DES Performance Framework Working Group
Notes for Telco 1 – On Sharp Practices
1 August 2012
DES Performance Framework Working Group
Notes for Teleconference 1 – On Sharp Practices
‘The prime purpose of quality measurement is to improve outcomes for
service users’
Following the hearing of the Senate Inquiry into the Administration and Purchasing of DES in
October 2011, the Government handed down its response to the committees report. The response
provides some insight into how DEEWR views the performance framework.
In its response, DEEWR indicated that it would make information available to industry on the
overarching principles that drive the regression model to reduce misinterpretations and any misuse.
It was indicated this information would be provided on a principled level.
DEEWR has stated that it is inherently difficult to incorporate a quality of service mechanism into the
DES star ratings model. Therefore we need to identify short-term, medium-term and long-term
strategies for the review. There is significant pressure on DEEWR to include qualitative measures in
the star ratings. This might take longer than the planned review period.
Connections for Quality is consistently mentioned by DEEWR when questioned about quality in
employment services. It is likely that the Department considers Connections for Quality as sufficient
to provide greater choice. However, the capacity to exercise this choice is limited as ESAt/JCA
appointments are increasingly shorter and conducted over the phone.
DEEWR believes its current monitoring and detection strategies are sufficient to identify
manipulation of the star rating system. It is also confident that the vast majority of providers comply
with the spirit, intent and letter of the DES Deed, the DSS and other requirements.
Disability Employment Australia acknowledges the Department’s recent monitoring efforts to ensure
the integrity of payments and services against the Deed. We support it in the context of identifying
where KPIs can be strengthened to improve the quality of services and employment outcomes for
job seekers and workers with disability, injury or ill health, and their employers.
In an email received in May 2012, the Department stated that it did not consider that changes to the
non-payable outcome guidelines would influence the review of the performance framework,
because the changes made would ensure the framework retains its integrity. The quasi-market is
very competitive. Opportunistic or illegal (gaming) behaviour occurs more frequently in competitive
settings than cooperative settings.
It has been argued that the cycle of increased control, in response to real or perceived risk on behalf
of Government, leads to lower levels of trust between purchaser and provider, which lead to worse
outcomes for end users as Government risk is minimised rather than minimising risk to individuals.
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DES Performance Framework Working Group
Notes for Telco 1 – On Sharp Practices
1 August 2012
The current theory underpinning employment services in Australia is principle/agent theory. This
theory suggests that agents (providers) will seize every opportunity to reduce work efforts unless the
principle (DEEWR) discourages such actions by intensive supervision and control combined with
sanctions.
This explains the Department’s decision to impose controls on all providers, rather than take a
precise, risk managed approach. Consequently, DEEWR manages its own political risk, however, in
doing so, does not minimise risk to end users. In many cases, further controls limit opportunities
and homogenise services. Such a heavy handed approach is perceived by providers as controlling,
rather than supportive.
The introduction of controls to mitigate gaming behaviour (or risk selection) can, in fact, generate
new forms of opportunistic or gaming behaviour. For example, DEA was approached by an employer
regarding the non-payable guidelines. The employer suggested her employees become
subcontractors to get around the ‘open employment’ rule. “I’ve already found a way around this”
was the comment, and that came from an employer.
Another example, an employer in the Gold Coast receives community awards for inclusion and
disability. However, now providers will not receive outcomes at this employer because it employs
‘too many’ people with disability.
DEEWR believes that the DES system is sound and the framework has integrity. Importantly, DEEWR
believes the contract is designed well, and often cites international interest in Australian programs.
It is important to tease out the differences between JSA and DES in this context. Australia does not
have a good international standing for disability employment.
In a nutshell, it is reasonable to assume DEEWR believes that good contract design, coupled with
intensive monitoring and regulation (and sanctions) is sufficient to identify and stop sharp practices.
Employment providers are business minded. As performance, profit and mission-driven entities they
will respond to the drivers that their contract vendor builds into the system. The onus is on the
contract vendor to imbed evidence-based and correct drivers to mitigate unintended consequences.
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