The DSS represented the traditional face of Australian departments of state. It was monolithic and multifunctional, covering policy and delivery responsibilities. It was a very large department by Australian standards that was slowly modernising.

A longstanding issue was the existence of separate networks of regional offices directly serving the public for the DSS and the Department of Education, Employment, Training and Youth Affairs (DEETYA). The maintenance of two networks by these departments—the DSS to claim benefits, DEETYA to register for employment—was regarded as duplication in some quarters (but not necessarily within the departments, as they perceived themselves as serving different customers: the DSS, the unemployed, who were the labour-intensive component of a broader benefits system; and DEETYA, the employers). In addition, there were client and customer problems including ‘people falling between the systems’, uneven liaison between agencies and other delivery problems,^[3] hence the observation that ‘there have been many plans to combine employment registration and employment benefit payments in Australia but they didn’t happen—it seemed too hard’ (Vardon 2000b).

The committee report of the House of Representatives (HR SCEET 1988) entitled Getting to Work: Report of the Inquiry into Training or Return to the Workforce by Social Security Pensioners concluded that ‘[c]loser liaison between CES and DSS is essential in ensuring that beneficiaries have access to counselling and/or employment advice even when they are unable to travel to the relevant office’.

There was a historical antecedent to the Centrelink arrangements: the series of attempts over the years to join DEETYA’s unemployment, youth and student assistance arrangements with the DSS’s unemployment and youth payment arrangements. Acknowledgment of their related nature led to co-location of the Commonwealth Employment Service (CES) and the DSS offices in some areas. A series of meetings in the mid-1990s between departmental secretaries Tony Blunn and Derek Volker was aimed at improving coordination between the DSS and DEETYA, but a new service agency was never contemplated. Otherwise, the intentions to improve coordination failed (Briggs 1996). There had also been a long history of ‘turf wars’ between the two organisations, reflecting departmental territorial imperatives. That rivalry was to have a strong influence on the ultimate structure and governance of Centrelink.

The 48-year monopoly the CES had on the provision of services to unemployed people had been challenged by an experiment begun under the previous government. The Labor Government had sought to contract out case management to a variety of private and community bodies (Donald 1996:24) and wanted greater freedom of choice and competition through extending the market share of the non-government sector.

At the time of the election, Coalition policy on employment and training focused on employment assistance and case management. It mentioned duplication in service delivery between the Commonwealth and state governments as an object for scrutiny by a commission of audit. It also accused the then case-management system of being overburdened because, inter alia, of functional duplication. There was no mention of a perceived overlap between the DSS and DEETYA or of possible restructuring. The document mentioned income support explicitly and committed a Coalition government to administering unemployment benefits through the Department of Social Security. It also promised that the CES would be asked to make public its standards of service in each office and its performance against targets in its immediate area (Liberal Party of Australia 1996).

A senior Commonwealth public servant, at a conference on competitive tendering and contracting, queried the CES’s capacity to deliver services effectively and expressed surprise that there was ‘still a belief that very large government bureaucracies can do a good job of delivering complex services to clients in Australia…the Commonwealth Employment Service is one body that will no doubt get some questioning in that regard’ (Moran 1996:19). It was expected that the new government would scrutinise the CES, and this was understood by DEETYA’s senior management (Rowlands 2003).

There was also a growing consciousness of the connections between the social policy departments (DEETYA, DSS, Health and Veterans’ Affairs). These departments were developing policy that impacted on the same group of people.