Job seeker funding still open to fraud, despite fee reforms

April 22, 2013

The Sydney Morning Herald

The $4.7 billion welfare-to-work scheme is at ”high risk” of being  defrauded by the government’s designated employment agencies, according to a  confidential federal government assessment.

The assessment was ordered after an external audit of the Job Services  Australia program last year identified more than $100 million in fees in just  two years had been improperly claimed.

Job Services Australia is designed to help the long-term unemployed find work  and it pays private employment agencies fees for finding jobs for, or otherwise  assisting, Centrelink recipients.

The April 2012 review, which found only 42 per cent of the claims it examined  were genuine, also prompted reform of  fees  claimed, as well as fraud  investigations into an unknown number of agencies.

But a December  program risk plan has warned the program is ”likely” to  continue to be abused by the companies it contracts to assist the  unemployed.

These providers may ”obtain unfair gains”, the document said, through  ”claim of payments to which they are not entitled” and the ”manipulation of  records in relation to the provider’s performance”.

There was also a high risk  agencies might benefit from ”unauthorised access  to confidential information” available to them under the Job Services Australia  program.

The only other ”high risk” contained in the spreadsheet was the  government’s potential ”failure to align and deliver policy and program agendas  across agencies [which would] inhibit the delivery of desired objectives”.

The plan proposes to address the risk of fraud through seven measures. These  include ongoing  assessment, clear guidelines and policies for the claiming of  fees, and ”monitoring through site visits, desktop monitoring or other  processes” that each claim can be supported by the required level of  evidence.

One mitigation strategy included in the document is: ”Contract management  staff apply legislative and contractual requirements and public accountability  standards”.

The risk analysis, obtained under freedom of information, was part of the  government’s response to a review of the welfare-to-work scheme by former public  servant Robert Butterworth, which had urged the government to investigate  ”other areas of vulnerability”.

Mr Butterworth’s appointment was prompted by a 2011 Fairfax investigation  that revealed rampant abuse of the scheme.

It reported  the Catholic Church’s employment arm had systematically  defrauded the program by claiming it had found positions  job seekers   had  found themselves, and  named the ORS Group, a private provider, as having been  under investigation for false claims.

Fairfax  also used freedom of information to obtain copies of ”provider risk  alerts” compiled by the Department of Education Employment and Workplace  Relations in 2011. Some of these alerts report whistleblowers from some agencies  have alleged their managers had ordered staff to abuse the program.

A December 2011 file from Victoria, for example, recorded  one agency had  been claiming ”reverse marketing” fees (awarded to agencies who generate a job  by cold-calling employers) for placements that were already advertised.

”The employee stated that there was a directive to staff to meet billable  hour targets for reverse marketing and to reimburse these hours,” it said.  ”The staff member alleges that this has resulted in inappropriate use [of  government] expenditure.”

An April 2011 file reported  an investigation into a Western Australian  company was gradually establishing major problems after an employee alleged  ”sharp practices”. ”Initial analysis shows that around 50 per cent of claims  are invalid,” it said. DEEWR is   overhauling the program which services about  700,000 job-seekers at any one time. It has said it will introduce a new  job-matching service for the unemployed after July 2015 when the current  contracts  expire.