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Government policies have seen the ‘unemployment industry’ paid millions during the pandemic, while jobless rates soar. By Rick Morton.

Exclusive: Jobactive virus kickbacks top $500 million

Employment Minister Michaelia Cash.
Credit: AAP Image / Mick Tsikas

When Employment Minister Michaelia Cash approved an advance payment worth more than $100 million for private job agencies to cover administration fees early in the coronavirus outbreak, it would mark only the beginning of a lucrative payday for the sector during the pandemic.

As the rest of the country descended into the worst economic crisis since the Great Depression, the government made it easier for these agencies, known as Jobactive providers, to claim bonus “outcome” payments, fees and other rewards for the work of “servicing” the unemployed.

Requirements for pay slips to verify job payments were removed, and providers were paid bonuses even if work was interrupted by periods of self-isolation or complications from the health crisis.

The influx of funds, however, did not stop there. Conservative estimates drawn from the government’s own data and payment schedules suggest private job agencies have been handed at least $500 million to date during the pandemic.

An internal document, sent to Jobactive providers by the federal Department of Education, Skills and Employment and obtained by The Saturday Paper, reveals that job agencies have even been paid bonuses for people who theoretically remained employed after the $87 billion JobKeeper payment was announced.

“An Outcome may be payable where an Outcome was already tracking for a participant who moves onto the JobKeeper Payment through their previous employer or applies for/receives JobSeeker Payment initially then moves onto the JobKeeper Payment through their previous employer,” the guidance document says.

The consequences of this decision to allow job providers to double dip are substantial for taxpayers, and a potential goldmine for the private agencies.

During the Covid-19 pandemic, the Jobactive caseload has more than doubled to 1.4 million people – up from 630,000 in February – while mutual obligations for job seekers were temporarily suspended because of the virus.

For the most job-ready unemployed, who the department says represent three-quarters of the 800,000 new employment services clients, providers can earn bonus payments of up to $1671 if they help these people get and keep a job.

If the unemployed person requires a bit more work – categorised as Stream B or Stream C – these bonuses rise to $4474 and $5929, respectively, if they secure employment.

In regional areas, providers can receive a six-month bonus worth almost $2100 for the easiest-to-place job seekers, known as Stream A.

However, by the end of September, every person re-engaged by their employer under JobKeeper after registering for Jobactive would automatically accrue a bonus for the job agencies.

In short, the federal government is spending taxpayer money on both the JobKeeper benefit – to keep people employed – and on the bonuses paid to job agencies for “earning” JobKeeper recipients their job.

The government’s own Jobactive figures and payment schedules outlined in the Jobactive master deed put the extra money being handed to private job agencies during Covid-19 at $500 million, at least.

This includes the upfront administration fees, bonus payments, fees for job seekers who begin internships under the controversial PaTH program and an extra $47 million paid for career transition funding paid to the agencies to help mature-age workers. Once the Work for the Dole scheme resumes, the agencies will also be eligible for up to $3500 for each person who enters a six-month Work for the Dole placement.

“The government is bending over backwards to give predatory job agencies more certainty during the economic crisis than they’re giving to people whose lives are in turmoil, who are facing the prospect that they might never find secure work again,” says Kristin O’Connell, a spokesperson for the Australian Unemployed Workers’ Union (AUWU).

“It is very fair to say the unemployment industry is booming.”

Ideologically, at least, the federal government cannot afford for the privatised network of employment service providers operating under Jobactive to fall over – especially with the return of mutual obligations, a process that has already begun in stages.

In addition to the JobKeeper double dip though, the Employment Department has also made it clear it is “relaxing” requirements for claiming other bonuses.

A document made available on August 10 reassures providers that these payments are easier to access.

“The department has increased flexibility for claiming outcomes due to the impact of Covid-19, including allowing additional permissible breaks and relaxing documentary evidence requirements for affected outcomes,” it says.

In 2018, providers were paid more than $400 million in bonus payments alone for placing Stream B and C participants in various forms of work or “activities” such as Work for the Dole, according to documents released under freedom of information.

When asked to comment about the estimate of extra payments made to job agencies so far this year, the department said this data is not available. But it did note the Jobactive system cost the federal government about $1.4 billion last year and that the caseload has more than doubled during the pandemic.

“A range of adjustments have been made to enable providers to operate flexibly and efficiently to meet employer and job seeker needs, while managing the risks to their workforce and viability,” a spokesman said.

The department confirmed the JobKeeper loophole and also clarified another curious detail: if someone loses their job, goes onto an unemployment benefit and is later rehired by the same employer, providers will still be paid an “outcome” bonus.

“Where a person moves onto JobKeeper payment, the job they were tracked against but can no longer undertake would already be recorded in the system and tracking for an outcome,” the spokesman said.

“Starting a new contract of employment means that the participant had lost their employment due to Covid-19 and then resumed working for the employer under new employment conditions.”

 

Since employment services were privatised under the Howard government, many private agency owners have become extremely wealthy.

One of these people is Gold Coast “jobs queen” Sarina Russo, whose companies have received almost $2 billion worth of government contracts since 2006. Her most recent Jobactive contract, struck when Tony Abbott was prime minister, is worth $606 million and ends in 2022.

With a personal wealth estimated at more than $100 million, Russo is a generous political donor, influential and well connected. It was her lavish New Year’s Eve celebration on the Gold Coast that Sussan Ley, then Health minister, flew to on official business, while also buying an apartment during the trip.

While the scandal eventually felled the minister – before she was returned to the frontbench by Prime Minister Scott Morrison – it has done nothing to dent Russo’s proximity to power.

During the pandemic though, some Jobactive participants say they have been compelled to comply with impossible requirements by Russo’s Jobactive providers.

On August 18, automated alerts from Sarina Russo Job Access providers were being sent to unemployed people telling them they had to go into a Russo office the next day for an appointment.

“I am in Melbourne in stage four lockdown,” one participant said.

The AUWU says it has been flooded with complaints just like these, where providers continue to pressure clients even when it is impossible for them to comply with conditions. The Saturday Paper is not suggesting any of Russo’s companies are acting outside the law.

Failing to respond to myriad requirements from providers – some of them without basis in law, others that are imposed without checking if job seekers have valid reasons – will result in temporary suspension of income support or even financial penalties.

From July to December 2019, income support payments were suspended almost 1.3 million times because of alleged breaches. For people already living below the poverty line, these suspensions can have enormous consequences for missed bills, rent and other responsibilities such as getting to work when they have found employment.

But this is the byzantine way Australia’s unemployment system operates, with automated penalties and providers hounding participants to sign up to various programs that will inflate their fees.

In June, the non-profit Help Employment turned up at the house of newly unemployed man Thomas Roker twice within the space of two hours.

The agency was attempting to sign Roker up to a job plan, for which it would receive a fee from the taxpayer.

The New Daily reported in July that Roker said the situation “felt like harassment.”

“I had my eight-year-old daughter with me. She was quite petrified of the whole situation,” he said. “I had to explain to her that it’s okay, ‘they’re not here to take you away’.”

At an August 6 senate select committee hearing on government responses to Covid-19, Greens senator Rachel Siewert asked about this case and was told the department is investigating.

“That is not part of the servicing arrangements at all,” Employment Department deputy secretary Nathan Smyth told the inquiry.

“We have said that face-to-face servicing is not to occur. I understand and I’m aware of the issue that you’re raising. Without going into the specifics and taking into account privacy considerations, that matter is being investigated by us at the moment.”

The Saturday Paper can confirm Roker has not been contacted by the department as part of its investigation.

 

As the Commonwealth pours hundreds of millions of dollars into the booming job-agency sector, government ministers are quibbling about whether to raise the rate of income support payments.

From September 25, the rate of the coronavirus supplement will be cut by $300 and it remains unclear whether the boost will be maintained at all past December. Its elimination would mark a return to the base rate of the JobSeeker payment – formerly known as the Newstart Allowance – which saw hundreds of thousands trying to live on roughly $40 a day.

Earlier this month, the Australian Institute of Health and Welfare (AIHW) quietly released its latest housing assistance report. There was no fanfare, no media release. Buried in the supplementary data tables is government data that has never been released, showing the level of housing stress experienced by people on different welfare payments.

As at July last year, even with Commonwealth Rent Assistance (CRA), more than 60 per cent of people on Newstart were in rental stress – paying more than 30 per cent of their total income on rent.

For those without CRA, almost 88 per cent were in rental stress.

Under the Covid-19 arrangements, neither the disability support pension nor the age pension has been increased – except for a relatively small lump sum payment. The AIHW data shows that last year, 31 and 33 per cent of people receiving those payments were in rental stress.

For both disabled and aged pensioners, the rates jumped sharply if they were not eligible for rent assistance – to 72 and 65 per cent, respectively.

Kristin O’Connell from the AUWU said she thinks the government figures mask an even harsher truth.

“I suspect it is because there are people who do not have stable housing and they do not qualify at all,” she says. “They might be spending less than 30 per cent of their income on rent but that’s because they are sleeping on a couch or in a car, or on the street.”

Undoubtedly, Covid-19 has increased the stress of Australians without work – rental or otherwise.

Job agencies, meanwhile, have received hundreds of millions of dollars and will continue to earn fees and bonuses with some 800,000 new unemployed people on their books.

“It’s grist for the mill,” says O’Connell. “You just get churned through.”

This article was first published in the print edition of The Saturday Paper on Aug 29, 2020 as "Exclusive: Jobactive virus kickbacks top $500 million".

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Rick Morton is The Saturday Paper’s senior reporter.