The Albanese government has flagged it may overhaul the $1.5bn-a-year Workforce Australia program after announcing a parliamentary committee to investigate its design.
The employment minister, Tony Burke, said on Tuesday the government would establish a house select committee to examine the job services scheme, which was created by the former Coalition government and replaced Jobactive this month.
It follows extensive reporting by Guardian Australia about early issues with the scheme, including unreasonable or confusing mutual obligations placed on jobseekers by the outsourced providers.
While the government supports mutual obligation, Burke said there were “some aspects of the new program we believe require fresh parliamentary scrutiny and oversight”.
“The previous Liberal and National government locked in Workforce Australia by signing more than $7bn worth of contracts with providers just before the last election,” he said.
“While they spent nearly two years designing and building the software for the new system, they did not properly explain it to the Australian people.
“We are concerned we have ended up with a system that is driven more by the details of contracts with providers than the legislation the previous government brought to parliament.
“Anecdotally, it appears the user experience of the system varies wildly from person to person and provider to provider.”
Contracts show the government is set to pay more than $3.2bn to the outsourced providers over the next three years under the new system, while some will rake in millions more through separate but related training contracts.
Labor, which backed the legislation while in opposition, is concerned the practical effect of the contracts – including the financial incentives that are necessary under a privatised system – could lead to poor outcomes for jobseekers.
Last week, the Guardian reported the industry had successfully lobbied to stop a proposed rule banning job agencies from referring jobseekers to their own employability skills courses in order to claim more funds from the taxpayer.
On Monday, Guardian Australia revealed how that practice – which is used across the sprawling $3bn welfare-to-work system – allows job agencies to boost profits by referring jobseekers to irrelevant and sometimes absurd training, including body language courses.
The employment services system has undergone several inquiries in recent years, including a Senate inquiry into the previous Jobactive program, and a separate Coalition government-commissioned report which was used to design Workforce Australia.
Burke said the inquiry would examine the first 12 months of the scheme and will “recommend where we can make long-term reforms, as well as where we can make more immediate improvements”.
It will focus on whether the scheme “respects individuals’ diverse needs, and supports job seekers into secure work, in particular, its support for long term unemployed and young people”.
The government is not ruling out making some changes to the scheme while the inquiry is ongoing and before the committee hands down a report.
