Post by Banker on Dec 19, 2011 4:04:55 GMT 7
Rip-offs by employment agencies are rife, as companies scramble for government contracts, Linton Besser has discovered.
For the past few years, Nathan Widdowson has tended to the manicured gardens and lawns of the Tamar Valley Resort, a family getaway north of Launceston. It's a job he enjoys, one he proudly ''picked up through word of mouth myself''.
In the end, he hadn't needed the assistance of ORS, the employment agency Centrelink had sent him to - after hearing about a vacancy, he had telephoned the resort directly. It probably never occurred to him, however, that by finding a job himself, he was going to deny ORS a job-finding fee of about $1000. Or at least that is what should have happened.
In fact, the agency claimed the fee anyway.
Not long after Widdowson notified ORS that he had found a job, one of their employees called Widdowson's new boss at the resort. ''I am calling from the Centrelink building to check that Nathan has commenced employment with you today,'' he said, according to a statutory declaration sworn by a former ORS employee as part of a government investigation. By this subterfuge, the agency gathered the scant details needed to enter an electronic job-finding claim.
A gardening job in sleepy Launceston, a cheeky phone call, a nominal fee: small beer really, in a welfare-to-work program worth almost $5 billion. But the allegedly false claim in Widdowson's case is one of potentially millions quietly lodged over the past decade. They have become, in one senior figure's words, ''the bread and butter'' of a booming industry, where giant multinational companies and venerable religious charities scramble for dole-collectors. In a somewhat unedifying spectacle, hundreds of employment agencies and thousands of branches are elbowing each other for a turn at the teat of the Commonwealth, which 13 years ago passed to them the problem of long-term unemployment.
The idea was perfectly acceptable. Rather than jaded bureaucrats stamping work diaries and waving the unfortunate through to another dole payment, entrepreneurs nourished by billions of taxpayer dollars would re-skill workers and rejuvenate employers. The invisible hand of the market would sweep the vast ranks of the jobless into a pool of vacancies only it could locate.
But the market must, by definition, first look after itself. Its measure of success is not the number of unemployed it places in work, but the quantum of fees it raises from the Commonwealth. And this is the fundamental dilemma at the heart of what is a very expensive experiment. In the parallel universe where such things are possible, if the job services industry achieved the elimination of unemployment altogether - surely the ideological goal - it would be choosing to tip itself into insolvency.
A
t any time since May 1998, when the Commonwealth Employment Service was jettisoned, there have been about 590,000 people out of work. In September, there were 711,150 people in total being serviced by Job Services Australia. On these figures, the industry has had as many as 116 million chances to claim a fee for meeting a client once a month since Job Network was created. For updating resumes, organising training, finding jobs or even just contacting employers, agencies have been presented with many millions more.
Low margins, but high volume. The Aboriginal leader Noel Pearson says the job services industry has turned the unemployed into walking barcodes.
It's cheaper though. A major review in 2002 found the outsourced model was costing on average $1.3 billion a year (it was $1.5 billion last year) while its predecessor cost $3.7 billion a year. Periodically, valuations are conducted, with varying degrees of credibility, as to whether the scheme is working. The government says it is; others disperse themselves along a spectrum of disagreement.
At the end of 2008 the government calculated that participation in the scheme had improved the job prospects of long-term unemployed people by only 6 per cent.
But what is clear is the scheme has become infinitely complex, as policy-makers try desperately to fashion a functioning marketplace out of humankind and its endless permutations. The scheme's governing contract is peppered with innumerable definitions and acronyms. These are in effect attempts to create a sufficient number of pigeonholes in which to stuff the jobless: work they seek, skills they have, education they require, traumas they've survived. The list goes on.
Then there is the back-office clearing house. Millions of electronic claims slipping between the government and thousands of agencies. Mass reconciliations against mirror transactions between Centrelink and the 300,000-odd people churning through the machine each month. It is so unwieldy an institution that not even the bureaucracy's most ardent supporter would claim the agency responsible, the Department of Employment, Education and Workplace Relations, is on top of it.
Because it is not. There are auditors, of course. They arrive each day in Canberra and Sydney and elsewhere, chat with colleagues, and then sit down and try to catch cheats. They recovered $6.4 million last year. But that is less than 0.4 per cent of the program and not all of it deemed outright fraud. They know they are barely scratching the surface.
Over the past few weeks, the Herald has spoken to dozens of people who work in the industry - front-line case managers, regional managers, DEEWR officials, and senior executives from charities, religious organisations and the private sector. They all took a slightly different view as to whether the program was actually assisting the unemployed, but on a single issue they were unanimous: Job Services Australia is being systematically defrauded by the majority of agencies and their employees. It is an open secret.
One senior industry veteran puts it this way: ''This practice has been going on for so long [but] is never fixed. We all know it is wrong.''
One of the many scams, for example, is the lodging of ''special claims'' (or extenuating circumstances forms) that are deliberately false. They excuse job seekers who fail to work the minimum number of hours required before their agency can claim a fee of up to $3300. The insider says: ''I have [personally] put many thousands through and not one has been checked [by DEEWR]. Most of them have been wrong.''
Last week, the Herald revealed that the Catholic Church's employment agency, called Local Employment & Training Solutions, operated by CatholicCare, had been falsely claiming it had ''brokered'' jobs found and secured by job seekers themselves. No fewer than 70 per cent of the people contacted by the Herald, whose jobs LETS had claimed it had found, denied the agency had any hand in them achieving employment.
Some told stories of helping out an old employer, others of jobs that were arranged through family and friends. Several were contemptuous of the assistance LETS had offered.
T
hese rorts are motivated not primarily by fees. The incentive is survival.
The government rewards agencies which broker more jobs for the unemployed with a higher star rating. Five-star rated agencies are more likely to win future three-year contracts; tenders are currently under assessment by DEEWR for a new contract round which begins next year. The competition is not for the faint-hearted.
Max Employment, a subsidiary of a giant US corporation, is the local industry's biggest player. Last year the government paid it $167 million.
Lisa Fowkes, the former chief executive of Job Futures, says the design of the system, its promotion of ''throughput'' over the individual and its intense competitive pressure could create perverse outcomes.
''Even those non profits that have very strong values will find themselves pushed to adopt less principled practices because failure to squeeze every possible outcome from the system ends up with the organisation falling behind,'' she said.
''The great challenge for governments when they contract out their services is how they can write contracts that make self-interested organisations act in the public interest.''
It is not clear whether DEEWR is pursuing its investigation into ORS, and it is too soon to say what action, if any, CatholicCare and the department will take over the abuse by LETS of the system.
The minister responsible, Kate Ellis, said last week that the government would not shy from reclaiming fees, cancelling contracts or even referring providers to police ''where necessary''.
But there are some disquieting ramifications for the political class should they really turn over this rock. There are potential revelations the government has been hoodwinked.
And there is the prospect that a share of the jobs supposedly created each month in Australia - figures which DEEWR help generate for eager politicians - are phantoms, mere shadows of real work for real people.
Do you know more?
investigations@smh.com.au
Read more: www.smh.com.au/nsw/false-claims-boost-chance-of-survival-in-jobs-game-20111218-1p0vb.html#ixzz1gvFnAYsi
For the past few years, Nathan Widdowson has tended to the manicured gardens and lawns of the Tamar Valley Resort, a family getaway north of Launceston. It's a job he enjoys, one he proudly ''picked up through word of mouth myself''.
In the end, he hadn't needed the assistance of ORS, the employment agency Centrelink had sent him to - after hearing about a vacancy, he had telephoned the resort directly. It probably never occurred to him, however, that by finding a job himself, he was going to deny ORS a job-finding fee of about $1000. Or at least that is what should have happened.
In fact, the agency claimed the fee anyway.
Not long after Widdowson notified ORS that he had found a job, one of their employees called Widdowson's new boss at the resort. ''I am calling from the Centrelink building to check that Nathan has commenced employment with you today,'' he said, according to a statutory declaration sworn by a former ORS employee as part of a government investigation. By this subterfuge, the agency gathered the scant details needed to enter an electronic job-finding claim.
A gardening job in sleepy Launceston, a cheeky phone call, a nominal fee: small beer really, in a welfare-to-work program worth almost $5 billion. But the allegedly false claim in Widdowson's case is one of potentially millions quietly lodged over the past decade. They have become, in one senior figure's words, ''the bread and butter'' of a booming industry, where giant multinational companies and venerable religious charities scramble for dole-collectors. In a somewhat unedifying spectacle, hundreds of employment agencies and thousands of branches are elbowing each other for a turn at the teat of the Commonwealth, which 13 years ago passed to them the problem of long-term unemployment.
The idea was perfectly acceptable. Rather than jaded bureaucrats stamping work diaries and waving the unfortunate through to another dole payment, entrepreneurs nourished by billions of taxpayer dollars would re-skill workers and rejuvenate employers. The invisible hand of the market would sweep the vast ranks of the jobless into a pool of vacancies only it could locate.
But the market must, by definition, first look after itself. Its measure of success is not the number of unemployed it places in work, but the quantum of fees it raises from the Commonwealth. And this is the fundamental dilemma at the heart of what is a very expensive experiment. In the parallel universe where such things are possible, if the job services industry achieved the elimination of unemployment altogether - surely the ideological goal - it would be choosing to tip itself into insolvency.
A
t any time since May 1998, when the Commonwealth Employment Service was jettisoned, there have been about 590,000 people out of work. In September, there were 711,150 people in total being serviced by Job Services Australia. On these figures, the industry has had as many as 116 million chances to claim a fee for meeting a client once a month since Job Network was created. For updating resumes, organising training, finding jobs or even just contacting employers, agencies have been presented with many millions more.
Low margins, but high volume. The Aboriginal leader Noel Pearson says the job services industry has turned the unemployed into walking barcodes.
It's cheaper though. A major review in 2002 found the outsourced model was costing on average $1.3 billion a year (it was $1.5 billion last year) while its predecessor cost $3.7 billion a year. Periodically, valuations are conducted, with varying degrees of credibility, as to whether the scheme is working. The government says it is; others disperse themselves along a spectrum of disagreement.
At the end of 2008 the government calculated that participation in the scheme had improved the job prospects of long-term unemployed people by only 6 per cent.
But what is clear is the scheme has become infinitely complex, as policy-makers try desperately to fashion a functioning marketplace out of humankind and its endless permutations. The scheme's governing contract is peppered with innumerable definitions and acronyms. These are in effect attempts to create a sufficient number of pigeonholes in which to stuff the jobless: work they seek, skills they have, education they require, traumas they've survived. The list goes on.
Then there is the back-office clearing house. Millions of electronic claims slipping between the government and thousands of agencies. Mass reconciliations against mirror transactions between Centrelink and the 300,000-odd people churning through the machine each month. It is so unwieldy an institution that not even the bureaucracy's most ardent supporter would claim the agency responsible, the Department of Employment, Education and Workplace Relations, is on top of it.
Because it is not. There are auditors, of course. They arrive each day in Canberra and Sydney and elsewhere, chat with colleagues, and then sit down and try to catch cheats. They recovered $6.4 million last year. But that is less than 0.4 per cent of the program and not all of it deemed outright fraud. They know they are barely scratching the surface.
Over the past few weeks, the Herald has spoken to dozens of people who work in the industry - front-line case managers, regional managers, DEEWR officials, and senior executives from charities, religious organisations and the private sector. They all took a slightly different view as to whether the program was actually assisting the unemployed, but on a single issue they were unanimous: Job Services Australia is being systematically defrauded by the majority of agencies and their employees. It is an open secret.
One senior industry veteran puts it this way: ''This practice has been going on for so long [but] is never fixed. We all know it is wrong.''
One of the many scams, for example, is the lodging of ''special claims'' (or extenuating circumstances forms) that are deliberately false. They excuse job seekers who fail to work the minimum number of hours required before their agency can claim a fee of up to $3300. The insider says: ''I have [personally] put many thousands through and not one has been checked [by DEEWR]. Most of them have been wrong.''
Last week, the Herald revealed that the Catholic Church's employment agency, called Local Employment & Training Solutions, operated by CatholicCare, had been falsely claiming it had ''brokered'' jobs found and secured by job seekers themselves. No fewer than 70 per cent of the people contacted by the Herald, whose jobs LETS had claimed it had found, denied the agency had any hand in them achieving employment.
Some told stories of helping out an old employer, others of jobs that were arranged through family and friends. Several were contemptuous of the assistance LETS had offered.
T
hese rorts are motivated not primarily by fees. The incentive is survival.
The government rewards agencies which broker more jobs for the unemployed with a higher star rating. Five-star rated agencies are more likely to win future three-year contracts; tenders are currently under assessment by DEEWR for a new contract round which begins next year. The competition is not for the faint-hearted.
Max Employment, a subsidiary of a giant US corporation, is the local industry's biggest player. Last year the government paid it $167 million.
Lisa Fowkes, the former chief executive of Job Futures, says the design of the system, its promotion of ''throughput'' over the individual and its intense competitive pressure could create perverse outcomes.
''Even those non profits that have very strong values will find themselves pushed to adopt less principled practices because failure to squeeze every possible outcome from the system ends up with the organisation falling behind,'' she said.
''The great challenge for governments when they contract out their services is how they can write contracts that make self-interested organisations act in the public interest.''
It is not clear whether DEEWR is pursuing its investigation into ORS, and it is too soon to say what action, if any, CatholicCare and the department will take over the abuse by LETS of the system.
The minister responsible, Kate Ellis, said last week that the government would not shy from reclaiming fees, cancelling contracts or even referring providers to police ''where necessary''.
But there are some disquieting ramifications for the political class should they really turn over this rock. There are potential revelations the government has been hoodwinked.
And there is the prospect that a share of the jobs supposedly created each month in Australia - figures which DEEWR help generate for eager politicians - are phantoms, mere shadows of real work for real people.
Do you know more?
investigations@smh.com.au
Read more: www.smh.com.au/nsw/false-claims-boost-chance-of-survival-in-jobs-game-20111218-1p0vb.html#ixzz1gvFnAYsi
