Australia's $2 billion Workforce Australia system is being redesigned to better match support with individual jobseeker needs
Australia's $2 billion employment services system is being overhauled for the first time in three decades, with the federal government committing $312 million to redesign the way more than one million Australians access support through Workforce Australia – the scheme that underpins the JobSeeker pipeline.
Employment and Workplace Relations Minister Amanda Rishworth delivered the announcement at the National Press Club in Canberra today (27 May), describing it as "the biggest reform to our employment services system in 30 years." The changes will fundamentally alter how employers engage with the scheme, what candidates they receive from providers, and how long-term unemployed Australians are prepared for work.
For HR leaders, the reforms carry direct workforce implications, particularly for organisations that hire from the Workforce Australia caseload or work with contracted employment service providers.
Why the current system is failing employers and jobseekers
The centrepiece of the announcement is the abolition of Workforce Australia's single-service model in favour of three distinct service streams, each with different support intensity, provider obligations, and mutual obligation requirements – the conditions jobseekers must meet to continue receiving income support.
Rishworth was unambiguous about the scale of the problem: "A one-size-fits-all approach, across all elements of Workforce Australia, is letting too many participants fall through the cracks and creating inefficiencies in the system," she told the National Press Club.
"The way providers are paid means they are incentivised to focus their efforts on those who fit into this narrow profile – rather than supporting everyone on their caseload. And people with more complex barriers to employment simply get put in the too-hard basket."
The minister described a practice known within the sector as "parking" – where providers deprioritise harder-to-place participants in favour of those most likely to generate a quick placement fee. According to the Department of Employment and Workplace Relations, only 11.7% of jobseekers in Workforce Australia found long-term employment through a provider in the 2024–2025 financial year, against a target of 15%.
The agency attributed part of this shortfall to a labour market that favours tertiary-educated candidates, yet more than half of current participants hold no qualifications beyond Year 12, according to Workforce Australia's latest annual report.
The consequences extend beyond the individual. Around one in six people who exit Workforce Australia re-enter the system within a year, according to the minister's office. Further, 20% of the current caseload – approximately 140,000 people – has been in the system for five years or more, up from 13.5% in 2015 according to the Department of Employment and Workplace Relations.
Employers have also registered frustration. Rishworth acknowledged in her speech that businesses are "frustrated at being sent unsuitable candidates, because providers don't always take the time to understand the needs of local businesses" and that many employers have disengaged from the scheme altogether as a result.
What the three streams look like
The new model divides the caseload into three service streams based on an individual's distance from the labour market – a concept the minister defined as the combination of skills, health, work history, qualifications, and personal circumstances that determines how readily someone can move into employment.
Service Stream One is a newly funded digital service, backed by $205 million in the 2025–26 federal budget, designed for people who are digitally literate and close to the labour market. Unlike the current Workforce Australia Online platform, which Rishworth described as "really only a compliance and administration tool," the new digital service will provide individualised resources, career mapping, and training, with access to a national contact centre for targeted support.
Service Stream Two delivers face-to-face, provider-led support for those who need more than a digital service can offer. Providers will be required to help participants set individual employment goals and pursue "active job coaching, work-ready supports and training linked to in-demand jobs." Mutual obligations in this stream will be explicitly connected to a participant's employment goals, with flexibility to adjust as circumstances change.
Service Stream Three is the most intensive tier, targeting people furthest from the labour market, often older Australians, those with health conditions or disabilities, people in regional areas, or those with limited formal qualifications. Rishworth flagged that providers in this stream will be "distinct from those in service stream two, chosen for their deep community connections and relevant experience in delivering intensive support." The budget has committed $52 million for early national rollout of this stream.
Alongside the streaming model, the government will introduce a new holistic assessment process, replacing the current Job Seeker Classification Instrument, backed by $27 million in the budget. A new Employment Goal Plan will replace the existing Job Plan, which Rishworth described as typically "a standardised template filled with arbitrary activities."
Mutual obligations: a rethink, not a removal
The government has confirmed it will retain mutual obligations – a position that puts it at odds with the Australian Council of Social Services (ACOSS), which has called for the requirements to be scrapped. ACOSS chief strategy officer Edwina MacDonald, based in Sydney, argued that "around a third of people [are] hit by automated payment suspensions while trying to get by on poverty-level payments," and that there was no evidence the obligations help people find work.
Rishworth addressed the debate directly: "For too long, our public debate has been stuck in a conversation about whether mutual obligations are too hard, or too soft," she said. "When the real question should be: are mutual obligations activities actually helping someone get into work? Unfortunately, all too often, the answer is clearly 'no'."
The Community and Public Sector Union (CPSU), whose national secretary Melissa Donnelly is based in Sydney, welcomed the review but said it did not go far enough.
"Today's announcement is a step in the right direction, but risks not going far enough to fix a system that is fundamentally broken," Donnelly said.
The CPSU has called for employment services to be returned to public hands, arguing that outsourcing the function to approximately 166 private contractors, the current number according to The Canberra Times, has been "an unmitigated disaster for jobseekers and employers."
What comes next for HR leaders
The reforms are not yet legislated. Current Workforce Australia contracts will be extended by 16 months while final design details are worked through, according to Minister Rishworth's office. A public discussion paper has been released on the Department of Employment and Workplace Relations website, and expressions of interest are open for a user lived experience panel. An Employment Services Reform Advisory Group has also been established to provide technical guidance on system design.
For workforce managers and HR leaders tracking employment law and workforce policy developments in Australia, the reforms signal a meaningful shift in the quality and targeting of candidates flowing through the public employment system.
Organisations that engage with Workforce Australia providers, particularly those hiring in aged care, logistics, hospitality, and retail, should monitor the consultation process for changes to referral standards and employer engagement obligations.
