False economy: New Public Management and the welfare-to-work market in Australia

Abstract

In 1994 the Australian Government opened case management services for the long-term unemployed to the market, laying the foundation for its now fully privatised employment services system. The system was a pioneering exemplar of New Public Management and it is widely hailed as a successful model of outsourced service delivery. However this thesis argues that the system’s measures of success, focused on aggregate employment outcomes and service delivery costs, mask the adverse impact of its marketisation on ‘hard to place’ jobseekers and ignore the flow-on economic and social costs of their persistent unemployment.

Going beyond the existing literature and drawing together multiple sources of data, this thesis presents an in-depth analysis of the context, process and effects of providing employment assistance to people facing multiple and significant barriers to work in Australia. Its findings reveal the complex and multi-disciplinary nature of interventions encompassed in activating those jobseekers; the challenges of coordinating those interventions in contestable funding environments and thin markets; issues in assessment of those jobseekers’ barriers to work and how they are streamed for employment assistance; and individualisation of the problem of long-term unemployment. The findings also reveal that, counter to predictions and despite calibrated incentives, the prospects of the long-term unemployed in Australia moving from welfare to sustainable work have not significantly improved through two decades of radical institutional change underpinned by market-based instruments.

This thesis challenges the ‘choice and contestability’ doctrine driving reform of human services. It argues that in the authorising environment, the symbolic value of market-based reform within policy and budgetary siloes trumps evidence of the cumulative impact of competition and explicit measures of performance in public services accessed by citizens vulnerable to exploitation or neglect in the market. In particular, it argues that much of the effort and investment devoted to helping the long-term unemployed overcome barriers to work through individual case management in the employment services system is misdirected, and that the real cost of failing to move the most disadvantaged jobseekers in Australia into work is not adequately factored into policy design, service provider incentives or system metrics in the welfare-to-work market.