The Indigenous Employment Policy (IEP) was introduced by Minister Peter Reith in 1999 as a result of decisions made in the 1998 Budget. It has been administered by DEWRSB. The IEP is a significant development: there had not been a major Commonwealth government initiative in the area of Indigenous employment since the mid 1980s. Indeed it is fair to say that before responsibility for employment became part of DEWRSB as part of a machinery of government change following the last election, the issue of Indigenous employment had not had a high priority. There had been a reasonable expectation that the radical new creation, Job Network, which replaced the old Commonwealth Employment Service (CES) and Employment Services Regulatory Agency (ESRA) would provide equity to Indigenous Australians—equity not only in terms of equitable access to labour market programs but equality in employment outcomes.

However, it soon became clear that although Job Network is working increasingly well, delivering better employment outcomes at significantly lower cost, Indigenous Australians are the group who are least able to make effective use of its services. The rate of Indigenous unemployment continues to be unacceptably high. DEWRSB estimates that 40 per cent of Indigenous people are unemployed, if those on CDEP are included in the count. Estimates from other sources are even higher. It was necessary to introduce a policy framework and program initiatives to complement Job Network.

A matter of even greater concern is that very few of those Indigenous people who are employed are at work in the private sector. The great majority are on CDEP, or have jobs in Commonwealth, State and Territory public services, or have jobs in local government or are working for community controlled Indigenous organisations which are largely publicly funded. Private sector employment remains the great challenge. If there is one key emphasis to the new IEP, it is to make more headway in accessing private sector jobs and getting them filled by Indigenous Australians.

In instituting Job Network we moved from 300 CES offices operating as a government monopoly to a new system delivered by a range of public, private, and voluntary welfare organisations offering a range of employment services. They deliver job-matching, the old ‘swing-of-the-door’ placement service; intensive assistance to those clients most at risk of welfare dependency; job search training; the New Enterprise Incentive Scheme (NEIS) to support unemployed people in establishing small businesses; and project contracting for harvest work. Employment services costing $1 billion a year are outsourced under contract by DEWRSB and delivered by a competitive market of 200 providers from some 2000 sites. The good news is that, as a consequence, many Indigenous Australians who previously had no access to a CES office now have a Job Network member near them. Often they are able to choose between providers. Unfortunately that does not mean that the services that are being provided are necessarily appropriate.

We face a challenge. Job Network is not performing as well as it should for Indigenous Australians. That is why the Government has introduced the IEP. But I do want to emphasise that Job Network is not nearly such a failure as some of the criticisms that I hear suggest.

If you examine Job Network, particularly the intensive assistance that is provided to the most disadvantaged job seekers, you will find that in terms of registrations Indigenous Australians represent just over 5 per cent of the client base. Perhaps it should be as high as 7 per cent, but it is still not too bad an achievement. In terms of referrals —the point at which clients are referred from Centrelink to the Job Network member to provide employment services—that is running at about 6 per cent. Then occurs the first major problem. From the time Indigenous Australians are referred from Centrelink to a Job Network member, to become a commencement, there is a drop-off, from Indigenous people representing 6 per cent of those referred, to representing only 5 per cent of those actually beginning with a Job Network member. People are falling through the cracks in the system before they even arrive at a Job Network member. And then, if you look at the outcomes (people who after intensive assistance are placed into employment for at least 13 or 26 weeks), although Indigenous people are 5 per cent of commencements, they represent just under 4 per cent of outcomes. For each criterion—registrations, referrals, commencements, outcomes—Indigenous jobseekers are slightly under-represented. The cumulative impact is significant. It is not a disastrous picture, but it nevertheless indicates that Indigenous people are not doing as well as other groups in terms of assistance.

My department has the responsibility of evaluating outcomes through post-program monitoring. After people have received assistance, we look at what has happened to them. We can assess outcomes in two ways: how many of those who get assistance end up in unsubsidised employment or go back into education. Both are defined as positive outcomes. Across all job seekers we are presently achieving positive outcomes of around 40 per cent. That is a very good result. The evidence suggests that in terms of the outcomes being recorded and the cost at which they are being achieved, the present Job Network is working more effectively than the old CES system. Some groups are doing remarkably well. Sole parents, for example, who come into the Job Network achieve relatively high outcomes. People from non-English-speaking backgrounds are also doing slightly better than the average in terms of outcomes. The lowest outcomes are for Aboriginal people and Torres Strait Islanders. So that is the challenge that had to be addressed.

That is why IEP was launched last year. It includes the IEP, a small-business fund, and a number of measures which are designed to improve the operation of Job Network. The aim is to do two things concurrently: improve the operation of the Job Network providers from the perspective of Indigenous clients and at the same time introduce a complementary program that will help to counter inequities in accessing Job Network and in making use of the services that are provided.

The IEP itself has a number of crucial elements. It includes wage assistance, which in effect provides a subsidy to employers for taking on Indigenous job seekers for periods of 26 weeks. Indigenous Australians are now the only group in Australia to get that wage assistance. It also includes a CDEP placement incentive fee, to which I will return; a Corporate Leaders for Indigenous Employment initiative, encouraging private sector business corporations to sign up to an employment strategy for Indigenous Australians; Structured Training and Employment Projects (STEP) to provide outcome-focused training; a Voluntary Service Foundation to match community needs with the skills and commitment of volunteer workers; and cadetships for Indigenous Australians at universities.

Now what I want to do—and this [the conference] is the first time I have had a public opportunity to do this—is evaluate the initiatives: to look at what is working in this program and what is not. We have now had between 12 and 15 months’ experience. Is the IEP actually making a difference?

In terms of wage assistance, the answer is categorically ‘yes’. An employer taking on an Indigenous job seeker can get a payment of up to $4400 if they employ that person for 26 weeks. In the first year 1600 Indigenous Australians were taken on in this way. We are running now between 200 and 250 people being placed each month. Crucial, from our point of view, is that wage assistance is starting to break through the most difficult barriers to employment—some 83 per cent of the placements are in the private sector. Better still, about half of the jobseekers are still at work three months after the completion of the subsidy, which by labour market program standards is a very good outcome. It does seem to be working.

The STEP projects also seem to be having a significant positive impact. We have tried to make these training programs far more flexible than has usually been the case. STEP now provides assistance to employers willing to train five or more Indigenous Australians. There are at present 180 projects, providing almost three-and-a-half thousand placements over the life of the projects. Again the important feature is that 60 per cent of the placements under STEP are with the private sector. This is a quite extraordinary achievement.

These successes reflect a different approach than in the past. When I think back to former times I recognise how demoralising it was when unemployed Indigenous people were sent on a short-term training program, followed by a bit more time on the dole, before being sent on another training program with never a job in prospect. We have got some of the most trained Australians without jobs in the country. What we have done now is to fund training projects with employment outcomes in mind. Before we support structured training we need to know that there is actually a good chance of a job placement at its end. So although STEP has become much more flexible in delivery, it has also become much more outcome focused. We are trying to get away from training programs that led to nowhere except cynicism and despair.

The Corporate Leaders for Indigenous Employment initiative is also significant. I can remember when I was in ATSIC, and used to get a bit frustrated sometimes with DEET and DEETYA—and I’m sure the feelings were often reciprocated—because of their heavily articulated and relatively rigid training. Well-intentioned public servants would sit around in Canberra, providing advice to government and designing very clever training programs to attract the private sector. Then hapless bureaucrats would be sent out to private sector employers around the country, touting the latest design models: ‘Do you want to sign up to this? If you do you will be eligible for government funds.’ Not surprisingly, very few private sector employers, particularly the big ones, wanted to get involved on that basis.

What we have tried to do on this occasion is to place ownership with the companies. We have said to the 40 companies that have signed up: ‘Look, you design your strategy. You decide on your approach. What we want to see is that in one way or another you’re going to provide work experience, pre-training, education, training, apprenticeships and employment for Indigenous Australians.’ But we do not start from the basis that what Ansett will want to do is necessarily what Coles Myer will want to do, or that the approach of Lactos cheesemakers will be the same as for Rio Tinto mining. They have different markets, different products, different regions within which they work and different labour forces. The aim is to persuade committed corporate leaders to design their own strategies, to encourage them to develop their individual approaches in consultation with communities, and then for DEWRSB to provide financial and/or administrative support and (if it is requested) advice.

With respect to the cadetship program aimed at Indigenous Australians at university, this year we have almost doubled the number of cadetships to 92, of which 34 are in the private sector. This is a program that is designed to create role models: it is intended to identify Indigenous people coming through university and place them in companies in fields as diverse as accountancy, information technology and engineering.

Thus far I have extolled the modest successes of the IEP. For me it generates cautious optimism. Where is the failure? The biggest disappointment is undoubtedly in the area of CDEP. A CDEP placement initiative has been established so that if a participant moves off benefits there is a payment made of $2000 to the CDEP. The objective is to encourage CDEPs to support participants in progressing to mainstream employment. How successful has it been? It has been an abysmal failure. This is the part of the IEP that has not worked so far. It is the part that we need to address. We have only had 180 placements move from CDEPs to employment until now, out of some 34 000 CDEP participants (see contributions in this volume which respond to this point: Bartlett, Ch. 20; Lewis, Ch. 30; Loomes, Ch. 31).

There are other things we need to do in terms of the IEP. We need to place a much stronger emphasis on employment retention. That means we have to put greater resources into mentoring support for Indigenous recruits and cross-cultural training for management and employees in those companies that are taking on Indigenous workers. It is one thing to fill jobs. If those recruitments are not converted into retained employees we are failing. We have also got to increase the emphasis on program flexibility, to meet the needs both of employers and of communities. And, importantly, we need to take a whole-of-government approach to providing the extraordinary range of support—health, education, community capacity building—that is required to achieve sustained employment outcomes.

The biggest single issue, however, is the relationship between the IEP, for which DEWRSB has responsibility, and CDEP, for which ATSIC has—and must keep—responsibility. At this stage only 6000 of the CDEP participants are registered with Centrelink. As I have just noted, over a 12-month period only 180 participants, a grand total of 0.5 per cent of CDEP workers, appear to have moved from CDEP into paid employment. Statistically a person has a worse chance of getting a paid job if they are on CDEP than if they are off it. It is true that many of these CDEPs are operating in areas remote from an effective labour market, where the CDEP must necessarily remain a community enterprise. But ATSIC is starting to argue, and DEWRSB is in full agreement, that where possible CDEPs have to be designed in such a way as to become a stepping stone—through training and work experience programs—into paid employment. Too often, even where a metropolitan or regional labour market exists, CDEP is presently a dead end.

At the moment, the balance of incentives and disincentives is all wrong. A CDEP naturally wants to retain its best workers; that is what makes the CDEP function well. Unfortunately, those workers are precisely the people who are most likely to have an opportunity to gain entry to mainstream employment if they are encouraged and supported. The incentives for CDEP need rethinking.

There are several options that could be considered. Perhaps CDEPs should be paid greater up-front fees, in order for them to help some of their participants into the wider labour market? Where there exist labour market opportunities, perhaps government should be willing to fund CDEPs to run training or mentoring programs? In this way CDEPs might receive money at the start, but the continuation of that funding would depend upon achievement of agreed outcomes: for instance, a negotiated outcome with a CDEP might be based on an agreement that at the end of a CDEP-provided training program three, or six, or ten participants will come off CDEP. They could then be funded for the cost of the training that is going to be required for the first year. If the program is successful in terms of its outcomes, then funding the following year to continue the program would be assured. That might be a better way of increasing the financial incentives to a CDEP to focus on moving its job-ready participants off community-based welfare support into paid employment.

Perhaps the incentives being paid to the CDEP should be increased? It might possibly make a difference if the incentive payment was increased to $3000 or $4000. However, this by itself might not be an effective strategy, since very few placement fees at $2000 have been claimed so far, and many of these placements may have been fortuitous. It is not clear that simply raising the fee would drive cultural changes in CDEPs.

Another option is to establish joint arrangements between DEWRSB, ATSIC and Job Network members so that, for example, if a Job Network member is working with a CDEP and gets a successful outcome, the CDEP and the Job Network member share the financial benefits from the outcome. Or perhaps CDEPs need financial incentives to enter into formal partnership arrangements with Job Network members?

It is not yet determined whether any or all of these options are feasible. It is apparent, however, that these crucial issues must be addressed in the short term, to strengthen what appears to be the weakest link in this new IEP. The majority of CDEPs, located in remote Australia, will remain important vehicles for community enterprise and self governance. But there are a significant minority of CDEPs with access to stronger labour markets who could be attracted by incentives to transform their role and become facilitators of employment. Trying to find a new approach to winning their support is the key challenge for the government and DEWRSB in the months ahead.