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International Journal of Social Security and Workers Compensation

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Carney, Terry; Ramia, Gaby --- "Welfare Support and 'Sanctions for Non-Compliance' in a Recessionary World Labour Market: Post-Neoliberalism or Not?" [2010] IntJlSSWC 4; (2010) 2(1) International Journal of Social Security and Workers Compensation 29





During the recent boom in the world economy, many western developed countries, of varying political complexion, adopted neoliberal welfare policies and deregulated labour markets. For the unemployed these reforms were characterised by contracting-out of labour exchange functions (public employment agencies), and strong sanctions for non-compliance with ‘activation’ policies to engage or reconnect social security recipients with the workforce. The 2008 world financial crisis, and policies pursued by a centre-left government in Australia indicate the potential for greater emphasis on social protection, social inclusion, upskilling/training or public value creation. The change of agenda, though not entirely substantive, is worthy of interrogation. This paper reviews Australian progress towards alternative paradigms and prospects of more radical ‘capacity building’ agendas.


Over recent decades a new form of governance of state services has emerged. Termed ‘neoliberalism’, it involves not so much a question of changing what government does, but rather the way it does it.[1] Instead of planning and delivering state services, neoliberalism contracts service delivery out to non-government actors, mainly for-profit businesses or not-for-profit charitable agencies. In a well known rowing metaphor, this is characterised as confining government to ‘steering’, rather than both steering and rowing. By putting market mechanisms at the core of the new delivery mode, the theory anticipates that programs will be both more efficiently delivered (at lower economic and ‘bureaucratic’ costs) and in a more flexible or responsive manner.

A considerable body of literature has emerged to interrogate the claims of and criticisms against this new model of governance, commonly captured in the concept of ‘new public management’ (NPM) widely applied by scholars in law, governance and social policy. In social policy fields such as social security entitlements for the unemployed which is the focus of the present review article, a prominent theme has been the extent to which any efficiencies or service flexibilities are gained at the expense of other values — such as insistence on behavioural change by the unemployed on pain of sanctions (under the rubric of ‘reciprocal responsibility’) and a weakening of accountability protections both to government and for clients.[2]

As Schramm et al comment in respect of US welfare reform, ‘[w]elfare policies for the poor have been redesigned in recent years to reflect the idea that the state has a legitimate interest in ensuring that socially marginal groups practice appropriate behavior’.[3] This was true of some but not all aspects of welfare reform under the former Australian Conservative Government led by John Howard.

Under the Howard regime, Australia adopted modified versions of US neoliberal forms of governance (such as being an early leader in marketising the delivery of labour matching services for the unemployed),[4] along with specific policy prescriptions both for the labor market (deregulation) and welfare: including an economically-purist rationale for its ‘welfare-to-work’ reforms[5] and embrace of the more authoritarian overtones of ‘mutual obligation’ (and penalties for non-compliance) drawn from Lawrence Mead’s ideas about moral responsibility and ‘character’ in overcoming lack of work or impoverishment.[6]

In public administration terms, Australia’s Job Network embraced the new public management approach to employment services governance,[7] with service provider value-for-money and expedient job placement criteria dominating over equity and the socially progressive outcomes associated with intensive assistance for long-term unemployed and more disadvantaged jobseekers. As Harris argued, neoliberal welfare reform in Australia was characterised by the themes of competition, individualisation and authoritarianism.[8] In combination, labour-market deregulation and social security reform constituted an exacerbating ‘pincher’ movement,[9] especially for vulnerable workers, including Australia’s high proportions of casual and part-time workers, along with those with multiple barriers to employment, such as the mentally ill.[10]

As we argue below, taking a macro view of compliance within employment brokerage in the new regime called Job Services Australia (JSA), the current Labor Government’s tentative moves towards tempering the previous government’s neoliberal excesses do not constitute a move toward European-style jobseeker capacity building. While enhancing some protections, neither do they add public value to a system which was, from its original conception and after implementation, deemed radically commercialised by both local and international observers.[11]

A Labor Government reforms

Following the election of the Australian Labor Party under Kevin Rudd in late 2007 — replaced as Prime Minister by Julia Gillard by a party room vote in June 2010 — a semblance of balance has been restored to labour law, knocking the rougher edges off the so-called ‘WorkChoices’ reforms and re-establishing vital regulatory protections for workers and trade unions.[12]

In welfare, the incoming Rudd Government effectively provided belated recognition to the critique of the overly-heavy penalty regime first raised eight years earlier by an Organisation for Economic Cooperation and Development (OECD) report reviewing recent Australian ‘innovations’ in labour market policies, sub-titled ‘the Australian Way’.[13] This was achieved by converting the scheme of lengthy penalties (high percentage rate reductions or total loss of payments for several weeks), across a wide range of allegedly non-compliant behaviour, to instead favour temporary loss of portion of a social security installment (effectively a day at a time), over a narrower range of core conduct, and only until a person complies (portrayed as a ‘No show, No pay’ policy).[14]

The Howard Government expressed little apparent interest in social inclusion or capacity-building policies,[15] and the new government has taken only tentative steps in that direction by establishing a Social Inclusion Board.[16]

Instead, the main focus has been on investing in classical labour-market programs, such as training places for the unemployed; including a July 2009 Council of Australian Governments (COAG) decision extending the subsidised training guarantee places for youth under 25 to cover all retrenched workers (or an estimated additional 124 000 places).[17]

B The new welfare compliance regime

Welfare compliance since 1 July 2009 now relies more on encouraging connection and cooperation than on fear of standardised loss of payment penalties; though both elements remain.

The no-show no-pay policy, expressed in the amended Social Security (Administration) Act 1999 (Cth), operates mainly by first identifying ‘connection failures’ (such as not keeping an appointment with a service provider: s 42E(2)(c)). Connection failures can trigger imposition of a ‘reconnection obligation’ (including notification of consequences for failure to honour it: s 42K), but otherwise they attract no immediate sanctions.[18]

No-show no-pay penalties for breach of reconnection obligations[19] are attracted variously by conduct such as not participating in (or misconduct during) an activity contained in an ‘Employment Pathway Plan’ (the new name for former ‘Job Search Agreements’), failure to honour an obligation imposed for a so-called ‘serious’ connection breach, and for ‘intentionally act[ing] in a manner ... (including by failing to attend a job interview), [which] it is reasonably foreseeable ... could result in an offer of employment not being made to the person’.[20]

Penalties are set by legislative instrument, not exceeding the amount of the payment for the day(s) in question.[21] For episodes like not attending an interview, it is loss of pay for that day,[22]

or in the case of ‘ongoing’ participation breaches, loss of payment for each day between the day of initial breach and the day prior to its rectification.[23] Unlike the former regime, however, the loss does not commence to be imposed until after the person is advised of, and is thus able to contest, the alleged breach.[24] A ‘further reconnection requirement’ can be imposed if the first is not discharged.[25]

Eight week penalties (of total loss of payment according to s 42P of the Social Security (Administration) Act 1999 (Cth)) are now confined to ‘serious misconduct’, such as ‘persistently’ failing to comply with obligations of a participation payment, ‘including by committing no show no pay failures, connection failures or reconnection failures’.[26] These penalties may not be imposed without first undertaking a ‘comprehensive compliance assessment’,[27] currently triggered by three unexcused failures in six months. Nor may they be applied where the person lacks capacity to comply, or where serving the penalty would cause severe financial hardship.[28] Acceptance of a person’s intention to now comply serves to terminate the period prior to eight weeks.[29]

Fixed-term, eight week loss of payment penalties continue to be applied (without the prospects of shortening or need for enquiries) on the historic grounds[30] of refusing or failing to accept an offer of suitable employment,[31] and unemployment due to a ‘voluntary act’, or ‘misconduct as an employee’.[32]


The various changes to the Job Network (now Job Services Australia, or JSA) to invest more funds in those classified as long-term or multiply-disadvantaged unemployed,[33]

and to shift to a no-show no-pay welfare penalty system, are welcome but flawed measures, very prone to exposure by rising unemployment consequent on the world financial crisis.

A A Duck is a Duck is a Duck; Markets are hard to govern?

The first difficulty, centred on the changes to the JSA, is that it remains a contracted-out network of service providers; or a welfare ‘quasi market’.[34]

While good for cost and efficiency, the JSA, like the Job Network (JN) before it, suffers from being steered from a distance, with long lag-times.[35] In consequence it is less responsive as a policy instrument to macro-economic change in the volumes of, difficulty of re-entry, or costs of placement of those who face multiple barriers to employment.[36] Indeed, the new government’s recent tender round is open to criticism for tendering the whole sector rather than taking a more flexible, staged approach, and for being predicated on a more buoyant labour market than now prevails.

In de-coupling the JSA from its former close nexus to a tough welfare sanctions regime, however, government appears tacitly to have recognised that welfare-to-work, and mutual obligation measures, may have been over-sold as remedies for unemployment and poverty. This is consistent with the research evidence. Thus a US study of former Aid to Families with Dependent Children (AFDC) clients found that it is the health or otherwise of the economy which determines how long welfare-to-work clients stay engaged in the labour force after initially obtaining work, whether willingly or due to compulsion following loss of.[37] Likewise the long-term economic welfare of sole parents under US Temporary Aid for Needy Families (TANF) programs showed little or no improvement,[38] and similar conclusions were drawn from a meta-review of studies published by the US Center for Budget and Policy Priorities.[39]

Canadian and UK experience is to the same effect.[40]

B Killing Me Quietly: Liberalism’s discrimination against the ‘demoralised’?

The welcome abandonment of quasi-criminal penalties for those unemployed who are uncompliant with conditions for continued receipt of social security, remains somewhat problematic, however, because it arguably makes too few adjustments for people who do not fit the liberal template of the settled and fully rational or autonomous individual.

Certainly the narrowing of breaches by excluding the former administrative breaches (such as attendance at JN interviews) to simply allow imposition of a reconnection requirement, overcomes the ‘sudden death’ effect previously triggered by minor infractions. But a person without a settled abode cannot readily respond favourably to the second chance which the reform offers; and in 2006 the ABS found 104 646 Australians or 53 per 10 000 were homeless.[41]

Nor will they – or people suffering from fluctuating mental illness or an addiction, for example – recognise rapidly enough, or respond speedily enough, to the opportunity to instantly end the penalty of loss of payments under the ‘day at a time’ rule; and 13 per cent of Australians reported being in high or very high levels of psychological distress in 2004-05.[42] By default, such people may continue to accumulate extended non-payment periods before re-contacting Centrelink (which administers income security payments) or their JSA member.

The subjectivity of the language of s 42C(1)(a)(iv) of the Social Security (Administration) Act 1999 (Cth) about intentionally acting in a manner ‘reasonably foreseeable’ as one which ‘could result in an offer of employment not being made’, is also open to over-use in the hands of front-line decisionmakers, who may too lightly accept the information relayed from employers about what they found to be an unpalatable presentation or attitude, particularly on the part of people with mental illness or without a settled abode.

There is some administrative recognition of such problems in the construction by Centrelink of the protection of requiring a detailed expert assessment of personal barriers to employment. This report is now required before imposing sanctions in respect of the narrower range of conduct which continues to attract such possibilities. However the more mundane and more common situation of what we may term ‘impoverishment by lassitude’ seems not to be adequately catered for so far.

Putting it more abstractly, the re-engineered compliance scheme still appears to place too much store in liberal assumptions of the autonomous and rational individual. The vulnerabilities and individual differences of those comprising the long-term or multiple-barrier group need to be catered for in more nuanced ways.

C Who Needs Law and Lawyers: The ‘marketisation’ of the rule of law?

For welfare clients, the neoliberal preference for contracting job brokerage services out to quasi-markets like the Job Network was problematic because it tended to weaken public law accountability machinery.

Originally the social security rights of the unemployed were no less protected by the operation of the rule of law than were other categories of recipients: with normative guidance set down either in legislation or rulings of the merits review tribunals and courts.[43] Neoliberal emphases on individual ‘activity contracts’ and other governance modes largely supplanted this with extra-legal interpretations of ‘policy’, front-line worker ‘enterprising’ cultures of agency administration, and economic or other models of localised administration of policy.[44]

As Mashaw[45] observed of the strong form of welfare neoliberalism in the US, the core difficulty is that the service required to be delivered involved ‘a regime of social control that entails norm creation, monitoring and sanctioning’, where private actors within the job-brokerage agencies effectively wielded state power to reinforce their brokerage authority.[46] This ‘blurring’ of the lines between public and private accountability, restriction of access to public avenues of redress such as merits review, the ombudsman or political oversight, serves to render administration less transparent to the public or to government.[47]

US experience suggests that as the unemployed become more difficult to place, they risk being ‘parked’ (at best), or ‘sanctioned’ (at worst).[48] This was certainly borne out by Australia’s experience with its ‘tough love’ welfare-to-work sanctions regime. Thus 15 509 people suffered ‘three strikes’ 8 week loss of payment penalties in the first year of operation of the 2006 reforms, compared to 6432 receiving the harshest of the then ‘tiered’ penalties under the previous regime.[49] As the 2007 election drew near, significant numbers of clients were effectively in ‘limbo’, as Centrelink staff sought to determine their fate.[50] According to Horin, up to 200 000 people were said to have reached the ‘second strike’ risk point by the time of the change of government in late 2007.

Since the softening of the welfare sanctions regime mainly shrinks the size of the populations at risk of the new ‘softer’ and ‘staged’ sanctions – rather than alter the form of social security obligations (in ‘employment pathway plans’), or the dynamics of the empowering of JSA job brokerage agencies – it must be doubted whether anything other than the scale of the problem will alter. It is unlikely that merits review and court constructions of measures such as the new comprehensive compliance assessments will adopt a wide, purposive view, directed at rigorously examining underlying causes of disadvantage and disempowerment of jobseekers. Compliance assessments instead risk degenerating to pro forma requirements which will offer little real protection for the most disadvantaged.

D We Are…, We Are…’We Are Australian’:
Few hints of European capacity-building?

For its part, the emphasis on upgrading skills through longer-term training or education may yet evolve into social security and labour market programs more akin to European models.

British and European ‘Third way’ policies pursue durable jobs and place greater emphasis on building an educated and skilled workforce as the basis for economic prosperity and international competitiveness.[51] Because the object of these policies is to elide, or find a reconciliation between social protection (as in social security) and markets (as in labour market flexibility), the most evocative term for these policies is ‘flexicurity’,[52] a concept incorporating various combinations of job security, employment security, income security and ‘work-life-balance’.[53] Among other things this embodies the idea of ‘transitional labour markets’, involving reconceptualising employment from a static point-in-time focus on labour supply and demand analyses at that time, to the dynamic perspective of a workforce ‘career’, where public policy facilitates lifecourse stability through development of individual skills and capacities and supportive pathways for new forms of involvement.[54] As in other countries, however, the worked examples of this new policy mix (such as those pioneered in the Netherlands and Denmark) included elements of ‘activation’ of the unemployed.[55] They also often included imposition of reciprocal ‘responsibilities’ to be met by the unemployed as a condition of payment under an imposed individual ‘behavioural contract’ designed to promote appropriate jobseeking behaviours, as in Britain’s various ‘new deal’ programs of the former Labour Government,[56] a model adapted from Australia.[57]

In 2007, the European Commission and later the European Council of Ministers of Labour and Social Affairs formally endorsed flexicurity to describe an alternative vision to that of neoliberalism and globalisation. This vision was expressed in the reconciliation of economic and social objectives enunciated in the 1997 Luxembourg ‘European employment strategy’, later incorporated into the 2000 ‘Lisbon agenda for jobs and growth’.[58] Consistent with the soft law idea of the ‘open method of consultation’ within the EU, the eight principles adopted by the ministers to elaborate on the notion of flexicurity left wide scope for national variation around issues such as the degree of pursuit of ‘activation’ strategies for the unemployed, or the suite of training and social protection approaches.[59] At their more expansive, these state interventions can be conceptualised as the operationalisation of Amartya Sen or Martha Nussbaum’s ideas around a ‘capabilities approach’ for assessing policy in terms of impacts on what people can or cannot ‘do’, by establishing a ‘third way’ compromise between orthodox social protection and neoliberalism's embrace of markets and globalisation.[60] The object here is to develop, support or re-tool the ‘capabilities’ of citizens to maximise their labourforce (or general social) participation over their lifecourse, as captured in the notion of transitional labour markets.

These European models are potentially promising developments, but, as commentators have observed, as yet no sufficiently detailed Australian blueprint has emerged for alternative pathways of welfare reform, leaving measures such as the establishment of the Social Inclusion Board open to the charge that it has the potential to ‘[diffuse] responsibility for addressing specific issues’.[61]

Thus, the EU now redefines poverty not in simple income terms, but instead through multi-faceted socio-economic measures of ‘social inclusion’, with the indicators serving as the basis for National Action Plans under the Lisbon Strategy for Employment and Growth.[62] By contrast, the closest Australia has come was in May 2009, at which time the Board published a compendium of Australian and EU social inclusion indicators, based largely on the five EU fields of poverty/low income, lack of access to work, limited social supports/networks, neighbourhood effects, and exclusion from services.[63]

These indicators in themselves are somewhat mixed, with positive showings on labour force participation (at 76 per cent against an EU average of 71 per cent in 2007) and low unemployment (4.3 per cent against EU 7.2 per cent in 2007) and long-term unemployment (0.6 per cent against EU 2.6 per cent).[64] However income decline on retirement (0.57 of non retired incomes, against EU 0.85), proportions of children living in jobless households (13 per cent against EU 9.7 per cent in 2006),[65] or gender, indigenous and regional disparities and indicators were less favourable. On the virtually unanswerable question of whether Australia’s investment in social expenditure is sufficient for an inclusive society, the report unsurprisingly concludes that ‘[e]ven after allowing for difficulties in harmonising different accounting systems, the conclusion is inevitable that Australia stands near the bottom of the list of relative social expenditures’.[66]

Social inclusion has been a late starter within Australian public policy, though it did receive some attention in the McClure Report on welfare reform[67] and the concept is somewhat contested.[68] A social inclusion agenda was earlier embraced by Britain in the late 1990s, where Ruth Lister[69] characterised it as a paradigm shift from goals of equality towards a focus on social inclusion and equality of opportunity, owing more to US active society ideas (and reciprocal obligations) than to European concepts of stakeholder inclusion. A perceived overemphasis on inclusion through work attracted early criticism, while mutual aid was also found to be poorly accessed by the most vulnerable.[70] As the Social Inclusion Board (SIB) report concedes,[71] not the least of the difficulties with concepts like social inclusion (or social capital and capacity building) is their woolly character. As Ronald Labonte[72] observed in the context of health services, such terms often replace the former embrace of ‘community’, another loose and rather unhelpful term now rightly rather out of favour in welfare policy.[73]

As a partial window on the question of social inclusion and capacity building from a public administration perspective,[74] the concept of ‘public value’ offers an alternate policy testing ground. One major objective behind job brokerage, by the very nature of the term, is to create a wider base of deliberation, to place jobseekers while minimising the misallocation of the human resources which underpin the unemployed or under-employed person. This serves as an alternative to approaches purely or mainly reliant on commercial criteria such as service provider value-for-money. Though the government is yet to prove itself on such grounds, its 2020 Summit along with the associated youth, schools and local summits sought to begin society-wide conversations, and the Final Report recommended a stronger role for the Department of Prime Minister and Cabinet in bringing a ‘whole of government’ approach to policy issues.[75]

The combination of the slightly softer sanctions as discussed here, and the public-private partnerships and joined-up government which underpinned the then super-Ministry of Deputy Prime Minister and combined Minister for Employment, Workplace Relations, Education and Social Inclusion, provided early evidence that public value had been put on the policy agenda, and there are indications that this is being maintained under the Gillard Government.[76] Other indicators include somewhat less commercialised employment services provision and greater attention to the long-term unemployed and double/multiple disadvantaged jobseekers as discussed above. The interests of the collective of stakeholders and in particular communities, as opposed to merely the individual customer or client of public and human services and benefits, which public value adherents support, may also be in evidence.[77] Slightly increased funds invested in services and the language of connection and co-operation as emphasised in JSA policy documents also add weight.

Prime Ministerial speeches of the then PM Rudd, particularly those stemming from the 2020 Summit, also indicated a recognition of the need to foster deliberative democracy. Perhaps ‘the ten core challenges for the future’ including ‘[crafting] our human capital’ and ‘building stronger communities’ encompass such a wider deliberative approach.[78]

Yet, as our analysis of compliance and sanctions under the JSA suggests, finding tangible evidence of the creation of public value is difficult. Such a search, however, forms the axis upon which employment services policy turns from here.


Vulnerable clients with complex needs are at risk both within the quasi-market of privatised job matching services and under the compliance regimes of social security,[79] just as they are at risk when in work if labour law regimes do not provide sufficient protections against risks such as unfair dismissal or adequate minimum wages and conditions.

Social policy is always sensitive to its cultural and socio-political context,[80] but Australia’s very pliable architecture and distinctive rationale of its social security scheme has permitted it to be especially responsive to change and experimentation. Compared to other western industrialised countries, Australian social security was a comparatively late development, reliant on tax-funding rather than being politically ‘embedded’ through shared social insurance contributions, and reflective of a more equivocal public policy stance about how best to respond to social risk or disadvantage. The historic model of the nation’s ‘worker’s welfare state’ was very malleable in comparison with contributory schemes. The Australian model was always sceptical about primary or long-term reliance on ‘welfare’, instead seeing the welfare of the unemployed as best advanced through employment conditions, supplemented by transitory and fairly austere welfare support.[81] In addition, there are no human rights protections to dampen change by softening the landings of the vulnerable.[82] So the polity was very receptive to replacement of socially protective policies for people of workforce age by radical new ‘neoliberal’ agendas conceived within a labour market or economic paradigm.

The recent partial softening of the impact of Australia’s former neoliberal model of unemployment payments (and penalties for breach of the behavioural contracts) certainly shifted policy away from an over-emphasis on personal responsibility as the basis for welfare, which, as Robert Goodin observes,[83] bears down in ethically indefensible ways on the most vulnerable. However, rather than usher in Third Way or capacity-building approaches familiar to European social policy, it leaves intact much of the distinctive architecture of Australia’s austere and residualist social policy for the unemployed.[84] It also leaves unresolved the questions of whether it has yet restored sufficient social inclusion in the policy mix in order to weather rising unemployment unleashed on the vulnerable by the next economic downturn, and whether the neoliberal/NPM model it inherited has been sufficiently modified.[85]

Our analysis suggests that it has done this partially at best. But as found by Auer,[86] the performance of EU flexicurity during the world financial crisis of 2008-09 was very mixed, suggesting that there are few policy panaceas and that all welfare policies need to be judged by reference to their own values, histories and cultures.

[∗] Professor of Law, the University of Sydney; Correspondence address: Faculty of Law, Eastern Avenue, University of Sydney, NSW 2006, Australia; fax: +61 2 9351 0200, mobile 0414 90 6857; email: This paper is a revised version of a paper presented at the XlX International Congress on Labour and Social Security Law, Sydney, 1-4 September 2009, International Society for Labour and Social Security Law. We acknowledge the helpful suggestions of two anonymous referees.

[†] Associate Professor, Graduate School of Government, the University of Sydney.

[1] Jon Pierre, ‘Reinventing Governance, Reinventing Democracy?’ (2009) 37(4) Policy and Politics 592, 592.

[2] Michele Gilman, ‘Legal Accountability in an Era of Privatized Welfare’ (2001) 89 California Law Review 569; Rachel Bacon, ‘Rewriting the Social Contract? The SSAT, the AAT and the contracting out of employment services’ [2002] FedLawRw 2; (2002) 30 Federal Law Review 39; Richard Mulgan, ‘Government Accountability for Outsourced Services’ (2006) 65(2) Australian Journal of Public Administration 48.

[3] Sanford Schram et al, ‘Deciding to Discipline: Race, choice, and punishment at the frontlines of welfare reform’ (2009) 74(3) American Sociological Review 398, 398.

[4] The principle of contestability of employment services came into operation in August 1997 when the ‘Job Network’ entirely replaced the former government-operated labour exchange (the ‘CES’) established in the mid-1940s, see Anthony O’Donnell, ‘Inventing Unemployment: Labour market regulation and the establishment of the Commonwealth Employment Service’ [2003] FedLawRw 11; (2003) 31(2) Federal Law Review 343. This established a market network of competing private sector providers, see Productivity Commission, ‘Independent Review of Job Network’ (Report No 21, AusInfo, 2002).

[5] The general embrace of welfare-to-work models, including the switch to ‘contractual’ forms of relationship for qualification for unemployment payments, is common across much of the western industrial world, see Joel F Handler, ‘Social Citizenship and Workfare in the US and Western Europe: From Status to Contract’ (2003) 13(3) Journal of European Social Policy 229; Joel F Handler, Social Citizenship and Workfare in the United States and Western Europe: The Paradox of Inclusion (Cambridge University Press, 2004); Joel F Handler, ‘Myth and Ceremony in Workfare: Rights, contracts, and client satisfaction’ (2005) 34(1) Journal of Socio-Economics 101. These programs are expressly designed to bring into the workforce groups who previously were ‘economically inactive’, as noted in Chris Grover and John Stewart, ‘Modernising Social Security? Labour and its welfare-to-work strategy’ (2000) 34 Social Policy and Administration 235, such as people with lower level disabilities or childcare responsibilities. At its most basic, the reason for the policy shift towards new forms of social security and welfare services models is a belief that social protection models are too passive, may help to manufacture or sustain dependency, and are poorly equipped to boost overall workforce participation rates in response to the challenges of an ageing population demographic.

[6] Terry Carney and Gaby Ramia, ‘Mutuality, Mead & McClure: More Big ‘Ms’ for the Unemployed?’ (2002) 37(3) Australian Journal of Social Issues 277; Terry Carney, ‘Not the Old Way, Not the Third Way, But The OECD/US Way?: Welfare sanctions and active welfare in Australia’ (2005) 12(2) Journal of Social Security Law 57; Terry Carney, ‘Travelling the ‘Work-First’ Road to Welfare Reform’ (2007) 44 Just Policy 12. Authoritarianism expresses itself in the ‘breach-penalty’ and other disciplinary measures which so often go hand-in-glove with individualisation, see Grover and Stewart, above n 5, 240; Terry Carney, ‘Welfare to Work: Or Work Discipline Revisited?’ (2006) 41(1) Australian Journal of Social Issues 27; Patricia Harris, ‘Neo-liberalism and the State: Implications for economy, society and human relations’ (2006) 25(2) Social Alternatives 8; or in increased ‘surveillance’ as a form of (more onerous) governance, see, eg, Paul Henman and Michael Adler ‘Information Technology and Transformations in Social Security Policy and Administration: A review’ (2001) 54(3) International Social Security Review 23; Paul Henman, ‘Targeted!: Population Segmentation, Electronic Surveillance and Governing the Unemployed in Australia’ (2004) 19(2) International Sociology 173. The policy rationale for mutual obligation is the ‘tough love’ idea of enforced re-sculpting of adverse values, or [re-]motivation of the unemployed through a “supervisory approach”, Lawrence Mead, ‘The Rise of Paternalism’ in Lawrence Mead (ed), The New Paternalism: Supervisory approaches to poverty (Brookings Institution Press, 1997) 1, 4-6.

[7] Gaby Ramia and Terry Carney, ‘Contractualism, Managerialism and Welfare: The Australian experiment with a marketised employment services network’ (2001) 29(1) Policy and Politics 59.

[8] Harris, above n 6.

[9] The de-regulation of labour law was more extensive than elsewhere (in not protecting rights for a majority of workers to elect for collective bargaining), while social security changes were a little less drastic than in the US see Carney, ‘Welfare-to-work’, above n 6.

[10] Ibid. Perversely, Britain favours the idea of contracting out job-matching services for those with chronic or multiple labour market disadvantages (which the evidence suggests were served least well by the Australian Job Network): see Terry Carney, ‘Australian Social Security Welfare-to-work: Avoiding Freudian slips?’ (2008) 15(2) Journal of Social Security Law 51.

[11] Tony Eardley, ‘New Relations of Welfare in the Contracting State: The Marketisation of Services for the Unemployed in Australia’ (Discussion Paper No 79, Social Policy Research Centre, University of New South Wales: Sydney, 1997); Robert G Fay, ‘Making the Public Employment Service More Effective Through the Introduction of Market Signals’ (Labour Market and Social Policy Occasional Paper No 25, OECD, 1997); Terry Carney and Gaby Ramia, From Rights to Management: Contract, new public management and employment services (Kluwer Law International, 2002).

[12] Rae Cooper, ‘Forward with Fairness? Industrial Relations under Labor in 2008’ (2009) 51(3) Journal of Industrial Relation, 285; Andrew Stewart, ‘A Question of Balance: Labor’s New Vision for Workplace Regulation’ (2009) 22 Australian Journal of Labour Law 2.

[13] OECD, Innovations in Labour Market Policies: The Australian Way (OECD, 2001).

[14] The compliance penalties for all payments are now gathered together in Part 3A of the Social Security (Administration) Act 1999 (Cth), as amended.

[15] Terry Carney, ‘Reforming Social Security: Improving incentives and capabilities’ (2007) 16(1) Griffith Law Review 1.

[16] Consistent with a campaign commitment (see ALP, An Australian Social Inclusion Agenda (2007) <> ) the government appointed this Board, reporting to the super-ministry of the then Deputy Prime Minister, Julia Gillard, ‘on how to improve social inclusion across the country’. To date the Board has considered, amongst other things, locational disadvantage, programs for children at risk of long-term disadvantage and the plight of ‘jobless families’ with children, Social Inclusion Board, Social Inclusion (2010) <> .

[17] Youth are especially vulnerable in an economic downturn because they are disproportionately engaged in casual or part-time sectors. A 3 July 2009 ABS report found that the under-utilisation rate rose 2.1 percentage points (to reach 26.2 per cent per cent; compared to 13.4 per cent per cent for other workers) between February and May 2009, Clancy Yeates, ‘Downturn Takes Toll on Part-time Workers’, Sydney Morning Herald (Sydney), 4 July 2009, <> .

[18] Social Security (Administration) Act 1999 (Cth) ss 42A (general outline), 42E(1), 42G.

[19] Social Security (Administration) Act 1999 (Cth) s 42H.

[20] Social Security (Administration) Act 1999 (Cth) s 42C(1)(a)(i)-(iv).

[21] Social Security (Administration) Act 1999 (Cth) s 42T.

[22] Centrelink, Why It’s Important to Meet Your Activity Test or Participation Requirements (2010) <$file/lw061_0906en.pdf> .

[23] Social Security (Administration) Act 1999 (Cth) s 42H(4). A legislative instrument sets the penalty from time to time, Social Security (Administration) Act 1999 (Cth) s 42T.

[24] Social Security (Administration) Act 1999 (Cth) s 42H(5).

[25] Social Security (Administration) Act 1999 (Cth) s 42J.

[26] Social Security (Administration) Act 1999 (Cth) s 42M. Serious failures are defined in Social Security (Administration) Act 1999 (Cth) s 42M(1)(a).

[27] Social Security (Administration) Act 1999 (Cth) s 42NA(1). These assessments must canvass the reasons for the relevant failures (s 42NA(1)(a)), reasons for failures to meet other requirements of social security law (s 42NA(1)(b), and barriers to employment (s 42NA(1)(c), and the appropriateness of the participation requirements (s 42NA(1)(d)).

[28] Social Security (Administration) Act 1999 (Cth) s 42NC.

[29] Social Security (Administration) Act 1999 (Cth) s 42R.

[30] Katherine Kempfer, ‘Disqualification for Voluntary Leaving and Misconduct’ (1945) 55 Yale Law Journal 147.

[31] Social Security (Administration) Act 1999 (Cth) s 42N.

[32] Social Security (Administration) Act 1999 (Cth) s 42S(1). The Social Security (Connecting People with Jobs) Bill 2010 (Cth) proposes to extend, from 8 to 12 weeks, the penalty for voluntary unemployment for participants in a two year trial of an active regional labour market assistance package from January 2011. The scheme will provide relocation assistance for 2000 job-seekers unemployed for more than 12 months and residing in an area with higher than national unemployment rates, in order to take up continuing full time work (or apprenticeships). The incentives are up to AUD6000 in relocation expenses (half that in urban areas) and an additional AUD3000 for families with dependent children.

[33] The main tranche of reform was to review and re-tender the contracts of the former ‘Job Network’ (renamed as Job Services Australia from July 2009). The 2008-09 Budget committed AUD 3.7b to revamping the employment services system to increase the focus on work readiness and skills development, including tailored case-management and better ties with employers. A new advisory body was created (Skills Australia Act 2008 (Act No 10 of 2008)), and an additional 238 000 training places were budgeted, at a cost of AUD880m, with ‘activity plans’ replaced by ‘employment pathway plans’ more akin to the UK models. See generally, Government of Australia, Department of Education, Employment and Workplace Relations, Job Services Australia - home <> .

[34] Julian Le Grand and Will Bartlett, Quasi-markets and Social Policy (Macmillan, 1993). The market is artificially constructed―as government itself (rather than economic forces) set both the ‘price’ and define the nature of the ‘goods’ to be supplied, see Auditor General ‘Management of the Job Network Contracts’ (Audit Report No 44, Australian National Audit Office, 30 June 2000) 37.

[35] In the absence of a real marketplace, government is obliged to intervene by modifying contractual terms to ensure providers remain viable and that policies are achieved: see Hugh Collins Regulating Contracts (Oxford University Press, 1999) 308-9; Nick Seddon Government Contracts (Federation Press, 2nd ed, 1999) 26. A hybrid governance form of ‘new public management’ (‘NPM’) emerges, using audits, monitoring of performance data, and other―more devolved and horizontal―management tools: Jan Terpstra, ‘The Supervision of Social Security and its Contested Independence’ in Jos Berghman et al (eds) Social Security in Transition (Kluwer Law International, 2001) 203, 207-9. The task is very taxing, as efficiency gains are traded off against a lessening of accountability both to government, Richard Mulgan, ‘Government Accountability for Outsourced Services’ (2006) 65(2) Australian Journal of Public Administration 48, and to clients, see Kate Owens, ‘The Job Network: How legal and accountable are its (un)employment services?’ (2001) 8 Australian Journal of Administrative Law 49; Rachel Bacon, ‘Rewriting the Social Contract? The SSAT, the AAT and the contracting out of employment services’ [2002] FedLawRw 2; (2002) 30 Federal Law Review 39; Rachel Livingston, ‘Contracting out of Employment Services in Australia and Administrative Law’ (2003) 10(2) Australian Journal of Administrative Law 77. The challenge of managing US work-placement was portrayed by the Brookings Institute as ‘legendary’ Bryna Sanger, The Welfare Marketplace: Privatization and Welfare Reform (Brookings Institute, 2003) 22, as also found by others Barbara Bezdek, ‘Contractual Welfare: Non-accountability and diminished democracy in local government contracts for welfare-to-work services’ (2001) 28 Fordham Urban Law Journal 1559, 1600; Gilman, above n 2.

[36] Richard Mulgan argues that the imperative for government to micro-manage contracts in this way is a political one: an unwillingness to risk public opprobrium and press criticism for poor customer service or maladministration through passing the buck to private-sector service providers, see especially Richard Mulgan, ‘Government Accountability for Outsourced Services’ (2006) 65(2) Australian Journal of Public Administration 48, 55-7.

[37] Sandra L Hofferth et al, ‘Remaining Off Welfare in the 1990s: The influence of public policy and economic conditions’ (2005) 34(2) Social Science Research 426.

[38] Kristen S Slack et al, ‘Family Economic Well-being Following the 1996 Welfare Reform: Trend data from five non-experimental panel studies’ (2007) 29(6) Children and Youth Services Review 698.

[39] Shawn Fremstad, Recent Welfare Reform Research Finding: Implications for TANF Reauthorization and State TANF Policies (2004) Center on Budget and Policy Priorities <> Sharon Parrott et al, Implementing the TANF Changes in the Deficit Reduction Act: “Win-win” solutions for families and states (2007) <> .

[40] Clare Bambra et al, ‘Does ‘Welfare-to-work’ Work? A systematic review of the effectiveness of the UK’s welfare-to-work programmes for people with a disability or chronic illness’ (2005) 60(9) Social Science & Medicine 1905; Ernie Lightman et al, ‘Welfare to What? After Workfare in Toronto’ (2005) 58(4) International Social Security Review 95.

[41] Social Inclusion Board, Social Inclusion: A compendium of social inclusion indicators (2009), 65

<> .

[42] Ibid 78.

[43] Terry Carney and Peter Hanks, Social Security in Australia (Oxford University Press, 1994) 257-62.

[44] Matthew Diller, ‘The Revolution in Welfare Administration: Rules, discretion and entrepreneurial government’ (2000) 75 New York University Law Review 1121; Mark Considine Enterprising States: The public management of welfare-to-work (CUP, 2001); Terry Carney, Social Security Law and Policy (Federation Press, 2006) ch 9.

[45] Jerry Mashaw ‘Accountability and Institutional Design: Some thoughts on the grammar of governance’ in Michael Dowdle (ed), Public Accountability: Designs, dilemmas and experiences (Cambridge University Press, 2006) 115, 135.

[46] Mashaw, ibid 119, points out there are three basic types of accountability regimes: ‘those associated with public governance; those that police the marketplace; and those that inhabit the non-governmental, non-market, social realm’. The Job Network, and its JSA successor, however, is a hybrid relationship which uneasily straddles the requirements of public governance and policing of marketplaces.

[47] Michele Gilman, ‘Legal Accountability in an Era of Privatized Welfare’ (2001) 89 California Law Review 569; Mashaw, above n 44, 136-8.

[48] Joel F Handler, ‘Myth and Ceremony in Workfare: Rights, contracts, and client satisfaction’ (2005) 34(1) Journal of Socio-Economics 101, 113.

[49] Patricia Karvelas, ‘Three Strikes Rule Cuts 15,000 off Dole’, The Australian (Sydney), 15 August 2007, 1; Stephanie Peatling, ‘Welfare Payments Cut for 15,000’, Sydney Morning Herald (Sydney), 15 August 2007, 7.

[50] Adele Horin, ‘Benefits Put on Hold for Weeks’, The Sydney Morning Herald (Sydney), 18 June, 2007, 5.

[51] Carney, ‘Reforming Social Security’, above n 15.

[52] Per Kongshøj Madsen ‘The Danish Model of Flexicurity: A Paradise – with Some Snakes’ in Hedva Sarfati and Giuliano Bonoli (ed) Labour Market and Social Protection Reforms in International Perspective: Parallel or Converging Tracks? (Ashgate, 2002) 243.

[53] Elke Viebrock and Jochen Clasen, ‘Flexicurity and Welfare Reform: A review’ (2009) 7 Socio-Economic Review 305, 309.

[54] Peter Auer, ‘What’s in a Name? The Rise (and Fall?) of Flexicurity’ (2010) 52(3) Journal of Industrial Relations 371.

[55] Wim van Oorschot, ‘Balancing Work and Welfare: Activation and flexicurity policies in the Netherlands 1980-2000’ (2004) 13(1) International Journal of Social Welfare 15.

[56] Peter Vincent-Jones, Individual Responsibility and Welfare Contractualism: A relational evaluation (The Foundation for Law, Justice and Society in affiliation with The Centre for Socio-Legal Studies, University of Oxford, 2009).

[57] Carney and Ramia, From Rights to Management, above n 11.

[58] Auer, above n 54, 372-3.

[59] See ibid 374; Viebrock and Clasen, above n 53, 310.

[60] Mick Carpenter, ‘The Capabilities Approach and Critical Social Policy: Lessons from the majority world?’ (2009) 29(3) Critical Social Policy 351, 359-60.

[61] Alan Hayes, Matthew Gray and Ben Edwards, ‘Social Inclusion: Origins, concepts and key themes’ (Paper prepared by the the Social Inclusion Unit, Australian Institute of Family Studies for the Department of the Prime Minister and Cabinet, October 2008)

<> .

[62] Carpenter, above n 60, 363.

[63] Social Inclusion Board, Social Inclusion: A compendium of social inclusion indicators (2009) viii-ix <> .

[64] Ibid 21, 27, 30.

[65] Ibid 16, 34.

[66] Ibid 81.

[67] Patrick McClure, ‘Final Report: Participation Support for a More Equitable Society’ (Report, Reference Group on Welfare Reform, 2000).

[68] Hayes et al, above n 61.

[69] Ruth Lister, ‘From equality to social inclusion: New Labour and the welfare state’ (1998) 18(55) Critical Social Policy 215.

[70] Colin C Williams and Jan Windebank, ‘Beyond Social Inclusion Through Employment: Harnessing mutual aid as a complementary social inclusion policy’ (2001) 29 Policy & Politics 15.

[71] Social Inclusion Board, above n 63, vii.

[72] Ronald Labonte, ‘Social Inclusion/exclusion: Dancing the dialectic’ (2004) 19(1) Health Promotion International 115.

[73] Bettina Cass and Deborah Brennan, ‘Communities of Support or Communities of Surveillance and Enforcement in Welfare Reform Debates’ (2002) 37(3) Australian Journal of Social Issues 247.

[74] John Alford, ‘Defining the Client in the Public Sector: A Social-Exchange Perspective’ (2002) 62(3) Public Administration Review 337; Gerry Stoker, ‘Public Value Management: A New Narrative for Networked Governance?’ (2006) 36(1) The American Review of Public Administration 41.

[75] Department of the Prime Minister and Cabinet, Australia 2020 Summit: Final report (2008) 47

<> .

[76] Gaby Ramia and Terry Carney, ‘The Rudd Government’s Employment Services Agenda: Is it Post-NPM and Why is that Important?’ (2010) 69(3) Australian Journal of Public Administration 263.

[77] Mark H Moore, Creating Public Value: Strategic Management in Government (Harvard University Press, 1995); Alford, above n 74..

[78] Kevin Rudd, Australia 2020 Summit: Opening Remarks - 19 April 2008 (2008) <> . Other examples include speeches by Kevin Rudd to the Centre for Independent Studies (August 2008) referring to ‘[building] a broader framework for social inclusion of all Australians’ and that ‘The Government’s core role [is] to provide the basic building blocks in communities – investments in education, health and housing infrastructure and advice on governance and service development – delivered in partnership with others.’; and an April 2008 Progressive governance speech referring to the importance of social inclusion on a national and a global level and one to the Sydney Institute in the same month referring to ‘social solidarity’ and to a vision ‘incorporat[ing] quite consciously a combination of private markets and public goods. Or what I have already called tonight a new tradition of the reforming centre of Australian politics’: further Ramia and Carney, ‘The Rudd Government’s...’, above n 76.

[79] Carney and Ramia, From Rights to Management, above n 11.

[80] Viebrock and Clasen, above n 53, 319-20; for examples from Australia and Singapore, see Terry Carney, ‘The Future of Welfare Law in a Changing World: Lessons from Australia and Singapore?’ (2010) 32(2) Sydney Law Review/Singapore Law Review 199.

[81] Frank Castles, The Working Class and Welfare: Reflections on the Political Development of the Welfare State in Australia and New Zealand, 1890-1980 (Allen and Unwin, 1985); Frank Castles ‘Welfare and Equality in Capitalist Societies: How and Why Australia was Different’ in Richard Kennedy (ed), Australian Welfare: Historical Sociology (Macmillan, 1989) 56; Frank Castles, ‘The Wage Earners’ Welfare State Revisited: Refurbishing the established model of Australian social protection, 1983-93’ (1994) 29 Australian Journal of Social Issues 120.

[82] Terry Carney, ‘Neoliberal Welfare Reform and “Rights” Compliance Under Australian Social Security Law’ [2006] AUJlHRights 11; (2006) 12(1) Australian Journal of Human Rights 223, passim.

[83] Robert E Goodin, Against Personal Responsibility for Welfare (The Foundation for Law, Justice and Society in affiliation with The Centre for Socio-Legal Studies, University of Oxford, 2009) 4.

[84] Carney, above n 80, ‘‘The Future of Welfare Law’, passim.

[85] See further Ramia and Carney, ‘The Rudd Government’s...’, above n 76.

[86] Auer, above n 54, 78.

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