Linton Besser March 30, 2012
Revealed ... how the Herald reported the story in December.
The government has moved to ''preserve the integrity'' of the $4.7 billion welfare-to-work program after a top-level inquiry found widespread rorting of the scheme.
The deputy secretary of the Department of Education, Employment and Workplace Relations, Sandra Parker, last night issued letters to about 100 employment agencies warning of changes to the way they were able to claim fees against the program.
The inquiry was prompted by a Sydney Morning Herald investigation that revealed rampant abuse of the scheme and that the government and senior industry figures had known about the problem for more than a decade.
In December it reported that the Catholic Church's employment arm had systematically defrauded the program by claiming it had found positions for job seekers that they had found themselves.
The Sydney Morning Herald also named the ORS Group, one of many private providers, as having made similarly false claims.
The welfare-to-work scheme, now called Job Services Australia (JSA), had rewarded agencies that ''brokered'', or found, jobs for Centrelink recipients with higher fees. This led many organisations to encourage staff to lodge these and other false claims. In the letter, Ms Parker said the higher fee for such brokerages was to be eliminated from July 1.
''We have recently been informed by the independent adviser that there is sufficient evidence of substandard practices to immediately consider changes to the current payment structure,'' Ms Parker's letter said.
''With this advice, the government has decided to move to preserve the integrity of the JSA system. By acting now, we are in a position to determine the optimal policy settings, as well as make clear our expectations of behaviour in the next contract term.'' The government is assessing bids for the next round of contracts.
The government would remove, she said, the ''differential payment rate'' between jobs claimed to have been brokered and those found by the job seekers.
''As you would appreciate, this policy change needed to be settled before we could offer new business or contract extensions. We believe you need to be fully aware of the nature of the offer from 1 July so as to make informed decisions.''
The new round of contracts is to be announced next week.
Industry sources have said enormous pressure was being put on staff inside agencies to broker as many jobs as possible in the lead-up to these bids to bolster the agency's apparent success.
Although the inquiry by Robert Butterworth is continuing, he had identified sufficiently compelling evidence to force the government to act before he handed up his report.
''The department will continue to work with you to ensure accountability for the efficient, effective and ethical use of taxpayer funds,'' Ms Parker wrote.
During the next two years, the department would offer ''education and prevention strategies, reviews of documentary evidence and in specific circumstances, provider self-audits with targeted departmental follow-up''.
Mr Butterworth's audit had targeted 14 agencies, demanding detailed documentation to substantiate claims worth thousands of dollars they had made for placing the long-term unemployed in jobs.
ORS denied it had defrauded Job Services Australia but admitted having repaid a small amount in fees after a government audit.
In the case of CatholicCare, as many as 70 per cent of the jobs it claimed it had brokered were found by the job seekers.
The Sydney Morning Herald interviewed 63 job seekers whom CatholicCare serviced between October 2009 and December 2010 and whose job placements were lodged with the department as brokered.
Of those, 44 said they had found the job, contradicting the organisation's official claims for fees. Many had a long history with the employer that pre-dated their relationship with the agency.
Agencies lodge claims for fees through an electronic interface with the department and have not in the past been required to show a high level of evidence for their claims.
The government spent more than $1.5 billion last year on Job Services Australia programs.
Last year auditors working in the department reclaimed about $6.4 million in fees from providers - not all of which was deemed fraud.
There are two cases before the courts.
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