The audit objective was to assess the Department of Employment’s management of the effectiveness and quality of employment services delivered by Job Services Australia providers.

Summary

Introduction

1. Job Services Australia (JSA) provides support to unemployed people to help them gain sustainable employment. The support can include helping to identify practical steps toward employment, access to job search facilities, help with résumés and job applications, and relevant training. JSA was introduced in July 20091, contributing to the then Employment Services program objectives of:

  • investing in the skills unemployed Australians need for the future to help them find and keep a job
  • ensuring that government assistance supports workforce participation and economic and social inclusion.2

2. The number of job seekers assisted by JSA is typically some 700 000 to 800 000 at any one time. One measure of program performance is a survey of the current status of people assisted by JSA. Results during 2012–13 were that some 40–50 per cent of those assisted were employed, 15–20 per cent were no longer looking for employment, and the balance were unemployed.3

3. The Department of Employment is responsible for managing the longer term effectiveness of the Employment Services program, consistent with government policy requirements, and also for oversight of the performance of JSA service providers within contractual arrangements.

4. The primary clients of JSA are in receipt of government benefits; these benefits may be withheld if the recipients do not comply with job search and related activity requirements which are supported through JSA.

5. JSA services are delivered by about 85 contracted service providers from some 2000 sites across Australia. JSA providers were selected by competitive tender in 2009; the current contracts end in 2015. JSA providers are required to meet specified service standards, assist all eligible job seekers, and work with employers to understand and meet their skills and labour needs. Individual JSA providers are responsible for their own performance, which is reported by the department using ‘Star Ratings’ based on each provider’s performance relative to other providers and local circumstances. JSA providers may have contracts for delivering JSA terminated if they are performing at a much lower level than other providers.

6. Expenditure on JSA is approximately $1.4 billion per year in total, allocated in about one-third each to:

  • tailored support to job seekers, such as training directed at improving employability;
  • service fees to JSA providers for some ongoing services such as assessment and support of job seekers; and
  • outcome fees to JSA providers, for example for the outcome of a job seeker remaining employed for a specified duration.

7. Between 2004 and 2008, the Australian National Audit Office (ANAO) conducted seven audits of the JSA’s predecessor, Job Network. The earlier audits focused on program implementation; the later audits concluded that the program was generally well administered on a day-to-day basis and identified areas of possible improvement, including performance information.

Audit objective and criteria

8. The audit objective was to assess the Department of Employment’s management of the effectiveness and quality of employment services delivered by JSA providers.

9. To conclude against this objective the high-level criteria used by the ANAO included the department’s setting of service requirements, its support and management of service providers, and its overall management of program effectiveness.

Overall conclusion

10. Job Services Australia (JSA) provides government-funded support to unemployed people to help them obtain sustainable employment, at a cost of some $1.4 billion each year. JSA services are provided by contracted service providers. An important responsibility of Department of Employment is its oversight of the effectiveness and quality of employment services delivered by JSA providers, so that these services contribute to the achievement of the program’s objectives.

11. Overall, the Department of Employment has appropriately managed the delivery of JSA employment services. Requirements of service delivery have been clearly specified and promulgated. Service delivery has been effectively monitored, and performance feedback has been given to service providers. Appropriate action was taken where there has been poorer performance by JSA providers. The department has also reviewed its own performance, and identified areas for improvements—such as reducing the volume and frequency of change of operational guidelines to service providers, and improving its risk management practices. There were reasonable arrangements for oversight of operations and deliverables at the program level.

12. The department has published evaluations of aspects of JSA’s performance, and has provided comprehensive information about JSA for many years through its annual report to Parliament and additional labour market reporting. While these performance reporting mechanisms have provided relevant information about specific aspects of the operation of the program and immediate results, the department has given less attention to reporting on the contribution made by the expenditure on JSA to program objectives. The reported performance information shows that the program deliverable, the number of job placements achieved, has declined by 25 per cent in the past three years, from 480 000 to 360 000, but does not explain the extent to which this decline is attributable to a reduction in program performance or to external factors. Improved choice of indicators and explanation of results would have provided a better assessment of the contribution made by the expenditure of some $10 billion on JSA over 2009–15. The ANAO has made one recommendation aimed at improving information on program performance for future employment services programs.

Key findings by chapter

Supporting JSA Providers (Chapter 2)

13. The contracted approach to JSA service delivery requires the department to have appropriate foundational arrangements, so the contracted services are effective and of suitable quality. These arrangements include the broad contractual framework, defining the service quality and performance expectations, appropriate support to JSA providers, and encouraging innovation.

14. The contractual framework was well established, covering the requirements of the services to be provided, and the mutual responsibilities of the department and JSA providers. Relevant aspects of service quality and performance expectations were defined by the department, including comprehensive measures of provider performance covering timeliness, effectiveness and quality. The approach to measuring performance was generally accepted by JSA providers as reasonable, but with some scope to review aspects of the implementation arrangements with respect to transparency and periodic review.

15. Practical support to JSA providers was available through an online system, training sessions, and opportunities to ask questions. However, JSA providers interviewed indicated that the volume of guidance documentation, and the frequency of changes, made it more difficult to keep service provider staff aware of requirements. Against this background, the department has moved to reduce the frequency of changes and reduce the volume of documentation. The department has undertaken a number of initiatives to promote innovation and share best practice. While the competitive nature of JSA tends to discourage the sharing of proprietary information about the most effective JSA work practices, the findings from innovative projects funded by government were available to inform providers and policy development.

Oversight of Service Delivery (Chapter 3)

16. While individual JSA service providers are responsible for day-to-day delivery of employment services, the department is responsible for broad oversight and monitoring, to gain assurance that the nature and quality of services are as required.

17. The department had reasonable arrangements for collecting and using job seeker feedback on service providers. There were appropriate arrangements for monitoring and managing risks in relation to service delivery by JSA providers, and the department had improved its risk management of JSA providers following a notable risk event and associated publicity in 2011, concerning fee claims for ‘Provider Brokered Outcomes’.4

18. Performance reports and data were made available to JSA providers on a regular basis, and formal performance feedback was given every six months. There were appropriate arrangements to respond to relatively poorer performance by periodically reallocating work to better performing providers. In doing so, the department sought to ensure equitable access to quality services for job seekers in different locations and with specific needs.

Managing Program Effectiveness (Chapter 4)

19. In addition to its oversight of the nature and quality of services being delivered by JSA service providers, the department is also responsible for managing the longer term effectiveness of the program, consistent with government policy requirements. The department has reasonable arrangements for monitoring operations and deliverables at the program level.

20. There are many JSA service providers, giving job seekers choice of providers. The star-rating of providers only assesses comparative performance, and as the department is the dominant purchaser of employment services, there are no convenient external performance benchmarks. In that context there would be merit in the department strengthening its approach to assessing the performance of providers over time, to help detect any overall reductions in underlying performance. Risk management arrangements at the program level were generally appropriate, but with scope to continue to improve the completeness of identification of risks and clarity of responsibility.

21. The department was provided $10 million for the evaluation of JSA over 2009–12, and has to-date prepared 17 evaluation reports, with seven publicly released. These reports covered a wide range of topics of relevance to policy decisions and improving the delivery of services. The evaluation reports included some comparisons of JSA with its predecessor Job Network, however the evaluations have not reported on the contribution of the expenditure on JSA to program outcomes.

22. Performance information in Portfolio Budget Statements (PBS) and Annual Reports helps inform Parliament and the public on the results of the expenditure of public money. The department has provided comprehensive information about JSA for many years through these mechanisms and through additional labour market reporting. This information is useful to those with an understanding of the program, of the precise meaning of definitions of performance indicators, and of past performance.

23. However, there is scope for considerable improvements. In contrast to 2009–10, the JSA objectives in the 2013–14 PBS simply described the delivery method, but not the intended impact of the program—making reporting difficult. The PBS had 18 performance indicators for JSA, and this large number of indicators made it difficult to assess the performance of the program. Additionally, the results for the indicators used are strongly affected by external events making it difficult to assess the specific contribution of JSA. The JSA program deliverable was the number of job placements to be achieved; the actual result declined by 25 per cent in the past three years, from some 480 000 in 2010–11 to some 360 000 in 2012–13. Whether this significant decline in results was a shortfall in the contribution of the program or a consequence of external events was not explained in the department’s annual reports.

24. The department has access to comprehensive data relevant to assessing the program, and has 15 years’ experience adjusting raw performance information about JSA providers to take account of external circumstances. In that context, there is scope to better explain the specific contribution of the large public expenditure on JSA to program objectives, through both improved annual performance reporting and periodic evaluations.

Summary of agency response

25. The Department of Employment’s response to the proposed audit report is reproduced at Appendix 1. The Department of Employment’s summary response is set out below:

The Department welcomes the report and appreciates the positive feedback regarding its management of the delivery of JSA services. The Department will review its public reporting approach as part of the Employment Services programme arrangements from 2015. The Department will endeavour to be more explicit about what the programme is intending to achieve, how it is influenced by external factors and how success is measured.

Recommendation

Recommendation No. 1

Paragraph 4.57

To better support informed consideration by Parliament and understanding by the public of the significant expenditure involved, the ANAO recommends that the Department of Employment, in the context of developing revised Employment Services program arrangements from 2015–16, improve its public reporting approach to clearly describe the intended impacts of the program, and provide an easy-to-understand assessment of the actual contribution of the funded activities to those intended impacts.

Department of Employment’s response: Agreed

Footnotes

[1] JSA replaced the previous Job Network, merging a number of related programs into one, and with a stronger focus on the most disadvantaged job seekers.

[2] DEEWR, Portfolio Budget Statements 2009–10, p.139. [#ANAO ref DEEWR Portfolio Budget Statements 2009-10 - Outcome 4 

[3] For example, see DEEWR, Labour Market Assistance Outcomes, June 2013, p.4 Table 1.1 JSA streams 1–4.

[4] The issue of fees claimed for Provider Broker Outcomes is discussed at paragraphs 3.14 to 3.17 of the audit report.