Another neoliberal institution shown to be unfit for purpose while lining the pockets of private equity and millionaires

Over the last several years, I have been indicating that I think we are in the endgame for neoliberalism as a dominant ideology. On many fronts, the signs are that its institutional structure has failed and the promises that justified that structure have not materialised. I know there is a difference between the promises to sell the idea (that we would all be better off) and the true motivation (to enrich the already wealthy and consolidate their hegemony). But short of military dictatorship where the top-end-of-town control the military, major economic changes are conditioned by the legislative and regulative structure created by government. That means that the voters have to be convinced that change is worthwhile. Neoliberalism thrived because the elites reconfigured the state to serve their interests after the social democratic era saw the state play a mediation role in the class conflict. That reconfiguration was driven by an intense public relations campaign to manipulate the public perception. The working class was divided into segments and segments were turned on other segments (the ‘dole bludgers’, the migrants, trans people, etc) as part of the strategy. The strategy enriched the architects beyond belief but for the rest of us the outcomes have proven dysfunctional to say the least. Now the endgame is upon us as the evidence continues to stack up that neoliberalism was an elaborate con to enrich the already rich and powerful. A report from Australia last week added to the evidence. It shows that one of the defining manifestations of neoliberalism in Australia – the privatised job services system has failed badly and only serves to fills “the pockets of private equity and millionaires, while leaving jobseekers without work”. Another brick in the wall falls.

I sometimes call the endgame the ‘poly crisis’, where a number of individual crises, that have been viewed as if they are separate problems have come together as one.

Their unity is because they are all manifestations of the failure of the neoliberalism paradigm.

Housing, education, health care, stagnant real wages, declining productivity growth, the climate emergency, job insecurity, rising income and wealth inequality, failed transport systems, increasingly dysfunctional provision of utility at ridiculous profits, etc

After decades of deregulation, privatisation, lack of oversight of the global financial system, the consensus that the unfettered market economy would deliver the best outcomes is broken.

It was, of course, never a ‘free market’ anyway, but that was the sales pitch.

It was a highly rigged market system relying heavily on government procurement contracts and favourable tax structures to ensure corporations could make profits.

The GFC exposed the lie that a deregulated financial system would deliver efficient outcomes.

Capitalism only survived because of massive state intervention and financial support.

The pandemic then demonstrated the same.

And since then we have rogue governments like the US abandoning any pretension to the ‘free market’ dream and openly using the largesse of the state to line the pockets of the President and his cronies.

Market self-regulation has failed.

The hollowing out of the welfare and other services provided by the state has left communities without essential infrastructure and created a sense that the system must change.

The myth of ‘free trade’ is now in full retreat with tariff walls and state aid becoming more mainstream.

The economic powerhouse of China is demonstrating once again the role that the state must play in fostering new industries.

The worry is that the conventional progressive political forces are still stuck in the neoliberal haze and cannot fully articulate nor commit to the changes that are necessary to herald in a new non-neoliberal era.

Which means that the nationalist, Right-wing, authoritarian voices are gaining attention and shifting the discussion away from an attack on neoliberalism itself and towards sectional hate towards migrants etc.

The failure of Australia’s privatised employment services

Last week, in Australia, there was a major report released (July 21, 2026) – Who’s rorting who? The failure of outsourced job services – by the Centre for International Corporate Tax Accountability and Research (CICTAR), which is a “network of researchers from across the world” who provide “detailed, accurate and accessible research into the tax and financial arrangements of global businesses”.

The Report is about the deplorable state of the privatised job services sector in Australia.

The problems it reveals are not new and go back to the original architecture that was introduced when the federal government scrapped the public Commonwealth Employment Services in favour of the privatised job services market.

Background reading:

1. Latest changes to Australian privatised job service industry are just window dressing and the sociopaths remain dominant (May 28, 2026).

2. Supply-side employment services models fail and promote sociopaths (November 3, 2025).

3. Job Services Australia – ineffective and rife with corruption – scrap it! (February 23, 2015).

4. Anti-Poverty Week – best solution is job creation (Octobe 14, 2013).

5. Oh for a decent public employment service! (January 28, 2011).

6. Training does not equal jobs! (April 30, 2009).

The Report cited from CICTAR is the result of an investigation into the privatised employment services in Australia.

In 1998, the Australian (conservative) government created a new ‘industry’ – the ‘unemployment’ industry, when it privatised the Commonwealth Employment Service (CES) and handed over labour market program delivery to profit-seeking private providers.

Our traditional industries are productively engaged in producing manufacturing goods, agricultural produce, public services, education, recreational services, and the like which provide employment and incomes and enhance our material standard of living.

The ‘unemployment’ industry produces nothing but heartache, wastes billions of public money, and the private service providers regularly defraud the system.

With unemployment remaining high in the 1980s and skyrocketing during the 1991 recession because the Australian government was obsessed with pursuing fiscal surpluses, its response to the rising long-term unemployment that it had produced was to introduce this privatised management scheme.

This parasitic private sector fringe – the Job Network – was, in effect, a new industry, whose product was unemployment.

Many people think it was the conservative Howard government that started the trend to outsource and privatise government services. It is true that it was the Howard government which privatised the public employment service and created the so-called Job Network in 1998.

But these conservatives, who took office in 1996, were not the founders of the scheme.

Leaked documents revealed that the if the Labor Party had not lost office in 1996, it was planning to privatise the CES itself.

The neo-liberal ideology was rife within the so-called workers’ party – the Labor Party.

The Labor government’s response to the 1991 recession was to introduce a scheme were the long-term unemployed were assigned to contractors in both private and not-for-profit agencies for training.

The myth was that the unemployment was a supply-side phenomenon.

However, the most salient and empirically robust fact about the performance of the Australian economy at the time the Job Network was introduced was that actual GDP growth was not been strong enough to achieve and sustain full employment.

This quasi-market paid the contractors a ‘fee-for-success’ basis and was the basis for the ‘new industry’ – profiting from managing unemployment.

The Government argued that a competitive model would improve the quality and flexibility of services provided to the most disadvantaged job seekers.

The scheme was deeply flawed and the Labor government justifiably lost office in 1996.

The election of the conservative Coalition Government in March 1996 saw the abolition of all the previous government’s programs and the privatisation of the CES.

The Prime Minister said that the responsibility of government was not full employment (which had been introduced as a primary goal after WW2) but rather full employability – that is, the government no longer ensured that employment growth matched labour force growth but focused, instead, on getting individuals ‘work ready’, should there be jobs available.

Despite the problem being a demand-side shortage of jobs, the supply-side activation approach championed by the now neoliberal OECD dominated.

It was all about blaming the unemployed for their plight and threatening them with starvation should they not agree to submit to the pernicious management regime (relentless dole diaries, meetings with case managers etc) which included working for free.

The government tendered out contracts to run the job services – and a conga line of parasites emerged to ‘handle’ the unemployed while pocketing billions in contracts.

The claimed goal was to assist the unemployed to gain skills and employment.

The reality was that these job service providers ‘managed’ the unemployed, frustrated their legitimate receipt of income support, and creamed off profits for the providers.

Every evaluation report since has demonstrated the total failure of the approach to labour market programs.

But no government will demonstrate the necessary courage to admit their failure and scrap the system.

The latest report cited above is categorical.

It says that:

Australia’s system of privatised employment services has failed. The Howard-era system fills the pockets of private equity and millionaires, while leaving jobseekers without work. … the privatised employment services system is still riddled with problems and not meeting the needs of unemployed Australians …

Federal employment services contracts have become a prized revenue-generating asset, attracting the interest of private equity and building the fortunes of millionaires.

It argues that the major providers in this ‘industry’ are “heavily dependent on government contracts” and they use sophisticated methods of “profit extraction that include aggressive tax minimisation and large dividend payments to shareholders”.

The Report finds that the so-called ‘market for job services’ is in reality dominated by wealthy owners who are paid billions by government, and are, in turn, highly profitable.

The Report concludes that:

It is clear that the major beneficiaries of the privatised system set in motion by then-Prime Minister John Howard in the 1990s are not Australia’s unemployed but a minority who have succeeded in diverting public funding to private profits.

Fancy that.

The billionaires and foreign private equity interests who squeal about government spending and the need to tighten welfare support but who jet around on the back of very lucrative government contracts and evade transparency at every turn.

And the so-called tailored support to the unemployed to improve their job prospects – not much happens on that front.

This so-called ‘market’ is a very curious construct.

1. The federal government issues ‘licences’ to the private job services providers who are spatially separated.

2. Single corporations can hold multiple licences – 9 profit-seeking companies account for more than 30 per cent of the value of the licences worth $2.1 billion.

3. One company – APM (controlled by international private equity) has 23 licences worth $590.7 million.

4. The clients (as they are called) – that is, the unemployed must align with their geographically-proximate private job service provider to get the unemployment benefit.

5. The government sets the ‘price’ – that is, the funding that each provider gets per case load managed.

6. The payment incentives are skewed so that the providers can ‘park’ difficult to place people – that is, ignore them while getting a fee.

7. Evaluation studies show that the ‘services’ provided fail badly to meet their objectives – “individuals placed into inappropriate jobs, such as working just an hour a fortnight … or sent to employability courses that give instruction on washing and bathing.”

8. “Tens of thousands of complaints about employment services providers” are received by the government every year.

9. “There is little time or ability to tailor services, and the workforce is in crisis with over 40 per cent turnover of frontline staff. Low paid, de-professionalised and de unionised, many staff do not possess the skills or qualifications to support an increasingly vulnerable and heterogenous client caseload.”

10. Under the so-called ‘mutual obligation’ system, the job service providers report the unemployed to the government for failing to meet their obligations resulting in withdrawal of income support.

But the evidence is that wrongful allegations are made by the providers who also impose programs on the unemployed that are impossible to fulfill.

11. There is a mass of evidence that shows that “Faulty claims for outcomes payments and reimbursements by providers appear to be
widespread” – that is, criminal fraud.

12. Job service providers are also known to lie about referrals and hours of work the unemployed are doing under their watch – all to claim government payments.

What to do!

The Report makes several recommendations, which I mostly agree with:

1. Scrap the privatised system and recreate the public employment service at the Commonwealth level – stop the profiteering.

2. “Strengthen procurement” – enforce stricter transparency and accountability – this is a transition step while the new public system is being introduced.

The problem is that dealing with foreign private equity hidden by a labyrinth of corporate structures is difficult.

The government is also reluctant to sent the fraudsters to prison.

3. “Ensure scrutiny of providers across funding streams” – the same companies involved in the job services binge get government contracts in aged care, childcare, and disability support.

It is a veritable feeding frenzy.

CICTAR want evidence of poor behaviour in one contract area to be the basis of exclusion in all areas.

4. “Prohibit political donations” by government contractors – obviously.

Conclusion

The privatised job services system and the scrapping of the Commonwealth Employment Service were key expressions of neoliberalism in the Australian context.

The system was part of the myth that government could hand over important functions to the ‘market’ for the betterment of everyone.

Of course, the government funded the whole show and let the profit-seeking sharks move in with little accountability.

And the objective – to improve the lot of the unemployed – seemed to get lost in the frenzy to convert the public money into private profits.

The fact that more evidence is being published that shows the system has failed and is beyond repair is a significant demonstration that neoliberalism is terminal.

The problem now is that the current Labor government is too gutless to scrap the system and take responsibility back for providing welfare support to those that are without work.

That is enough for today!