Another jobseeker, Adam, signed up with for-profit agency, ORS Group. Last year its turnover was 66 million dollars. They didn’t get Adam one job interview. Adam had been in a coma for 19 days after being hit by a car and was lucky to survive. He was in hospital for 3-4 months, a rehab centre for 6 months. After 10 months with ORS Adam found himself a job at a wine bar. Although ORS hadn’t found him the job they still claimed fees as a result of Adam’s success but they had to obtain his signature to do so. Adam claimed that the last time he’d signed anything with them was before the date he got the job since once he had the job he didn’t have any reason to go in there. The reporter shows him a document with his supposed signature 6 months after he started his job at the wine bar. He said they’d asked him to sign blank forms.

Four Corners obtained many of thes e forms signed by former ORS clients and tracked down these clients whose signatures appeared on the documents. In some cases the job details seemed completely fabricated. One woman said that this wasn’t her writing and that she didn’t write like that. She produced her signature, which was wildly different and the whole document looked like a complete forgery. Another woman was very shocked when shown the document because she didn’t fill it in. She claimed her signature was Photoshopped in because her signature always crossed the line and this one didn’t.

Dozens of claims have been examined by Four Corners and 75% of them relied on suspect paper work with clients repeatedly disputing the company’s records. Hours were bumped up, wages were inflated and in several cases their claim forms appeared to be forged.

A company whistleblower claimed that such fraud is rampant and that ORS routinely lodges false claims worth millions of dollars. He said about 80 per cent of claims that came through had some sort of manipulation on them from a forged signature with everything completely falsified to manipulation of a date or the hours worked…he’d seen thousands that had been manipulated. He said details are regularly whited out and altered, that signatures are cut and pasted from one form to the next, the photocopied documents are uploaded to the company’s server and the originals are destroyed. He said the management know this is happening. He said ORS promote staff who are prepared to do whatever it takes to earn fees for the company. It seems to have become normalised throughout the organization so that when you have brand new staff members join it’s drilled into them from the very beginning because they see everyone else doing it, that’s it’s normal culture throughout ORS to white something out, to manipulate a document a jobseeker has signed. The whistleblower said he was driven to speak out after a particularly disturbing incident. An older unemployed man had his payments cut off and he was forced onto the street all thanks to a false claim lodged by ORS. This man had to pay back money to the government because he had supposedly worked when he actually hadn’t. He subsequently couldn’t pay his rent so he became homeless. He actually came to the ORS office with a shopping trolley with as much of his belongings he could fit in it because he had nowhere else to go. The whistleblower said it was ‘gut-wrenching’ and ‘it hit home that we’d actually done that to a person’.

These stories should come as no surprise to the federal government. In 2008 another ORS whistleblower, Brooke Purvis, came forward with almost exactly the same story. She was told for an audit that ‘if the signature’s not on it get it anyway you can’. The department of employment decided not to investigate this whistleblower’s claims, citing a lack of evidence. But 3 years later ORS staff in Tasmania made similar allegations. The whistleblower Brook Purvis claimed that at least half of the claim for fees were suspect. Periodically ORS prepare for govt audits to check the validity of claims already made by the company. One of the whistleblowers claimed that emails are sent out once a month to  all managers saying if they’re not correct they need to get new evidence. Four Corners obtained one email from July 2013. In it an ORS manager reminds the company’s senior employees that they should not be claiming fees ‘unless all evidence requirements are met’. But then she asks: ‘’Could all sites that did not achieve 100% please forward the correct and updated documentary evidence. I will then review and upload and remove the old evidence…Just to reiterate I will delete the old evidence and upload the new’. In a statement ORS said they only deleted evidence when it was incorrect, extraneous or redundant.

Jobseekers who have found work aren’t often interested in returning to their agencies to fill out forms so ORS send them gift cards.  They enticed them in and asked them to sign for their gift vouchers. But the whistleblower said that three quarters of the time the paper they were giving them to sign was the evidence they needed to sign them off to say they agreed that this had been undertaken. The giftcard helps them to pay for fuel or food and so they are more focussed on the gift card than the form they’re actually signing.

A common practise is for agencies to push their clients into a category of greater disadvantage because it attracts a higher fee. They looked in files trying to search for things that may get them reclassified. Brooke Purvis said they were told to reclassify as many people as possible. Companies put them on train courses run by themselves and the provider will receive a payment from the govt.

Max Employment also has its own training arm. Jobseekers were often funnelled into irrelevant training so that Max’s registered training organization arm could gain a fee. It was in Max’s interest to place the maximum amount of people on one of their courses.

In 2009 governmnent investigators were alerted to a training scam in Max’x offices in Sydney. Four Corners obtained a copy of their confidential case report. Max were enrolling vastly more people into training programmes than was physically possible. 141 jobseekers were receiving training on site at Max Employment in a training room that could fit only 15 jobseekers at a time.  Even if the jobseekers only attended the course for two minutes or never attended at all as long as they had the signature that said they had been Max Employment could claim anyway.

Brooke Purvis said that the taxpayer money funnelled into the training programme could have been spent in so much better ways eg getting jobseekers driving licenses which would give them a bigger chance of getting a job than it would sitting in a classroom.

Another way the system is exploited is through the use of wage subsidies where the govt pays companies to take on the unemployed. Employers are suddenly offered cheap labour but when a person’s subsidy expires they can be simply replaced after 12 or 26 weeks.

Some of the countries most venerated charities have also gamed the system. The Salvation Army and the Catholic Church are among the not-for-profits who’ve had to repay millions of dollars for making false claims. In 2005 a government investigation targeted The Salvation Army in Victoria. During a taped interview a staff member made admissions of unethical and criminal behaviour relating to fraudulently upgrading jobseekers to the highly disadvantaged classification, thereby increasing payments and bonuses for staff. The charity had to repay 9 million dollars but the govt would not say if anyone was prosecuted even though criminal offences including falsifying documents and forgery had been committed by The Salvation Army recruitment consultants.

One person from The Salvation Army had refused to involve The SA in the Jobs Programme as he said it was incompatible on the one hand helping support families and individuals on the one hand and on the other being the person who decided to cut off their unemployment benefit. “On the one hand trying to be their friend and supporter, on the other you’re an agent of the state.”

Another person who ran one of the non-for-profit agencies said you get this dreadful irony where a major charity will breach someone for failure to do something and then send them round the corner to get some emergency relief from another part of the same agency. Charities are being forced to behave increasingly like commercial operators in a race for govt contracts.

Ian Whitchurch used to be a departmental auditor. In 1999 he warned the govt that fraud was rife. He’s still seeing similar problems that he identified back in 1999.

The govt has been removing audit requirements rather than increasing them. In a free market red tape is generally a bad thing but this isn’t a free market, this is a government contract. Red tape in this industry is regulation and it’s making sure that public funds are accounted for.

ORS declined to take part in the programme but told Four Corners it had a relatively low rate of errors and it was not familiar with allegations of doctored records but would be concerned if they were correct. The Govt has made some changes, due to be implemented in July 2015 but these changes haven’t addressed the fundamental economic dilemma at the heart of the programme: there are too many people and not enough jobs. 


  1. Scary. So our much vaunted 'benefits sanctions' scheme actually comes from Australia? Well wouldn't you know it. IDS - or his civil servants - must have studied their system rather closely.

  2. Yes, I think a combination of the worst of the Australian system and the US system, wouldn't you know!