The Albanese government is set to overhaul the $2 billion-a-year employment services system, which is failing to get unemployed Australians into jobs.
Announcing the plan in her National Press Club address in Canberra on Wednesday, Employment Minister Amanda Rishworth will pledge to end a "one-size-fits-all approach" to jobseekers, calling the changes "the biggest reform to our employment services system in 30 years".
The system run by federal agency Workforce Australia, which contracts about 166 private companies, will be overhauled with $312.2 million over five years from 2025-26 in this month's federal budget.
This will include changes to the mutual obligations requirements - which force welfare recipients to show they are actively job-seeking - for the one million people in the scheme, to make them "effective, fair and proportionate".
Ms Rishworth will say the current system is "letting too many participants fall through the cracks and creating inefficiencies".
"If you're lucky enough to be healthy, with recent work history and a post-secondary qualification, a provider is more likely to be able to help you find a suitable job," she will say.
"But the way providers are paid means they are incentivised to focus their efforts on those who fit into this narrow profile - rather than supporting everyone on their caseload."
Workforce Australia's latest annual report found the agency had failed to achieve 15 per cent of participants finding work in 26 weeks, with only 11.7 per cent hitting this target.
It blamed labour market conditions that favoured tertiary-educated jobseekers. More than half of participants have no qualifications beyond year 12.
Ms Rishworth will announce a plan to split employment services into three streams, with a more targeted approach for the long-term unemployed, who currently rotate through providers contracted to help them find work.
One in five participants have been in the system for at least five years, while average time spent on JobSeeker is more than six months.
"People with more complex barriers to employment simply get put in the too hard basket - what's known in the system as parking," the minister will say.
The changes aim to ensure that providers deliver the right support for unemployed people who "need help to build skills and confidence to return to the job market" and "intensive, joined-up support for people facing complex barriers".
People who are still "close to the employment market" will be supported through a digital service.
There will be a new assessment and triaging process aimed at matching jobseekers with the right supports and a planning tool for participants.
The government will launch a public consultation on the design of the new model, with a discussion paper and expert advisory group.
The Community and Public Sector Union was disappointed the minister had not gone further to nationalise employment services.
CPSU national secretary Melissa Donnelly said the announcement was "a step in the right direction" but called for the government to "bring the system back into public hands".
The private system had been "an unmitigated disaster" for jobseekers who were "sick of being lectured by flashy 'entrepreneurs' who are milking the government for hundreds of millions of dollars and providing a broken, profit-driven service in return".
Greens social and government services spokesperson Penny Allman-Payne blasted the government for leaving the private provider system intact.
"These reforms aren't a shake-up, they're a screw-up," Senator Allman-Payne said.
"Any employment services reform that fails to abolish mutual obligations and put the system back in public hands isn't worth the paper it's written on ... Labor is continuing to prop up a system which punches down on welfare recipients. Its own inquiry into employment services in 2023 concluded that privatisation had failed."
A House committee inquiry into Workforce Australia employment services in 2023 recommended a "radically different service model" with a "stronger, more active role for the Commonwealth government, by establishing Employment Services Australia as a rebuilt public sector core".
Under this proposal, agencies would undertake "direct service delivery" for those struggling to get back into work.
